The games industry will not only grow in the next few years, but will experience changes in the hardware market, according to DFC Intelligence – with only two clear winners from the three major manufacturers. The research and advisory firm released its annual market report and forecast today, and one of the major takeaways of the latter is that consumers only have room in their wallets for two new gaming consoles, while the third will be hard to find its place.

Previous DFC reports have suggested that 2025 will usher in a period of record growth for the games industry, and this market report clarifies that: It predicts that the industry will recover from the decline of last years thanks in part to exciting new game and console launches – two of the biggest and most immediate are the new Nintendo console and Grand Theft Auto VI, both predicted for 2025.

The report also shows that the gaming audience will grow along with the market itself. By 2027, DFC predicts that the gamer population will hit 4 billion, up from roughly 3.8 billion where it stands today. Most of the 4 billion gamers will be “low income,” meaning they don’t spend a lot of money on games. In contrast, the top 10% of spenders in the gamer population will account for 65% of video game revenue in the next few years, according to the report.

Two consoles will be the winners in the next few years

Along with the growth of the gamer population, DFC also predicts the state of the hardware market in the next few years. The new Nintendo console will be a major driver of growth, and the report suggests that it will have a stronger launch than the Switch, and more households may buy more devices. This could be part of a larger trend in hardware spending – DFC predicts hardware revenue spending will hit $120 billion by 2028.

However, not all consoles will get the Nintendo treatment, the report says. Sony and Microsoft are likely to release a new console between now and 2028, but only one is predicted to be successful. As the next PlayStation and Xbox consoles are completely theoretical at this point, there is no way to know who will achieve success. This will depend on the features of the new consoles and active install base.

In addition to hardware sales, the report also predicts shifts in gaming revenue over the next few years. Add-on content and subscription revenue will continue to outpace full games, with individual game subscriptions (eg MMOs) outpacing those offering multiple games (eg Xbox Game Pass). One of the biggest challenges facing game companies is distribution.

DFC Intelligence CEO and founder David Cole said in a statement, “Over the past three decades, the video game industry has grown more than 20x, and after two years of declining hardware and software sales, it poised to continue growing at a healthy rate through the end of the decade. While 2025 will mark the start of an upward trajectory, some big questions remain, including who will lose the next-generation console war and who will win the game software distribution battle.And with more publishers focused on live services around evergreen franchises, the opportunities for smaller studios will be plentiful.