🕹️ The Great Gaming Shift: Steam’s Record $11B H1 2026, Sony Kills Physical Discs, and an Industry at a Crossroads
Published August 28, 2026 — by Vito Ruocco (Kaito)
Introduction
If there’s one thing the first eight months of 2026 have made abundantly clear, it’s that the video game industry is undergoing a transformation unlike anything we’ve seen before. While one side of the ecosystem is experiencing unprecedented financial success, the other is staring down an existential reckoning. On one hand, Valve’s Steam platform has just posted its most profitable six-month period in history — a staggering $11.1 billion in revenue. On the other, Sony has announced it will cease production of physical game discs by January 2028, delivering what experts are calling a “hammer blow” to game retail. Throw in the launch of Call of Duty: Modern Warfare 4 today, Amazon’s controversial AI game experiment gone wrong, and the ever-looming shadow of GTA 6, and you’ve got a landscape that’s equal parts thrilling and terrifying. Let’s break it all down.
Steam’s Unstoppable Ascent: $11.1 Billion in Half a Year
Let’s start with the good news. According to data from analytics firm Alinea Analytics, Valve’s PC storefront generated $11.1 billion in revenue during the first half of 2026 — its highest-ever six-month total. To put that in perspective, that’s nearly five times what Steam made in the same period back in 2017. As Rhys Elliott, head of market analysis at Alinea, puts it: “Zoom out over the last decade and things get really crazy. There’s obviously a visible dip as the market normalized after the pandemic sugar-high, but the long arc is relentlessly up, with seven half-years of growth.”
Several factors are driving this growth. The Chinese market continues to be a massive force — as of February 2025, over 50% of all Steam accounts were Chinese-speaking. Higher prices on new releases (thanks in part to the $69.99 standard) and the return of third-party publishers to Steam after abandoning their own launchers have also contributed significantly. Ubisoft’s return to Steam is a prime example of a trend that’s funneling more and more revenue through Valve’s ecosystem.
The biggest games of the year so far? Forza Horizon 6 leads the pack with $197.7 million in under two months, followed closely by Resident Evil Requiem at $194.5 million (3.4 million sales on Steam alone), and the breakout hit Crimson Desert at $190 million since its March launch. Notably, three indie titles cracked the top earners list: Slay the Spire 2 ($141.7M), Subnautica 2 ($133.6M), and Meccha Chameleon ($71.3M). The indie market is alive and thriving on PC.
Sony’s Disc-Connect: Physical Media Ends in 2028
While Steam celebrates, the console side of the industry is grappling with seismic change. Last week, Sony announced that large-scale production of physical game discs will cease in January 2028. The decision sent shockwaves through the industry, raising urgent questions about game preservation, retail jobs, and the very concept of ownership in the digital age.
Industry experts are nearly unanimous in their assessment: this is devastating for physical retailers. Chris Dring of The Game Business called it “clearly a blow” for retail, noting that “PlayStation games do sell well at physical retail. It’s a smaller part of the business than digital, of course, but we’re still talking millions of sales worldwide.” Rhys Elliott of Alinea was more blunt, describing the news as a “hammer blow for games retail” and highlighting that “the pre-owned market was one of the rusty engines keeping specialist retailers alive.”
Elliott, who previously worked at GAME in the UK, explained the economics: “The margins on new physical games are so thin for retailers, but used games are where the real money was. That engine has been sputtering for a while. GAME has already stopped accepting trade-ins, and CEX is basically gone.” He pointed out the absurdity of the current “code-in-a-box” model: “Why pre-order a ‘physical’ copy from Amazon or GameStop when what arrives is a slip of cardboard with a download code, no better than buying it on the PlayStation Store, and often slower? A code-in-a-box has none of the things that made physical worth choosing: no resale value, no lending, less collectability. The physical channel has no reason to exist.”
Piers Harding-Rolls from Ampere Analytics offered a slightly more optimistic take, suggesting this could force innovation: “Calling time on physical media will mean innovating around digital games sales in-store to try and replace lost business.” But even he acknowledged the “ever-shrinking” nature of the physical market.
Call of Duty: Modern Warfare 4 Launches Today
In the midst of these industry-wide shifts, Call of Duty: Modern Warfare 4 (2026) hits store shelves (metaphorically speaking) today. While details on the campaign remain under wraps, early impressions suggest Infinity Ward is aiming for a return to form after the mixed reception of recent entries. The timing is interesting — launching into a market where physical sales are declining but digital is booming, and where the competition from GTA 6 looms on the horizon. Will Modern Warfare 4 be the shooter that defines 2026? Early buzz suggests it might be, but it’s got a tough battlefield ahead.
GTA 6: The $70 Elephant in the Room
Speaking of GTA 6, Rockstar’s upcoming behemoth continues to dominate conversation even before its release. The latest batch of screenshots has the community buzzing — from the incredible water physics to the character work on Jason and Lucia. But alongside the hype comes a sobering reality: GTA 6 will cost £69.99 / $69.99, and its “physical edition” won’t actually contain a disc. It’s a code-in-a-box, the very format experts say is hastening the death of physical retail. Worse, the actual full game experience — including day-one content — is being carved up, with a mission and some items locked behind pricier tiers. Rockstar is testing the limits of what gamers will pay, and the industry is watching closely.
Amazon’s AI Gamble: Project Trident and the Human Cost
In a story that reads like a cautionary tale, Eurogamer has revealed the inside story of Amazon’s Project Trident — a game that was pressured into incorporating generative AI, and then cancelled anyway. The project was a third-person action-comedy set in a fictional Nordic world where players could use voice or text commands to interact with NPCs via a large language model (LLM). Think commanding Thor to perform special attacks by simply saying his name, or solving environmental puzzles by conversing with in-game characters.
It was creative, ambitious, and different. It was also not enough to save the team. In October 2025, Amazon Game Studios laid off a significant portion of its workforce, shuttering Project Trident alongside other high-profile casualties like New World (which is shutting down after its tenth season) and the long-rumored Lord of the Rings MMO. As one source put it, the AI mandate came from the top — a company-wide push to use the technology — but it “was not enough to save them from closure.” The message is clear: even when developers do exactly what leadership asks, job security is far from guaranteed in today’s industry.
Xbox and PlayStation: A Tale of Two Struggles
While Steam soars, the console manufacturers are facing headwinds. Microsoft’s gaming revenue is down 7% year-on-year, and this week’s “reset” — involving layoffs at Double Fine, Compulsion Games, and Ninja Theory — suggests rough seas ahead. PlayStation isn’t faring much better; first-party software sales have been declining since 2020, and Sony’s decision to stop bringing future exclusives to PC has removed a significant revenue stream. Both companies are feeling the bite of increased hardware costs thanks to the AI-fueled RAM crisis, which has led to price increases across the board.
Consumer sentiment has also tanked. A petition against Sony’s physical media decision has gathered tens of thousands of signatures, and Microsoft faces backlash as the brutal impact of its layoffs becomes clear. Morale at Bethesda is reportedly at an all-time low, with The Elder Scrolls VI development suffering from the talent drain.
The Indie Renaissance Continues
Amidst the corporate turmoil, independent games continue to thrive. The success of Slay the Spire 2, Subnautica 2, and Meccha Chameleon on Steam proves that there’s a hungry audience for quality indie experiences. The Humble Choice August 2026 bundle — headlined by Like a Dragon: Infinite Wealth — is another sign that subscription and bundle models are evolving to support a diverse range of games. The barriers to entry for indie developers have never been higher (discoverability on Steam is brutal), but those who break through can find massive success.
What It All Means
The gaming industry in 2026 is a study in contrasts. PC gaming has never been stronger — Steam’s numbers are astronomical, the Chinese market is booming, and indie developers are producing some of the best work in the medium’s history. But the console ecosystem is in transition, caught between rising costs, shifting consumer habits, and the slow death of physical media. The human cost is real: thousands of developers have lost their jobs in the last two years, and the trend shows no sign of stopping.
For players, the message is mixed. We’re getting more games than ever, on more platforms, with better technology. But we’re also losing something — the ability to truly own our games, the local game stores that were community hubs, the jobs of the people who make the magic happen. As we look toward the rest of 2026 and beyond, one thing is certain: the industry we knew is gone. What replaces it is still being written.
What do you think about these industry changes? Are you Team Digital or Team Physical? Drop your thoughts in the comments below! Follow ruocco.it for daily gaming industry coverage.