Spending on video games and game products is down virtually across the board, and now major brands like "Pokemon Go" and "World of Warcraft" are cancelling projects. During the second quarter of 2022, video game spending dropped by 13%, but companies are holding out hope that major releases in 2023 will be able to revitalize the industry.

So far this year, Nintendo's (NTDOY  ) console sales have fallen by 23%, PC sales have seen the sharpest drop in nearly a decade, and Electronic Arts (EA  ), Activision Blizzard (ATVI  ), Microsoft (MSFT  ), and Sony Group Corp (SONY  ) have each released disappointing reports for the second quarter and low expectations for the remainder of 2022.

Video game exchange-traded funds (ETF) like Global X Video Games & Esports ETF (HERO  ) and VanEck Video Gaming and eSports ETF (ESPO  ) have also taken a beating so far this year, falling 20% and 22%, respectively.

"There are parts of the business that I think are doing better and parts of the business that are maybe doing a little worse than we would have anticipated even a few months ago," EA Chief Financial Officer Chris Suh said.

Along with the same inflation pummeling the rest of the economy, video game sales were also hurt by the chip shortage and a low number of popular new releases compared to other years. Both 2020 and 2021 had major releases that helped drive up pending during those years.

While 2020 introduced "Ghost of Tsushima," "Assassin's Creed Valhalla," "Call of Duty Warzone," and "Animal Crossing: New Horizons;" and 2021 introduced massive games like "Monster Hunter Rise", "Metroid Dread," "Halo Infinite," "Resident Evil Village," and "Marvel's Spider-Man: Miles Morales;" 2022 has had comparatively few new big games with "Horizon: Forbidden West," "Pokemon Arceus" and "Elden Ring."

Video games also saw a big boost as a result of the COVID-19 pandemic, but the end of widespread lockdowns has also led to a decrease in how much time users spend playing games.

Video game companies were also among the group of industries that pulled out of Russia in response to the invasion of Ukraine. Previously, Russia was the 10th largest market for video games globally.

Things may be looking dark for the industry right now, but companies are optimistic about the potential for higher spending in 2023. Companies are hoping for major new releases in 2023 to reverse the slump.

"In the long-term, the growth prospects of the video game space remain as strong as they've ever been," said analyst Mat Piscatella with the NPD Group.