Despite the UK video games market holding steady at a value of £7.05 billion according to a UKIE report, console hardware and subsequently software market values are declining.
Console hardware was down 27% to £832 million, with PC hardware down 14% to £760 million and console accessories down 15% to £396 million.
In total, the value of the hardware market fell 19% to a value of £2.16 billion.
Dorian Bloch, Senior Client Director at GfK, said: "Console hardware remained the biggest sector in game hardware but saw the steepest decline in 2022 due in part to the natural progression and uptake of ninth generation consoles which is set against the decline of the previous generation.
"Other factors included well-documented supply chain component issues, higher cost of raw materials due to shortages and shipping slow-down at warehouses and ports, which affected all hardware sectors including video games.
"Much can still be attributed to Covid uncertainty, but the Russia-Ukraine war, recession, inflation, rising energy/food/living costs all play a part in dampening consumer confidence, with consumers putting off major purchase decisions - including of course game hardware."
Reflecting this decline, the value of digital console sales fell 4.7% to £1.98 billion. Sales of boxed games also fell 4.3% to a value of £489 million. Despite this decrease, 2022 is the first year in over a decade that boxed video games have beaten digital copies in year-on-year performance.
Matt Bailey, Principal Analyst at Omdia, said: "The digital segment of the UK's console market was impacted by a further shift towards pre-pandemic engagement levels, resulting in fewer downloads of legacy software titles and reduced spend on console DLC.
"A lack of hardware supply - particularly for PS5 - also prevented many would-be ninth-generation console owners from shifting their spend toward higher value digital content.
"And, although console subscription services remain a key area of growth, they are not yet generating the amount of spend required to offset declines in other areas of digital console spend.
"PC digital was relatively flat, propped by the microtransactions segment. The healthy debut of Valve's Steam Deck - which we estimate sold 135k units in the UK in 2022 - indicates there's still appetite for spend residing in the PC market."