The giants of the video game world saw their sales slide in the second quarter, as initial tailwinds from the Covid pandemic faded.

In the three months ended June, Microsoft, Sony and Nintendo each posted disappointing results in their respective gaming businesses.

The numbers reflect a broader contraction in consumer spending on video games. Americans spent $12.4 billion on games in the second quarter, according to market research firm NPD, down 13% year-on-year.

Several factors are to blame, not least the relaxing of pandemic restrictions, with people eschewing home entertainment options in favor of outdoor activities.

Ongoing shortages of semiconductor equipment haven’t helped either.

“The growth of the overall game market has recently decelerated as opportunities have increased for users to get out of [the] home as Covid-19 infections have subsided in key markets,” Hiroki Totoki, Sony’s chief financial officer, said on the company’s earnings call last month.

Sony reported a 2% decline in sales year-on-year at its gaming unit in the June quarter, while operating profits plunged almost 37%. The company also issued a gloomy outlook, cutting its full-year profit forecast by 16%.

The main reason? People are spending less time playing games and more time going out.

Total gameplay time among the PlayStation player base was down 15%, much lower than initially forecast by the company.

Gaming was one of the big beneficiaries of the Covid pandemic, with publishers experiencing bumper growth as consumers spent more time indoors.

But with consumers’ spending habits shifting post-lockdown, and inflation running hot, the industry is taking a hit.

At Microsoft, overall gaming revenues sank 7% year-on-year. Sales of the company’s Xbox consoles declined 11%, while gaming content and services revenues dipped 6%.

The declines were “driven by lower engagement hours and monetization in third-party and first-party content,” Amy Hood, chief financial officer of Microsoft, said on the firm’s earnings call last week.

Activision Blizzard, the embattled game publisher being acquired by Microsoft, reported a 70% plunge in net profit and a 29% drop in revenues.

The Call of Duty-maker blamed the slump on weak sales of the latest title in the popular shooter franchise.

Ubisoft, the firm behind Assassin’s Creed, posted a 10% decline in net bookings.

Michael Pachter, managing director at Wedbush Securities, said the disappointing numbers were largely driven by comparisons with “outsized performance” a year ago. In other words, companies couldn’t match the wildly high numbers they posted in 2021.

“Everyone saw record numbers during shelter-in-place, with catalog sales of older titles leading the way,” Pachter told CNBC. “That set up an impossible comparison, and the year-over-year declines were well telegraphed and were expected.”

Electronic Arts was one of the rare companies to defy the gaming contraction, posting a 50% rise in profits and revenue growth of 14%.

A major factor hampering performance in the gaming world is the continued scramble for key console hardware.

Nintendo saw a 15% slide in operating profit in the April-June period. The company behind the Super Mario franchise blamed the weak performance on the global semiconductor shortage, which meant it was unable to produce and sell as many Switch consoles as it wanted.

Nintendo sold 3.43 million units of its portable Switch console in the quarter, down 23% year-over-year, while software sales slumped 8.6%, to 41.4 million units.

Sony sold 2.4 million PlayStation 5 consoles in the quarter, slightly higher than the 2.3 million units sold in the same period a year ago. The firm is hoping a lifting of lockdown measures in the crucial manufacturing hub of Shanghai and a holiday season sales drive will help it reach its target of shipping 18 million PS5 units in 2022.

“The slow rollout of hardware is one of the biggest contributors,” Pachter said. “New hardware purchasers tend to buy a lot of software, and PlayStation and Switch sales have been supply constrained.”

The remote-working trend has also caused delays for new game releases, limiting the pool of games people want to buy. Microsoft, for example, delayed the release of its highly-anticipated sci-fi epic Starfield until early 2023, while Ubisoft pushed back the launch of a game based on the Avatar film franchise.

Spiraling prices for everything from gas to groceries and fears of an impending recession could spell further trouble for the sector.

The global games and services market is forecast to contract 1.2% year-on-year to $188 billion in 2022, the first annual decline in over a decade, according to data from Ampere Analysis.

“The cost of living squeeze means added pressure on household budgets,” Piers Harding-Rolls, research director at Ampere, told CNBC.

“The impact is likely to be felt on high ticket items which could include console hardware, although limited availability and pent up demand especially for the higher-end consoles means impact will be minimal at present.

Harding-Rolls added: “There could also be some additional pressure on high in-game spending as gamers adjust their discretionary spending.”

Some firms are betting a push toward subscription products will help counter the effect of waning game sales.

According to Microsoft, growth in the company’s Xbox Game Pass membership plan helped cushion the blow of softer demand for consoles and games. While Microsoft didn’t give an updated subscriber number for the service, it had over 25 million subscribers in total as of January.

Sony recently revamped its PS Plus subscription service, and is hoping the move will help combat the recent tail-off in gaming activity. PS Plus subscribers totaled 47.3 million, according to Sony’s quarterly report, slightly down from the previous quarter.