Level up in price: the cost explosion of consoles –

Gamereactor was only a few years old, social media didn’t exist in the same way it does now, and Neogaf was my obvious online pub. Everyone hung out there and countless major news stories started through the forum. One of the biggest events that people watched closely was the price of game consoles.

Console manufacturers were playing 4D chess with each other, and following the price drops was extremely interesting. It revealed things like how sales were going, what the consoles cost to produce, how a console manufacturer was doing and much more. Before the price cuts, which often came after a period of low sales, there was much speculation about when the time would come and what the updated price tag would be.

However, there was no speculation at all about whether prices would be raised. There was no such thing as a price increase at all, except possible adjustments due to currency changes and the like. An electric gadget gets older and more and more obsolete with each passing day, which should be reflected in its price tag, so a console that halved in price after about five years was an expected thing, and that was when the so-called informal public intervened.

But… It feels like a lifetime ago. This generation has been a very different beast. When the PlayStation 5 and Xbox Series X set their respective prices, people were half-shocked at how expensive they were, with Sony’s console costing £450 and Microsoft’s the same. However, scalping at launch made them cost significantly more, and countless articles were written about how unreasonable that was.

Scalping is always completely unreasonable and unethical, but you can probably guess where I’m going with this – namely, that today we are paying scalping prices for the same consoles after they have increased in price since launch. Not just once, but several times. There are several reasons for this, starting with significantly higher costs associated with the pandemic, followed by a huge desire for silicon since AI became the new black in computing. Thus, component prices have risen to the point where it has not been possible to lower prices.

In addition, all the subsidies and such related to the pandemic caused inflation to skyrocket. You probably remember the headlines about how prices rose at turbo speed and made us all poorer. This, of course, also contributed to driving up price tags.

Then there are factors like Vladimir Putin and Russia deciding it was worth blowing up a country and sacrificing up to a million of their own people to take some land from a neighboring country – which led to several operations that cost money.

But. what has affected the past month and a half is U.S. tariffs, where President Trump has said several times that it’s like taxing other countries – after which he has gone back and forth under harsh criticism, while some countries seem to be working more closely together to circumvent the U.S. We do not yet know how this will play out, but it is clear that there will be high tariffs and they will have to be paid. Whichever way we look at it, all costs will fall on the shoulders of the consumer.

Reasonably, it would be American gamers who would have to pay for more expensive consoles, accessories and physical games, but it seems that Microsoft and Nintendo are reluctant to make their products much more expensive in the US. It is likely that a large price differential would have upset the Trump administration and risked various kinds of action, and also caused people to import hardware from Canada and Mexico in particular, so now we have to help pay for U.S. tariffs as well.

So, when will prices come down again? The sad thing is that I think this is something we can forget about for the foreseeable future. Unless President Trump, under pressure from the market and public opinion, turns around and ends the tariff war, there are many indications that prices will rise instead. Sony has raised prices several times in the past, and just last month it raised the price of its consoles in parts of the world, presumably to offset U.S. tariffs. Daniel Ahmad, head of research at Niko Partners, and one of the most prominent in the industry, recently wrote on Bluesky:

“I must stress that what you see here is just the beginning. Sony will be affected by the same tariffs and we have already seen them raise prices elsewhere to offset the impact. Nintendo has not raised prices because they produce in Vietnam, but may do so if tariffs go up.”

Another notable figure,MST Financial analyst David Gibson, recently made headlines by suggesting that the PlayStation 5 could cost the equivalent of over $1,000 in the U.S. Since then, we have seen publishers reluctant to let Americans get the full bang for their buck, which also contributes to the fact that prices are likely to continue to rise. We don’t yet know where the ceiling is, but it is clear that perhaps the consoles’ most important weapon is about to slip out of its hands.

For a long time, simplicity and low price (compared to a gaming PC) have been the defining characteristics of video games. But in recent years, PCs have come a long way, and playing via Steam is really no more complicated than a console. And when consoles start costing $1,000, we start to get into a situation where it becomes more financially advantageous to buy a computer instead.

Sure, a decent gaming PC is more expensive anyway, but you don’t have to pay for online multiplayer and games average about $20 each. It won’t take long to make up that difference and have a more powerful gaming device that has access to significantly more games. This is something Sony in particular should be concerned about, but also Microsoft (although they seem to be on their way to a PC future and doing well, but they are far from there) and Nintendo.

The most disturbing thing about this development is that within four years we will have both a new PlayStation and Xbox – and later this year there will probably be a portable Xbox from Asus. What are these devices going to cost when five-year-old hardware costs around £550? The idea that these would cost less than £800 seems almost a pipe dream at the moment, and unfortunately I fear the worst is ahead of us and seriously threatening to damage this wonderful form of entertainment.