Gaming has become quite an expensive hobby these days, regardless of whether you prefer PC or one of the consoles as your platform of choice, thanks to several price hikes that arrived in the wake of a global shortage of memory modules. According to Kotaku, industry analysts believe that this won’t be changing any time soon.
NYU Stern professor Joost van Dreunen brought up the cost of RAM as being the major reason behind price hikes. Along with this, he also noted that geopolitical situations have also played a role, such as the US tariffs.
“The rising cost of RAM is the main culprit, but the inconsistency and volatility created by U.S. tariffs aren’t helping either,” said van Dreunen. “Downstream suppliers and manufacturers now sit on massive amounts of inventory they cannot sell or assemble because few consumers would be willing to pay for the markup. What was supposed to bring manufacturing jobs to the U.S. has instead priced consumers out of the market and pushed manufacturing jobs to lower-wage countries.”
Kantan Games CEO. Dr. Serkan Toto reiterated van Dreunen’s statement, saying that these various factors have added up to create a “persistent inflation worldwide”. Niko Partners director of research Daniel Ahmad similarly brought up fluctuations in various currencies from around the world. However, he acknowledged that many of these issues are largely affecting Western markets, and that regions like MENA (Middle East and North Africa) and Asia are doing better.
“The Asia and MENA games market continues to demonstrate resilience and long-term growth potential amid ongoing geopolitical uncertainty, shifting trade policies, and broader economic volatility impacting industries worldwide,” he explained. “Asia and MENA countries will continue to outpace worldwide video game software and services growth through 2030 according to our forecast and global estimates.”
Discussing the future, all analysts expressed a belief that prices will likely keep going up, since geopolitical tensions still remain high. Alinea Analytics’ head of market analysis, Rhys Elliot, referred to the current price hikes as “lagging indicators, not the peak.”
“Platform holders and manufacturers run on long-term supply contracts and inventory buffers that initially shielded retail pricing,” explained Elliot. “As those contracts expire, companies are renegotiating component costs at today’s inflated rate, and that pressure is industry-wide.” Despite this, Elliot also believes that the industry is still relatively healthy for now, since the “pipeline of new, spending users” hasn’t yet closed up. Omdia’s senior analyst James McWhirter, however, believes that we will see more price hikes for platforms like the Nintendo Switch 2 next year.
Circana senior director Mat Piscatella believes that there is an upper limit to how far companies can push their hardware prices. This ceiling, however, is yet to be discovered.
“Some very tough choices with long-ranging impact will have to be made by all hardware manufacturers both now and in the coming months when it comes to pricing and production,” he says. “Yes, at some point there is a viable price cap. What that cap is, however, is still a bit of a mystery, and dependent upon numerous factors, both quantifiable and not so much. This market has never before been in this position, and we’re learning many things about it as we go.”
As for whether prices will come back down once geopolitical issues are settled and there is no longer a RAM shortage, Tiago Reis of Newzoo isn’t quite sure. He believes that the price hikes are also an indication of a higher price floor – the minimum a company can charge for its products.
“Our base case is that the industry is entering a period where the pricing floor for gaming hardware is likely higher than it was before,” he said. “Newzoo’s market data shows that engagement remains concentrated around established ecosystems and older titles, while overall growth is increasingly driven by monetization rather than major expansion in player time. Our interpretation is that these conditions reduce pressure on platform holders to aggressively subsidize hardware in the way previous generations sometimes did. That doesn’t mean prices can never come down, but a return to earlier pricing expectations looks increasingly unlikely.”
van Dreunen, on the other hand, has a bleak outlook on the future. He noted that, in 2024, software started getting more expensive and the prices never quite came down, and the same trend might now be coming to hardware. “Naturally, it will catalyze a shift to new ways to play that don’t rely on a large upfront investment from consumers, and I expect a large part of the industry to shift to subscriptions and ad-based revenue models,” he said. Unfortunately, more budget-conscious gamers “will soon find that no one is catering to them. Instead, I expect Big Tech firms will try to rent them a virtual PC or console in the cloud for a monthly fee.”
Interestingly, McWhirter believes that Nintendo will be hit quite hard with these new market conditions, since it released a brand-new console relatively recently. “It’s an imperative that it must grow the Switch 2 installed base as quickly as possible,” he said.
Other analysts, like Piscatella and Ahmad, have noted that there are plenty of low-cost ways for gamers to still play games, such as internet cafes, the availability of older games, and mobile and cloud as platforms.
“Gaming as a whole has plenty of low cost or free gaming options, particularly in the mobile and free-to-play space, that directly contradict the notion of being a luxury hobby and are more likely to thrive in the ‘current economic conditions’ that companies have been fond of citing as the reason for their higher prices,” said Piscatella. Looking to future console generations, Elliot believes that we will see more and more games released on platforms that are already out now, like PS5, Xbox Series X/S, and Nintendo Switch 2. He also believes that “cross-gen is going to be huge” when it’s time for a new console cycle.
Bringing up comparisons with the mid-2020 Covid-19-induced supply chain issues, Dr. Toto expressed some optimism about the future.
“I believe in 2028 and beyond, components should become more readily available again,” he said. “I might be too optimistic here, but today reminds me of the supply crisis in the early COVID days when consoles were hard to get for months worldwide. Back then, it was also hard to imagine a world with PS5 or Xbox units piled up to the ceiling in retail stores – which became reality rather suddenly after the supply chain was fixed again.”
Ultimately, however, Piscatella acknowledges that it is difficult to figure out what is going to happen with the gaming industry in the future, since all assumptions being made right now could change in a matter of weeks, if not days, or even hours.
“Anyone that says they know what happens next is either lying to themselves or trying to sell something,” he said. “It’s the most hold-onto-your-butts moment I’ve seen in 20 years in the industry, and it both worries and saddens me.”