What's Going On with Console and Game Prices?

As of May 1, Microsoft has increased prices on its gaming products. The budget-friendly Xbox Series S (512 GB) went up from $300 to $380, and the 2 TB Xbox Series X now costs $730 — more than the PS5 Pro. A bit earlier, on April 13, [url=/news/124230-sony-hikes-playstation-5-prices-in-europe-and-australia.html[/url] in Europe, Australia, and New Zealand, raising it to €500. Prices are rising not only for consoles and accessories but also for games themselves. Nintendo was the first to reveal that Mario Kart World, its flagship title, would cost $80. Microsoft followed suit, announcing that some of its upcoming titles will also carry the $80 price tag. So why is everything suddenly getting so expensive? Let’s break it down.

The main reason behind the recent surge in console prices is the ongoing tariff war. The United States has imposed additional import tariffs, especially on goods from China, in an attempt to reduce its trade deficit and address what the current U.S. administration deems unfair trade practices. In response, China and other nations introduced counter-tariffs. The full impact of these mutual tariffs has yet to unfold, but early signs already show disruptions and market uncertainty. Analysts are warning of potential disruptions to global supply chains.

Experts believe the tech sector will be especially hard-hit, as many electronic components — such as microchips and circuit boards — are either produced in China or rely on Chinese materials. Due to the tariffs, these components are becoming more expensive, impacting the cost of everything from smartphones and industrial hardware to gaming consoles.

In light of the U.S.–China trade conflict, you might wonder: why are prices also rising for the PS5 Digital in Europe, Australia, and New Zealand? While Europe isn’t directly involved in the U.S.–China trade war, Sony — like many global corporations — is facing rising production and logistics costs worldwide. As previously mentioned, components manufactured in China are becoming more expensive, supply chains are strained, and currency exchange rates are volatile.

Moreover, some analysts suggest that the price hikes in Europe may be a strategy to offset growing costs without raising prices in the U.S. — Sony’s largest and most competitive market. In essence, the company is compensating for losses from American tariffs by increasing prices in other regions where it’s already performing well.

Even aside from tariffs, you've probably noticed that this console generation has been unusually resistant to price drops — despite being almost five years old. That’s highly unusual: in past generations, console prices fell significantly over time. For instance, the PlayStation 3 launched at $599 for the 60 GB model but was replaced three years later by the PS3 Slim with 120 GB for just $299. So why hasn't the PS5 followed a similar trajectory?

One possible explanation lies in chip sizes. In the past, shrinking chips helped reduce manufacturing costs over time, making consoles cheaper. But today’s chips are already so small and complex that further reductions don’t translate into meaningful cost savings. As a result, companies like Sony and Microsoft can no longer rely on traditional price cuts during a generation — consoles remain expensive.

Another reason console and GPU prices didn’t fall even before tariffs? The AI boom. Neural networks rely on powerful GPUs for training and inference, and Taiwan Semiconductor Manufacturing Company (TSMC) — the main chipmaker for AMD, NVIDIA, and Apple — has limited production capacity. Since AI chips are more profitable than consumer-grade processors, TSMC prioritizes those orders.

In short, the recent Xbox and PlayStation price hikes are closely linked to the U.S.–China trade war — and prices may keep climbing if tariffs escalate further. But even if the trade war ended tomorrow, a sharp drop in console prices is unlikely, as AI-related chip shortages will remain a limiting factor.

As soon as Nintendo announced that Mario Kart World would cost $80, nearly all industry analysts agreed that other major publishers would soon raise their prices too. Interestingly, the $80 price tag isn’t a new baseline for all future Nintendo exclusives — it’s more of an exception. For instance, Donkey Kong Bananza, which launches after Mario Kart World, will remain at $70. Nintendo of America president Doug Bowser explained the company’s new pricing approach in an interview:

Even though Nintendo isn’t planning to sell all its games at $80, the mere existence of that new price point for Mario Kart World seems to have broken a psychological barrier. Microsoft has already announced that some of its games releasing later this year will also carry the $80 price tag.

Is the price increase justified? Leading experts have long warned that it was inevitable. AAA game development has become incredibly expensive. Budgets for some projects now exceed $300 million when factoring in development and marketing. Inflation and worsening global economic conditions — partly due to the same tariff war — have also driven up costs. In response, companies are adjusting their pricing strategies to remain profitable.

However, not all developers and analysts agree that $300 million budgets should become the norm. Many believe publishers have boxed themselves into a corner by throwing excessive amounts of money at AAA development, when many games could be made at a fraction of the cost. In a recent Bloomberg article, journalist Jason Schreier cited games like Clair Obscur: Expedition 33, Blue Prince, and Split Fiction as strong titles with modest budgets and more consumer-friendly pricing.

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With all this news, it might feel like the future of the gaming industry looks grim — especially when it’s hard to predict how things will unfold. Most likely, the rising prices will push gamers to be more selective about which $80 AAA titles they buy, to seek out mid-budget releases like Clair Obscur: Expedition 33 more often, and to lean more heavily on backlogs and services like Game Pass.

And if the cost of gaming hardware and components continues to rise, convincing consumers to upgrade their consoles or PCs may become even harder. That could mean this current console generation lasts longer than initially expected.

What do you think? Are you concerned about rising prices in your favorite hobby? Let us know in the comments.