Gaming consoles have long followed a predictable pattern: as they age, their prices drop. But that trend is now broken.
In March, Sony raised the PS5 price by £90, and Microsoft followed with a £75 increase for Xbox Series S and X in August.
The Switch 2 will also be more expensive globally from September.
The root cause is the exploding demand for semiconductors and memory to power AI datacentres.
Console manufacturers once sourced these components cheaply, but now they face fierce competition and supply constraints.
“Initially, the wave of price increases seen in gaming were driven by tariffs imposed by Donald Trump early last year,” says Andy Robinson, editor in chief of VGC.
“Then, in October, OpenAI announced a deal with Samsung and SK Hynix to acquire a huge portion of their DRAM output for datacentres, causing prices to increase by almost 200%.
According to Xbox, those prices have since doubled again.”
The memory market is dominated by just three companies: Samsung, SK Hynix, and Micron. Building new factory capacity takes years.
“It looks like hardware companies will be waiting until the beginning of 2028 for factory capacity to open up,” says Piers Harding-Rolls, games industry analyst at Ampere.
Lenovo’s executive director, Martin Hiegl, recently suggested that memory prices might never return to previous levels.
Sales Slump and Record-High Prices
The price hikes have already hurt sales.
“Typically, at this stage of the generation, consoles could be picked up at significant discounts, but the cheapest PS5 now costs 50% more than it did in 2020,” says Robinson.
In the US, hardware sales hit 30-year lows last November, with the average price of new hardware reaching an all-time high of $439.
Last month, that figure increased to $502. Xbox recorded its worst May ever for hardware sales, while PS5 was down 58% year-on-year.
Analysts predict that the PlayStation 6 could retail at $1,000 USD, matching the price of Valve’s Steam Machine.
This would break the long-standing tradition of affordable consoles.
Sony and Microsoft used to absorb losses on each console to keep prices down, while Nintendo used cheaper components.
The PlayStation 2 and Nintendo DS launched at £299 and £99, respectively.
Microsoft now offers “buy now, pay later” plans and interest-free financing on Xbox models, which may extend to next-gen platforms.
But some believe cloud gaming could eventually reduce the importance of hardware.
“Especially when GTA 6 is about to drive an incredible amount of interest in gaming from those who might not have modern consoles,” says Robinson.
GTA V has sold 230 million copies since 2013, and one GTA 6 trailer attracted 475 million views in 24 hours.
However, cloud gaming relies on excellent broadband, and resolution can be limited.
Hideaki Nishino, president and CEO of Sony Interactive Entertainment, has discussed a hybrid approach to consoles, similar to the Nintendo Switch.
Rumours suggest Sony might delay the PS6 launch until 2029, hoping for lower manufacturing costs.
“We do need to rethink consoles,” says Chris Dring, editor-in-chief of the Game Business. “The difference between each new generation was getting smaller from a visual perspective.
Why do we need a PS6? We’ve not even had a Naughty Dog game yet.”
