Green Has Come for the Gaming Industry

We are in a strange transition period in the gaming industry, but it’s one that was really a long time coming. I was a devout console gamer. Although my older siblings had an Atari 2600 that I used to play on, I really came up in the era of the Nintendo Entertainment System. That system was mine, the first that I owned, and that was the era when NES was king, that every kid had to have one and Nintendo dominated the whole market. Hook ‘em while they’re young, they say, and Nintendo got its claws in me goodI loved that console, and I loved so many others from Nintendo over the years after (even while I picked up other consoles from Sega, Sony, and Microsoft as well, just to flesh out my collection).

Much more recently, though, I’ve been shying away from consoles for a number of reasons, but the biggest factor is the fact that the consoles have been pushing people towards digital sales over physical ones. We discussed this a bit when looking at the price hikes for Xbox Game Pass, but effectively console makers don’t see money in physical games anymore. They’d much prefer if you bought your games digitally, since they make more money there. Consoles are getting released without physical disc drives, and those games that do get a “physical” release more often than not really just have a disc or cart with a download code that then downloads the whole game remotely instead of actually running the game off the disc of the cart. Physical media is, in effect, dead already.

Because of that, the value proposition of consoles was already on tenuous grounds. Why buy a game for a console if you also already had a computer and could go over and get it on Steam or GOG instead. Your Steam library lasts a hell of a lot longer than a single console cycle, so that title you bought 20 years ago will likely still be available to download and play even after the associated console from that year has been replaced twice over. Sure, you might have had to replace the computer it ran on a couple of times, but the library remains, ageless and always ready for you. Consoles can’t say that, not anywhere near as easily.

But recent times have made things worse for console gamers. Over the last couple of years game developers have decided that the standard price for games wasn’t good enough anymore. If you wanted the top tier, triple-A games (or, in the case of Ubisoft, their so-called quad-A) then you needed to pay a premium for it. Eighty bucks was their goal, and there were already some companies saying that even a full hundred wasn’t off the table. This is a steep jump when games have traditionally been priced around sixty five bucks since the days of the NES. Have development costs gone up? Sure, but the size of the gaming market has increased massively as well, and game companies are ranking in billions of dollars annually already.

(And we aren’t even going to get into microtransactions in this discussion, but that’s another way that game companies have found to leech even more money out of fans, even when they’re charging an arm and a leg for the game to begin with. It’s awful.)

The big shift, though, was in the price of the consoles themselves. Way back, consoles were priced under two hundred dollars. Nintendo worked to make sure each generation was a couple of hundred bucks, and it was a big deal when they moved the price point up to $250 for the Wii. The WiiU then moved the needle up to $300 for the base model, $350 for the deluxe, and now we have the Switch 2 set at a whopping $450. And that aligns with the prices other console makers are charging. The discless, base version PS5 is $500 while the full powered pro edition is an eye-watering $750. Microsoft meanwhile charges $400 for the bare minimum Series S edition, and their Series X costs as much as $600. All of these jumps come within the span of just a couple of generations (about a decade or so in total).

Now, sure, you could blame these price increases on a number of factors. Tariffs, for one, have reportedly made everything the tech industry uses cost more. Meanwhile, the prices for a number of necessary components, like GPUs and RAM, have skyrocketed in recent years due to bitcoin miners and AI data centers. But there was a time where console makers ate the cost of their consoles to keep the prices down so that they’d make more on licensed games and digital sales. Those days are clearly over now.

Is it any wonder, then, that console sales are down massively year over year? Reportedly sales for the Switch and Switch 2 are down ten percent in comparison to Switch sales from this time last year (when that was the only edition on the market). Sony’s sales are worse, with PS5 sales down 40% year over year, while the Xbox is down a massive 70%. The only bright spot for any console maker is the motion-controlled Nex Playground, which apparently made a massive sales jump, up to 600,000 this year from 150,000 last year, and 5,000 the year before, although those are still just a drop in the bucket in comparison to the millions of units the big three sell.

Okay, well, the big two, since actually the Playground outsold the Xbox in November. That has to be a big old black eye for Microsoft, one would think.

What is clear is that console gamers, of just about every ilk, have felt the pinch of the higher prices and are finally starting to say “no”. Sales declines like these are hard to ignore, especially in the key November season when parents buy their kids consoles for the holidays. Is it any wonder that the budget-friends, kids-focused Playground is selling in huge (comparative) numbers? The big boys have functionally priced themselves out off the market they made, going from little plastic game boxes that every family could afford to a luxury item only hardcore enthusiasts even want.

I’m not saying this is the end of Nintendo or Sony or Microsoft (okay, maybe the Xbox will die off soon enough), but it’s pretty clear that consoles are in an untenable situation. In this economy gamers have to be choosy about what they buy, and with consoles priced so high, gamers are turning elsewhere. Any decent computer can run Steam and most of us have computers in our homes now. Why bother with a console that costs even more money when you can get games on the box you already have? And when Steam is regularly running sales (something Nintendo at least is loath to do), it’s pretty clear where the value proposition lies.

Consoles are priced too high. That much is clear. If the game companies want to ensure everyone that wants to be a customer can be one then they’re going to have to bring the price of their consoles down (and maybe the prices of games, too). Until then, I think we can expect that sales are going to be lower because consumers just don’t have the kind of spending cash they once did, and that’s unlikely to change any time soon.