The era of console price cuts may be over as AI-driven demand for semiconductors and memory pushes hardware costs to unprecedented levels. Sony raised the PS5 price by £90 in March, while Microsoft announced a £75 increase for Xbox Series S and X from August. The Nintendo Switch 2 will also see a global price hike in September.
AI Data Centres Fuel Memory Scarcity
According to Andy Robinson, editor-in-chief of VGC, initial price rises were driven by tariffs, but the real shock came in October when OpenAI struck a deal with Samsung and SK Hynix for a huge portion of their DRAM output. “Prices increased by almost 200%,” Robinson said, adding that Xbox reports prices have since doubled again with no expected relief.
Piers Harding-Rolls, games industry analyst at Ampere, noted that memory production is dominated by Samsung, SK Hynix, and Micron, and building new factories takes years. “Hardware companies may wait until 2028 for capacity to open up, but it’s unclear if that will stabilise prices,” he said. Lenovo’s executive director Martin Hiegl suggested memory prices might never return to previous lows.
Sales Plummet as Prices Hit All-Time Highs
The price hikes have crushed sales. Robinson said the cheapest PS5 now costs 50% more than in 2020, an unprecedented rise. In the US, hardware sales hit 30-year lows last November, with average new hardware prices reaching $439. Last month, that figure climbed to $502, while Xbox recorded its worst May ever and PS5 sales dropped 58% year-on-year.
Analysts predict the PlayStation 6 could retail at $1,000 or more, matching Valve’s Steam Machine. This breaks the tradition of subsidised consoles; Sony and Microsoft once absorbed losses on each unit, while Nintendo used cheaper components. The PS2 and Nintendo DS launched at £299 and £99 respectively.
Cloud Gaming and Extended Cycles as Potential Solutions
Microsoft now offers “buy now, pay later” plans and interest-free financing, likely to continue for next-gen consoles. Robinson suggested cloud gaming could become more attractive, especially with GTA 6 driving interest. The GTA 6 trailer garnered 475 million views in 24 hours. While no cloud streaming plans are confirmed, Take-Two might explore that market if hardware sales falter.
Hideaki Nishino, Sony Interactive Entertainment CEO, hinted at hybrid approaches like the PS Portal and Nintendo Switch, and rumours suggest PS6 might be delayed until 2029. Chris Dring of Game Business questioned the need for a PS6, noting diminishing graphical returns and a lack of major first-party games like Naughty Dog’s next title.
