Xbox Prices Rise; Analysts Predict Similar Hikes for PlayStation and Others

In recent weeks, the gaming industry has seen significant price adjustments across major console manufacturers. Microsoft announced an increase in the prices of all its Xbox Series consoles and many accessories worldwide, with new games set to cost $80 during the upcoming holiday season. Just prior to this, PlayStation had already raised console prices in select regions, and Nintendo had increased the cost of its Switch 2 accessories and revealed its first $80 game.

These tariff-induced price hikes are part of a broader trend that's impacting the gaming market. To understand these changes, I consulted a range of industry analysts to explore the reasons behind the price increases, the future cost of gaming, and the sustainability of the industry amidst these shifts. The consensus is clear: the video game industry, including major platforms like Xbox, remains robust, but gamers should brace for higher costs.

The primary driver behind these price hikes, according to analysts, is tariffs. With Xbox consoles manufactured in Asia, the impact of U.S. tariffs is significant. Dr. Serkan Toto of Kantan Games, Inc., remarked, "Microsoft's consoles are made in Asia, so seriously: who in this world can now be surprised about these price hikes?" He highlighted that the timing of the announcement was strategic, leveraging the current economic climate to minimize backlash.

Joost van Dreunen of NYU Stern and author of the SuperJoost Playlist newsletter echoed this sentiment, explaining Microsoft's approach as "ripping off the Band-Aid all at once rather than death by a thousand cuts." He views the synchronized global price adjustment as a strategic recalibration to tariff pressures, aiming to consolidate consumer reaction and maintain competitive pricing.

Other analysts, including Manu Rosier from Newzoo and Rhys Elliott from Alinea Analytics, also pointed to tariffs as a key factor, noting the timing allowed Xbox's partners and consumers to adjust expectations. Elliott added that while digital software remains unaffected by tariffs, the price increase on games helps offset the higher hardware manufacturing costs.

Beyond tariffs, macroeconomic factors such as persistent inflation and supply chain costs contribute to the price increases, according to Piers Harding-Rolls of Ampere Analytics. He also noted that the launch prices of competitors like Switch 2 and Sony's recent hikes facilitated Microsoft's move. Harding-Rolls observed that the U.S. saw the heaviest increases, likely due to tariff policies, while price adjustments in the EU and UK were more moderate.

Blinking Third

The question on everyone's mind is whether Sony will follow suit with its own price increases. Analysts largely agree that it's likely. Rhys Elliott is particularly confident, predicting that PlayStation will raise software prices as well, given the market's willingness to pay above $70 for early access to games.

Elliott also anticipates more varied pricing strategies, with games at different price points from $50 to $80, allowing for longer sales tails and more copies sold at lower prices. Interestingly, after our discussions, EA announced it would not raise prices on its games... for now.

Daniel Ahmad of Niko Partners noted that Sony has already increased console prices in certain regions, but the U.S. might be next. James McWhirter from Omdia highlighted Sony's vulnerability to U.S. tariffs due to its manufacturing in China, suggesting that Microsoft's move could prompt Sony to adjust PS5 prices in the U.S.

Mat Piscatella from Circana was cautious about predicting Sony's actions but referenced the Entertainment Software Association's views on tariffs, suggesting that rising prices are a symptom of broader economic issues. Meanwhile, Nintendo hinted at potential future adjustments if tariff policies change.

Video Games Are Fine... But Are We?

With Xbox's price increases and the anticipation of similar moves by Sony, there's concern about the impact on console sales. However, analysts believe that the gaming industry will remain resilient. Microsoft's 'This Is An Xbox' campaign indicates a shift towards a service-oriented platform, which could mitigate the impact of reduced console sales.

Piers Harding-Rolls noted that while Xbox hardware sales are declining, a boost is expected in Q2 2026 with the launch of GTA 6. Rhys Elliott emphasized that gaming is price-inelastic, with early adopters likely to continue purchasing despite higher prices. He also pointed out the significant revenue from in-app purchases, which often exceeds that from premium game sales.

Manu Rosier suggested that while overall spending may not decline, consumers might shift their expenditures towards subscriptions, discounted bundles, and live-service games. Harding-Rolls added that the U.S. market, being the largest for consoles, might feel more impact from these changes.

Daniel Ahmad predicted growth in Asian and MENA markets, particularly in countries like India, Thailand, and China. James McWhirter noted that while full game pricing hasn't traditionally followed inflation, the quick move by Xbox to $80 games after Nintendo suggests a trend that other publishers might follow.

Mat Piscatella, while less optimistic, acknowledged the growing uncertainty in the market. He expects consumers to shift towards free-to-play games and rely more on existing devices as everyday spending categories like food and gas rise, leaving less money for gaming.

In conclusion, the gaming industry is adapting to these economic pressures through strategic pricing and a shift towards service-based models. While gamers may face higher costs, the industry's resilience suggests that gaming will continue to thrive, albeit with a changing landscape.