Why Are Video Game Consoles So Expensive These Days (And Games Historically Cheap)?
Gaming has never been more expensive. We're here to investigate why, and help you play more while spending less. Welcome to GameSpot Cheap Week.
Like seemingly everything else in life these days--from gas and groceries to coffee and ground beef--video games and the systems they're played on are getting more expensive. There are numerous reasons for this, and the overall picture for the near future is a bleak one.
"A few separate pressures all landed at once, and it's the pile-up, not any single one, that's made gaming feel suddenly expensive," Rhys Elliott of Alinea Analytics told GameSpot.
As part of GameSpot's Cheap Week, we're running through the history and context of how we got here, the facts on the ground, and what comes next.
What's going on?
There are numerous factors at play that have contributed to the situation the industry now finds itself in. US President Donald Trump's controversial tariff plan, announced in April 2025 (on the very same day as the official Switch 2 reveal, to boot), is one reason. In short, the Trump administration's actions led to higher costs borne by console manufacturers. In the environment of line-must-always-go-up capitalism, those increased costs were passed on to the consumer in the form of higher prices at retail. All the while, companies like Microsoft, Sony, and Nintendo raked in gigantic profits, paying executives massive sums along the way.
The tariffs were deemed illegal in 2026 by the United States Supreme Court. Subsequently, companies like Nintendo and others were able to seek refunds, but no one should expect the companies to return any recouped money to consumers who paid higher prices. Nintendo recently said in court that it bears no legal obligation to pass along any refund (plus interest) that it gets back from the government to people who paid more. Making its case, Nintendo's legal team said people who paid higher prices due to tariffs "received exactly what they bargained and paid for." Microsoft and Sony have not commented on plans for any tariff refunds it may receive, though Sony touted the positive impact in its financial results. Many people are dismayed by these results, seeing it as a situation where companies charged people more to cover the cost of tariffs, got the money back, and then kept it. Nintendo may have a legal case to keep any refunded tariff money, but that doesn't mean regular people who paid the Trumped-up prices are going to be happy about it.
Another factor driving up prices for game hardware is the AI-fueled demand for RAM, storage, and processors, which has led to a nasty and dire situation known as "RAMageddon." Many companies big and small are ramping up investment in AI and data centers, betting, speculatively in many cases, on a future where AI is a major economic driver. These investments, including AI data centers, require vast amounts of memory and GPUs--cutting into the same limited supply needed for consoles and gaming PCs. And thus, the squeeze.
Xbox CEO Asha Sharma said earlier this year that the company is experiencing a "hardware component crisis," and many have pointed out the irony being that Xbox's parent company, Microsoft, is one of the biggest players in the AI race and has contributed to the crisis Xbox finds itself in. Putting that aside, Sharma said that when she joined Xbox in February 2026, the price Microsoft paid for console storage components was over 2x as high as the company paid in Fall 2025. Since then, the costs doubled again, she said. For Holiday 2026, Sharma said Microsoft expects "another significant increase," taking us over 5x the prices that Microsoft paid just two years prior.
"Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade," Sharma said. "We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix."
"A structural problem with the model itself"
Also at play here is what Elliott called a "structural problem with the model itself" for video game consoles. Historically, a company like Microsoft or Sony would sell their consoles at a loss and then make up the difference with more margin-rich products like games and accessories.
"That model only works if you can fabricate the box cheaply enough to subsidize it. When components cost what they do now, subsidizing hardware is impossible, so the loss-leader console ain’t happening viably. The whole economic engine of the console business is seizing up," he said.
It wasn't always like this
Historically, video game consoles got cheaper over time. Enthusiasts would pay full price at launch, but after a period of time, companies like Sony, Nintendo, and Microsoft would be able to produce consoles at a lower cost, due to manufacturing efficiencies and other cost-reduction efforts, in turn passing those savings along to the consumer in the form of price cuts. This was a regular practice for The Big Three, and it held true for years. People could reliably expect a PlayStation, Xbox, or Nintendo console to be available for $50 or $100 less just a couple years after launch. In turn, at this stage in a particular console's lifecycle, a price drop would help drive adoption further to an even wider audience with the overall aim of funneling people into where the real money is made: games and accessories (and, in the past two decades, services). That formula no longer holds true.
After the latest PS5 price hike went into effect this past April, the same digital edition of the PS5 that launched at $400 in 2020 is now $600--a whopping $200 price increase. Xbox Series X|S consoles, meanwhile, have gone up by more than $200. The Switch 2 is getting a price hike to $500 this September. The original Switch, meanwhile, launched in 2017 at $300 and now costs $340--and that's for a nine-year-old console. Valve's Steam Deck has gone up, too, launching at $400 in 2022 and now going for $790.
https://www.youtube.com/watch?v=4FatSqS3VYYMistaking a bubble for a baseline
Elliott told GameSpot that the "pandemic boom" for video games, when people were stuck inside and turned to gaming, is partly to blame. He said the executives at gaming companies made the wrong bets during this time. "The industry foolishly mistook a bubble for a new baseline," he said. "Developers staffed up and increased production budgets, [and] companies, fueled in part by historically low interest rates, went on acquisition sprees. "A lot of folks thought the number would keep going up," Elliott said.
Then reality set in. Interest rates began climbing again, cost-of-living concerns took off, and all of the growth in gaming compiled during the pandemic "went to shit," Elliott said.
"So you've got an industry with a bloated cost base suddenly under pressure to make its money back. Sadly, the two go-to levers for the powers that be are charging more and cutting staff. We've seen a brutal amount of both," he said.
When might things get better?
Experts generally agree that AI is a bubble that is set to burst, with a select few "winners" emerging but many more falling by the wayside, just like the dot-com bubble. No one knows when or if the general market conditions surrounding memory and component availability could improve, but the consensus is that it won't be anytime soon. South Korean semiconductor company SK Hynix recently said 2027 will be the "worst year in the industry's history from the supply perspective."
The company's chief executive made these comments on the very same day that SK Hynix started trading in the American stock market, and the comments were perceived by many to be an effort to juice the SK Hynix stock. Whatever the case, analysts and experts have consensus around the idea that the memory and component crisis is not ending anytime soon.
“Would I be surprised to see further price increases, potential shortages, or other complications? Not in the slightest,” Circana's Mat Piscatella told The New York Times.
Elliott expects things to get worse for gaming hardware in the near term. "The component squeeze won’t ease until at least 2029, or when the AI bubble finally pops, so hardware stays expensive," he said.
The impact on PS6 and Project Helix
Microsoft has announced its next-generation platform, Project Helix, and Sony has hinted at plans for a future console, which for the purposes of this story we will call the PlayStation 6.
Experts believe the AI-fueled component and memory crisis has led Sony to rethink its plans and possibly delay the PlayStation 6. Sharma, the CEO of Xbox, said this year that gaming consoles have become too expensive and that "radically different" plans are needed.
Xbox chief strategy officer Matthew Ball, meanwhile, said, “The crisis is not yet getting better,” acknowledging that he may have underestimated how bad things could get. “The window in which we and others are gonna have to work through is getting longer, and that is going to constrain the category."
“We are working very hard to rethink everything that we can about Helix," he added.
For the PS6, Elliott said it would be "madness" for Sony to launch a new console into this market, given what is going on. He also pointed out that Sony's announcement that it will stop supporting physical game discs in January 2028 is a tell that the PS6 is not launching before then.
Sony is killing off discs first because people are increasingly shifting their spending to digital--this has been evident for years, at Sony and basically every other major game company in the world. Sony might still sell many millions of physical game discs annually, and people are understandably upset and worried about game-preservation and ownership generally. But the math is the math, and Sony, like any other corporation, is in the business of making money. Industry analysts have also suggested that Sony is killing off discs in part because it foresees a future where game hardware, like the PS6, will be a high-end, premium product with a price point to match. If Sony ends up selling fewer systems as a result, it will protect some profit by exclusively selling digital games, where it keeps nearly 100% of the profit from first-party games and 30% from third-party games sold on the PlayStation Store. When discs go away, the secondhand market will die, too, further enriching Sony in the process.
Knock-on effects
Data already shows that gaming is becoming increasingly a hobby for richer households, and Elliott said he foresees a future where this only drifts further. Whereas game consoles were at one point mass-market devices, they are swiftly becoming items for the "premium enthusiast." This could lead to a split in the gaming audience where casual and lower-income players simply opt out of buying a PS6, Helix, or Switch 3, and instead stick with whatever hardware they already have, or spend more time and money on PC, mobile, and free-to-play games.
A second knock-on effect is that platform holders and publishers will try to "squeeze more from a smaller premium base," with an aim of focusing more on ARPU--or average revenue per user. This likely won't result in the kind of consumer-friendly future many hope to see. As mentioned before, the secondhand market for buying games more cheaply could evaporate, advertising-based gaming programs and in-game ads could proliferate, and Buy Now Pay Later services could only creep further into what Elliott said "used to be a clean, premium experience." Already, this is happening, as Microsoft touted Buy Now Pay Later in a blog post announcing the latest round of Xbox price hikes.
"I'm not thrilled about ads and payment plans in my living room, but given the economics, that's the reality," Elliott said.
What about the price of games?
Some predicted it would be EA or Ubisoft, but it was Nintendo, of all companies, that caused a stir in 2025 when it announced that Mario Kart World would be priced at $80. Nintendo's justification for upping the price from the going market rate of $70 for a top-line new release was that Mario Kart World simply offered that much value. Multiple more Switch 2 games, like Elden Ring and Fire Emblem: Fortune's Weave, will cost $80 as well on Switch 2. The biggest release of 2026, Rockstar's GTA 6, will also cost $80 upon release in November, and you won't be able to buy the game on a disc.
Elliott said the "AAA arms race did its own damage" as it relates to pricing for big new games. The biggest games today can cost "hundreds of millions of dollars" to produce, and with so much capital spent, companies want to see a significant return on investment. In turn, this has led to risk-averse decision making, along with developers pumping out remakes and sequels that have a higher likelihood of turning a profit. This has contributed to an environment where companies charge $80 for new games, fill games with what some call gross microtransactions, and stack on more add-on content than the cost of a game itself, as was the case recently with the Black Flag remake.
At the same time, big new video games are cheaper than they've ever been, at least if you view things through a certain economic lens. Take-Two boss Strauss Zelnick said major new releases have actually come down in price over the years when you consider how inflation has affected pretty much everything else you buy these days. The $60 in 2013 dollars that GTA 5 cost at launch is now more than $85 in 2026 dollars, for example. Nintendo's iconic Super Mario 64 launched at $60 back in 1997, and that's about $125 today.
The world has changed a lot since then. If people's pay matched or exceeded inflation rates, increasing costs might be more palatable. Economic data does not paint a clear picture on whether or not Americans' wages have kept up with inflation. Beyond that, historical data is just that--historical. People are living in the here and now, with whatever money they have, and that money is simply not going as far as it used to, creating the cost-of-living crisis we are in today.
Whatever the case, people like former PlayStation executive Shawn Layden have said for years that companies refusing to raise prices was actually detrimental and has caused numerous systemic problems, contributing to the situation the industry finds itself in. Layden said the price of new games ought to have gone up $10 for each new console generation, and when that didn't happen, companies made efforts to extract more money from people with things like microtransactions, battle passes, and subscriptions.
“I think it’s because everyone’s afraid,” he told GI.biz. “No one wants to be the first one to raise the price, because you’re afraid to lose traffic. So what you do is you just end up eating into your operating income, your profit margin. There were more sports cars in the parking lot in the PS1 era than there were in the PS4 era, because if you’re selling 20 million units at $60 for something that only cost you $10 million to make, that’s different than selling 20 million units at $60 for something that cost you $160 million to make.”
On the flip side, if more companies raise prices to $80 like Rockstar is doing with GTA 6, that doesn't mean developers will stop hawking things like microtransactions, DLC, and battle passes. Instead, these efforts to increase ARPU will likely continue in concert with price hikes because why would a company cut off, or scale back, a revenue stream?
Gaming is not dying
Buying the latest consoles might be more expensive than ever, but gaming is not dying.
"Far from it," Elliott said.
Gaming, as an overall market, is becoming broader and, for many people, cheaper than ever thanks to games bundled into subscription services, free games, and inexpensive games. Meccha Chamelon, for example, was recently released for $6, and it became June 2026's No. 2 overall best-selling game in the US measured by revenue. It beat out titles like 007 First Light, Star Fox, Lego Batman: Legacy of the Dark Knight, and MLB The Show 26.
"The premium tier is getting pricier and narrower. Gaming as a whole is getting broader and, for most people, cheaper. Both things are true," Elliot said.
"Still, what a bloody mess."