The ongoing situation surrounding tariffs is impacting many sectors, and the games industry is no exception.
With the additional volatility caused by mass layoffs, rising development costs, and player apathy, these tariffs on gaming consoles, GPUs, and physical media could fundamentally reshape how people interact with gaming as a whole, from manufacturing to pricing and even consumer behaviour.
The not-so-hidden cost of tariffs
These recent tariffs have caused multiple sectors to worry, especially when it comes to technology and its pricing. It is becoming hard to deny that the impact these additional charges have will not change the entire industry in the long term.
It is safe to say the introduction of tariffs will have a huge ripple effect, especially regarding accessibility to electronics. In fact, the Consumer Technology Association has estimated that tariffs could add $7 billion in extra costs for gamers buying consoles in the US alone, as physical products such as consoles and game discs are often imported into Western markets.
This increase in hardware costs is one of the main issues that will impact both consumers and publishers. And it shouldn’t be a surprise, as big industry voices have been vocal about the potential impact of tariffs for some time.
In 2019, Nintendo, Sony, and Microsoft warned that a 25% tariff increase would add at least $840 million to holiday season costs, which we’re seeing now as Sony increases the price of certain PlayStation 5 consoles in the UK, Europe and Australia.
No easy fix
Publishers have two real options when it comes to physical games: increase prices or produce fewer physical games. As we have seen with the announcement of the Nintendo Switch 2, players are already feeling betrayed by higher game prices, and this distaste extends to paywalled DLCs, making this option risky for a publisher’s reputation among fans.
Similarly, reducing physical media is more than a business move; it’s a cultural shift. While digital games have become increasingly common, recent concerns over ownership and digital delisting mean that there is increased value in having a physical copy of a game.
Ultimately, there is no right solution.
It’s equally complicated when it comes to the production of consoles and other hardware. Companies can move physical production to markets not yet impacted by tariffs, which we have already seen with Nintendo moving Switch production to Vietnam, but as we have seen, the tariffs situation is constantly changing.
Plus, this is a temporary solution and an expensive one at that. Even if companies can avoid tariffs by changing their production location, the costs associated with moving will likely still reach consumers.
Reshaping how we play
Naturally, with tariffs potentially impacting everything from prices to the way media is available, how gamers approach video games is likely to shift.
The cost of living is continuing to rise, meaning people are not in the position to spend additional money on luxuries like games or consoles. Some analysts speculate that this could result in a 57% drop in console sales – marking the worst decade for console sales in recent history.
A major issue that puts consoles at risk more than other hardware is that they are largely single-purpose devices. While they have a wide range of apps and tools that allow them to perform secondary tasks, they ultimately exist to run video games. PC and laptop hardware won’t be immune to global macroeconomic trends, but they are a more justifiable purchase as tools used for both professional and personal tasks, including providing a platform for entertainment.
The potential impact on developers could also mean that players will see a change in the type of game being made. AAA games are expensive to produce, and there is a good chance that we will see fewer premium titles entering the market. Instead, we are likely to see a more aggressive push towards microtransactions in free-to-play games and in-game advertising, as developers cater more to players able to spend.
It’s fair to say the console era, which began in a world of affordable trade and stable policies, is undergoing a significant stress test as the effects of tariffs will be felt globally. We are yet to see how tariffs will affect the industry long term, but if they continue as they are, we could see changes that alter the very nature of how we make and consume games.
Chief Technology Officer at Sandsoft
