Microsoft recently increased prices for its Xbox Series consoles and accessories worldwide, confirming that select new games will cost $80 this holiday season. Just days prior, PlayStation raised console prices in certain regions, while Nintendo increased Switch 2 accessory prices and announced its first $80 game.

Tariff-driven price increases have begun, and tracking the rapid cost surges across the gaming industry can be overwhelming. To understand the situation following Xbox’s announcement, I consulted analysts to explore the reasons behind these hikes, the future cost of gaming, and whether the industry or Xbox faces any existential risks. The reassuring news is that video games, consoles, and major platforms remain secure.

However, the downside is clear: gamers will face significantly higher costs for games and related products.

Why Are Costs Skyrocketing?

My first question to analysts was straightforward: why now, and why so steep? The answers were equally direct: tariffs. Rising development and production costs play a role, but tariffs—or the anticipation of them under U.S. President Donald Trump’s fluctuating policies—are the primary driver.

“Microsoft's consoles are manufactured in Asia, so these price hikes are hardly surprising,” said Dr. Serkan Toto, CEO of Kantan Games, Inc. He noted that the timing, amid U.S. tariff uncertainty, allowed Microsoft to implement global increases with reduced backlash. “It was a smart move to raise prices all at once, avoiding prolonged fan frustration across different regions.”

Joost van Dreunen, NYU Stern professor and author of the SuperJoost Playlist newsletter, echoed Toto’s view on Microsoft’s strategy of implementing all price hikes simultaneously. “Microsoft is tackling the issue head-on rather than dragging it out. This global price adjustment responds to tariff pressures, consolidating consumer reactions into one news cycle while maintaining competitive pricing in a market increasingly focused on services, where hardware is just the starting point.”

Other analysts also highlighted tariffs as a major factor. Manu Rosier of Newzoo noted that announcing price hikes well before the holiday season allows Xbox’s partners and consumers time to adjust. Rhys Elliott of Alinea Analytics explained that while digital games avoid tariff impacts, raising game prices helps offset higher hardware production costs. “When one area of the business gets pricier, you balance it elsewhere. That’s what’s happening here.”

Piers Harding-Rolls of Ampere Analytics added that non-tariff factors, like persistent inflation and rising supply chain costs, also contributed to Xbox’s inevitable price adjustments.

“Macroeconomic conditions, including higher-than-expected inflation and supply chain cost increases, played a role. Sony’s recent price hike and the Switch 2 launch price gave Microsoft room to act. Waiting until after their earnings report was strategic. Even with a 27% U.S. price increase, the Xbox Series S remains $70 cheaper than the Switch 2, providing ample pricing flexibility. The U.S. sees the steepest percentage increases due to tariffs, while EU and UK adjustments are more moderate, targeting lower-end consoles.”

Will Sony Follow Suit?

The bigger question is whether Sony will raise PlayStation hardware, accessory, and game prices. Most analysts believe it’s likely, with Elliott particularly confident about $80 games becoming standard.

“This is just the start,” Elliott said. “With Nintendo and Xbox raising software prices, publishers—first- and third-party, across PC and consoles—will likely follow. The market supports it, as millions pay $100 for early access to certain titles.”

Elliott predicted more varied pricing, with games launching at $50, $60, $70, or $80, allowing lower-priced titles to attract more buyers. (Notably, EA recently stated it would not raise game prices for now.)

“Our data shows gamers often buy when Steam games drop below $50,” Elliott continued. “I expect $80 launch prices to maximize early sales among dedicated fans, with prices dropping over time for longer-term sales. This trend will likely shape publisher strategies moving forward.”

Daniel Ahmad of Niko Partners noted that Sony has already raised console prices outside the U.S., with the U.S. potentially next.

“Sony has increased console prices multiple times globally but hesitates in the U.S. due to its market significance. Still, we wouldn’t be surprised to see PS5 price hikes in the U.S.”

James McWhirter of Omdia added, “PS5 production in China exposes Sony to U.S. tariff risks. Historically, Q4 accounts for up to half of console sales, giving Sony and Microsoft time to use existing inventories. In 2019, consoles were exempt from China tariffs until August.”

“With Microsoft acting first, Sony may follow with PS5 adjustments, though the U.S. market’s importance makes this a tough call, especially after the PS5 Digital’s $50 increase in 2023.”

Mat Piscatella of Circana avoided firm predictions but referenced the Entertainment Software Association’s comments on tariffs driving price increases, calling them “a symptom, not the cause.”

Nintendo also indicated it might consider “appropriate price adjustments” if tariffs persist.

Gaming’s Future Amid Rising Costs

With Xbox’s price hikes and speculation about Sony following, some worry console makers could face backlash if prices become unaffordable. Analysts, however, believe the industry is resilient. Microsoft’s 'This Is An Xbox' campaign signals a shift toward services over hardware reliance, especially as Xbox sales lag competitors. The upcoming GTA 6 launch could also boost the market.

“Xbox hardware revenue is declining, and higher prices may temper this further, but GTA 6’s 2026 launch should help,” said Harding-Rolls. “Last quarter, Microsoft’s gaming hardware sales dropped 6%, with further declines expected. GTA 6’s delay likely impacts 2025 more than price hikes.”

Analysts generally agree gaming spending won’t collapse but may shift. Elliott noted, “Games are price-inelastic, even in tough economies. Early adopters will pay, and PlayStation and Nintendo sales remain strong despite higher prices. In-app purchases now outpace premium game sales.”

Rosier added, “Spending may not decline but shift toward subscriptions, discounted bundles, or live-service games. Xbox’s pricing, and similar moves, could accelerate focus on services over standalone products.”

Harding-Rolls noted the U.S., the largest console market, may feel tariff impacts most, while Ahmad predicted growth in Asian and MENA markets like India and China. McWhirter suggested that $80 games, following Xbox and Nintendo’s lead, could become common, with publishers adding value through DLC and bundling.

“We don’t expect sales volumes to drop, especially with 2025’s strong game lineup,” McWhirter said. “Nintendo may reintroduce Switch Online Game Vouchers at a higher price to support $80 games.”

Piscatella was less optimistic, highlighting uncertainty. “As tariffs continue, gamers may lean toward free-to-play titles like Fortnite or existing devices. With rising costs for essentials like food and gas, gaming budgets could shrink. My earlier +4.8% growth forecast now seems overly optimistic, with a potential high single-digit or double-digit decline possible.”