Microsoft Hikes Xbox Prices; Analysts Predict Similar Moves by PlayStation

In recent weeks, the gaming industry has seen a significant shift as major console manufacturers have announced price increases across their products. Microsoft raised the prices of all its Xbox Series consoles and many accessories globally, while also confirming that some new games would be priced at $80 this holiday season. Just a week earlier, PlayStation similarly raised prices on consoles in some regions, and shortly before that, Nintendo bumped its Switch 2 accessory prices and announced its own first $80 game.

These tariff-induced price hikes have arrived, creating a whirlwind of changes that can be overwhelming to follow. To better understand the situation following Xbox's announcement, I consulted several industry analysts to discuss the reasons behind these increases, the future cost of gaming, and the potential impact on the industry. The consensus is clear: video games, consoles, and major platforms are not going anywhere, but gamers should brace themselves for higher costs across the board.

Why is it all so dang expensive?

The primary reason cited by analysts for these price hikes is tariffs. Dr. Serkan Toto, CEO of Kantan Games, Inc., emphasized that Microsoft's consoles, manufactured in Asia, are directly affected by these tariffs. "Microsoft's consoles are made in Asia, so seriously: who in this world can now be surprised about these price hikes?" Toto stated. He suggested that Microsoft timed the announcement cleverly, using the current economic climate to justify global price increases without much backlash.

Joost van Dreunen, NYU Stern professor and author of the SuperJoost Playlist newsletter, echoed Toto's sentiments, explaining that Microsoft's decision to raise all prices simultaneously was strategic. "Microsoft is ripping off the Band-Aid all at once rather than death by a thousand cuts," van Dreunen said. He believes this approach helps consolidate consumer reactions and maintain competitive pricing in a market increasingly focused on services.

Other analysts, like Manu Rosier from Newzoo and Rhys Elliott from Alinea Analytics, also pointed to tariffs as a significant factor. Rosier noted the timing of the increase well ahead of the holiday season allowed for adjustments by partners and consumers. Elliott added that while digital software isn't directly affected by tariffs, the price increase on games helps offset higher hardware manufacturing costs due to tariffs.

Piers Harding-Rolls from Ampere Analytics highlighted additional factors contributing to the price hikes, such as persistent inflation and rising supply chain costs. He also mentioned that the launch prices of competitors' consoles made it easier for Microsoft to adjust its prices. "The macroeconomic backdrop is also a contributing factor, with higher-than-expected persistent inflation and increases in supply chain costs," Harding-Rolls explained.

Blinking Third

The big question on everyone's mind is whether Sony will follow suit with price increases on PlayStation hardware, accessories, and games. Most analysts believe this is likely. Rhys Elliott was particularly confident, predicting that PlayStation would also increase software prices. "This is just the beginning," he said, noting that with Nintendo and Xbox setting a precedent, other publishers would follow suit.

Daniel Ahmad from Niko Partners pointed out that Sony had already raised console prices in some regions, and the U.S. might be next. "Sony has raised the price of its console multiple times outside the U.S.," he said, suggesting that Sony might not want to risk raising prices in the crucial U.S. market but might feel compelled to do so.

James McWhirter from Omdia noted that PS5 hardware, manufactured in China, is vulnerable to U.S. tariffs. He also mentioned that console sales peak in Q4, giving manufacturers time to rely on existing inventories. "With Microsoft having blinked first with price readjustments this week, it now opens the door for Sony to follow with PS5," McWhirter said.

Mat Piscatella from Circana was cautious about making predictions but referenced what the Entertainment Software Association had to say about the impact of tariffs on video game prices, suggesting that rising prices are a symptom of broader economic issues. Nintendo, meanwhile, indicated it may consider "what kind of price adjustments would be appropriate" if tariffs continue to change.

Video Games Are Fine... But Are We?

Following Xbox's price increases and the anticipation that Sony may do the same, there's concern about the potential negative impact on console manufacturers. However, analysts are not overly worried. They point to Microsoft's 'This Is An Xbox' campaign as evidence that Xbox has been preparing for this shift. Xbox's focus on becoming a service platform rather than just a hardware seller is seen as a strategic move to mitigate the impact of declining hardware sales.

Piers Harding-Rolls noted that while Xbox hardware sales revenue may continue to decline, the launch of GTA 6 in Q2 2026 could provide a boost. "Xbox hardware sales revenue has been in decline, and I see that continuing, moderated to an extent by the higher price points," he said.

Analysts like Rhys Elliott and Manu Rosier believe that overall gaming spending will not significantly decrease but may shift. Elliott explained that games are price-inelastic, meaning consumers will continue to spend even during tough economic times. "The rising prices won’t necessarily reduce spending. Even in the toughest of economic times, games are incredibly price-inelastic," he said.

Rosier added that consumers might become more selective, spending more on subscriptions and discounted bundles rather than individual full-priced titles. "Not necessarily a decline, but we may see shifts in where and how money is spent," he said.

Harding-Rolls noted that the U.S. might feel the impact more due to being the largest console market and the focus of the tariffs. Daniel Ahmad suggested that growth in Asian and MENA markets would continue despite global economic factors. James McWhirter pointed out that while full game prices have not traditionally followed inflation, the quick move to $80 games by Xbox and Nintendo suggests others will follow.

Mat Piscatella was less optimistic, highlighting the uncertainty in the market. "My expectation for the remainder of the trade war is that consumers will shift even more towards free-to-play and other more easily accessible forms of gaming," he said. He also predicted a possible decline in gaming spending in the U.S. due to rising costs in other essential categories.

Overall, the consensus among analysts is that while prices are rising, the gaming industry will adapt. Consumers may shift their spending habits, but the demand for gaming remains strong, ensuring the industry's resilience despite economic challenges.