Over the years, the video game industry has accustomed us to a model in which hardware prices fall or remain stable over time. However, the ongoing revolution in artificial intelligence has turned this order upside down. Giants such as Nintendo and Sony are facing a brutal new reality: the scramble for the same components that AI data centres need is making gaming a luxury.
The main culprit is memory chips. Their prices doubled in the first quarter alone, and forecasts for the current period indicate a further increase of more than 60 per cent. The reason is simple – major semiconductor manufacturers such as Samsung and SK Hynix are redirecting capacity to meet the insatiable appetite of the AI sector. Although these companies are investing billions in new production lines, we will have to wait at least a year for a real increase in supply.
For Nintendo, a company traditionally avoiding drastic increases, the situation has become untenable. Rising component costs and customs duties are estimated to burden the Japanese manufacturer’s budget to the tune of $638 million in the current financial year. This has forced management to take the difficult decision to raise the price of the upcoming Switch 2. The device will debut in the US market with a price $50 higher, reaching a ceiling of $499.99.
Nintendo’s president, Shuntaro Furukawa, outright admitted that the company was no longer able to take on these costs without hitting profitability. Sony followed a similar path, raising the price of the standard PlayStation 5 in the US to nearly $650.
It’s a risky game, especially for Nintendo. While Sony fans often show more resilience to price changes, the Super Mario user base is largely made up of Sunday gamers and families for whom an extra few hundred zloty may be an insurmountable barrier. However, market analysts, including experts from HSBC, leave no illusions: waiting for the situation to improve is not a viable option. The cost pressures resulting from the AI boom are not going to let up any time soon, and players – willingly or unwillingly – have to finance this technological revolution from their own pockets.
