No Console Inflation: How the Thirst for AI Chips Is Driving Game Console Prices | games

IIt has been a universally acknowledged fact that an old console with good revenue should be in line for a price cut. Those days may be over. In March, Sony announced a £90 price increase for the PS5, while Microsoft informed gamers last month that it would charge at least an additional £75 on Xbox Series S and All three were first released in 2020. The Switch 2 will also be more expensive globally from September.

The main reason, of course, is artificial intelligence, or more specifically the growing demand for semiconductors and memory to power data centers. Console manufacturers could get these components cheaply, but now demand is high and manufacturers can’t keep up, so deals are being made. “Initially, the wave of price increases seen in gaming was driven by the tariffs imposed by Donald Trump early last year,” says Andy Robinson, editor-in-chief of gaming news site VGC. “Then, in October, OpenAI announced a deal with Samsung and [Korean chip manufacturer] SK Hynix is ​​taking a significant portion of its DRAM production for data centers, causing prices to increase by nearly 200%. According to Xbox, these prices have since doubled again, and are not expected to go back down anytime soon.

The problem is exacerbated by the narrow scope of the work. “The memory market is controlled by the big three – Samsung, SK Hynix and Micron – and building factory capacity will take years to achieve,” says Piers Harding-Rolls, games industry analyst at Ampere. “It appears that hardware companies will wait until the beginning of 2028 to open up factory capacity, but it is not clear whether this will actually stabilize or lower memory prices.” In fact, Lenovo CEO Martin Hagel recently pointed out that memory prices may never return to their previous lows.

Naturally, higher prices affect sales. “Normally, at this point in the generation, consoles can be had at deep discounts, but the cheapest PS5 now costs 50% more than it did in 2020 – which is real, unprecedented territory,” Robinson says. “In the US, there is evidence that the market has had a negative reaction. Last November, typically the biggest month of the year for the industry, hardware sales reached their lowest levels in 30 years. Notably, the average price of new hardware reached an all-time high of $439. Last month, that number rose to $502. Xbox posted its worst May ever for hardware sales, while the PS5 fell 58% year over year.”

Things aren’t looking any better for the next generation of consoles. Analysts expect the PlayStation 6 could retail for at least US$1,000 — the same price as Valve’s new console-like PC, the Steam Machine. It feels like a breach of the unspoken promise of cheap hardware. For many years, Sony and Microsoft took a loss on each console to keep prices low, and Nintendo used cheaper components to cut costs. Two of the best-selling consoles of all time – the PlayStation 2 and Nintendo DS – were famous for their affordable and accessible launch prices: £299 and £99 respectively.

The prospect of paying a four-figure sum for a gaming rig will be painful for many potential buyers. Microsoft is offering “buy now, pay later” plans and interest-free financing on Xbox models, which will likely be offered on next-gen consoles as well. But hardware may not matter in the future, Robinson says, as cloud gaming could become attractive to consumers and creators alike. “Especially when GTA 6 is about to attract an incredible amount of gaming interest from those who may not have modern consoles.” GTA V has sold 230 million copies since its launch in 2013; Only a few of those fans will migrate to current hardware. The GTA 6 trailer attracted 475 million views in the first 24 hours. Although there are no plans to allow the latest version to be played via the cloud, if consumers don’t buy the latest devices, could Take-Two turn to the potentially lucrative streaming market?

Xbox and PlayStation run cloud gaming services, but they rely heavily on excellent broadband connectivity, and resolution can be limited for many users. Prolonged console cycles and expanded offerings may be the answer. In a recent interview, Hideaki Nishino, President and CEO of Sony Interactive Entertainment, talked about the portable remote play device, PS Portal, and how the hybrid approach of consoles like the Nintendo Switch can give consumers more gaming options. There are rumors that Sony may delay the launch of the PS6 until 2029, perhaps in the hope that manufacturing costs will come down, while also giving console owners some financial breathing room.

“We need to rethink consoles,” says Chris Dring, editor-in-chief of Game Business. “The difference between each new generation was getting smaller visually. We were at a point, as I put it.” [former Sony boss] Shawn Layden: “We see graphic differences that only dogs can hear.” Why do we need PS6? We didn’t even have a Naughty Dog game yet. I think this is a question that Sony is looking to answer.

What are you playing?

Released on the Wii U console in 2014, Scram Kitty was an exciting and innovative 2D puzzle game. You play as a kind of robotic skateboard on rails, navigating the walls of a massive space station to rescue kidnapped cats. Now, Super Scram Kitty is updating the game for Switch, and it’s just as powerful, imaginative, and unique as ever. Jumping, grinding, bouncing between rooftops, grabbing gold coins and avoiding enemies is very exciting, and somehow combines elements of Tony Hawk’s Pro Skater, Gravitar and Sonic the Hedgehog. It feels like a long-lost SNES or Mega Drive title has been lovingly restored.

Available on: Nintendo Switch
Estimated playing time: 10 hours plus

What are you reading?

• The dangers of digital content were once again highlighted this week. amazing 550 Movies are To be erased From PlayStation 5 video libraries even if console owners have purchased content. According to reports, this is due to the expiration of the licensing agreement with distributor Studio Canal. It comes at a time of growing tension over digital content in the gaming industry, which has led to the formation of the Stop Killing Games lobby group, and now plans to take legal action against publishers for ending support for older game titles.

• Ironically, Sony Interactive Entertainment CEO Hideaki Nishino told reporters in Japan that he wanted to… Revitalizing the live service games sector, Which is dominated by titles like Fortnite, Roblox, and Minecraft. Two years ago, the company canceled its multi-million-dollar hero shooter Concorde after just two weeks. At least customers got a refund then.

• What can video games tell us about? Climate migration? The conversation includes an interesting article looking at a range of titles that explore this issue, showing how climate change is forcing people to leave their homes and undertake arduous cross-continental journeys.

What to click on

Block of questions

Great question from Jimmy this week:

“I just took my son to see Supergirl, and naturally, he wants to play the video game. Is there one?”

Unfortunately, there is no video game tie-in to Supergirl (read Peter Bradshaw’s review here). However, actor Millie Alcock’s style has just been added to the character fortniteWith her boyfriend Crypto. They are available for download in the Item Shop in a range of clothing styles, and with numerous accessories and poses. The Supergirl figure alone costs 1,400 V-Bucks (about £9), and the bundle costs 3,400 V-Bucks (about £30). Otherwise, Supergirl also stars in an excellent film Lego Batman 2 and lego batman 3And the fighting game Injustice 2Her role is played by veteran voice actress Laura Bailey. It’s quite a violent game (think Mortal Kombat with superheroes), so it may not be suitable for younger children. And if he’s tempted to look for Superman toys instead, be careful – they’re notoriously bad. I just love The Death and Return of Superman on the Super Nintendo or as a single Superman returns on Xbox 360. However, it’s also present in Injustice 2, if you want to set up your own Krypton family grudge match.

If you have a question about the Question Pack – or anything else to say about the newsletter – hit reply or email us at pushbuttons@theguardian.com.