The future of game consoles is looking bleak

It’s been a real good news / bad news week for Nintendo. Out of nowhere on Wednesday, the company announced a lush remake of Star Fox 64, jolting the dormant franchise to life and helping to fill out a relatively sparse lineup for the Switch 2 for the rest of the year. But then on Friday, Nintendo announced news that had seemed inevitable, but is nonetheless significant: the Switch 2 is getting a price hike and will soon cost $50 more. Nintendo was the last holdout in a console space that has been ravaged by rising costs thanks to a combination of tariffs and the global memory shortage. And with the Switch 2 getting more expensive, console gaming is continuing its slow and steady march toward becoming a niche, luxury good.

Price hikes have become common for gadgets, and consoles are perhaps the most visible example. Historically these devices have become cheaper over time, but now the opposite is true. Microsoft raised the prices of the Xbox and its various accessories last spring, while the cost of a PS5 has risen multiple times over the last year. Even budget devices like the Nex Playground now cost more. What makes the Nintendo news notable is that the company appears to have been holding out for as long as it could. The Switch 2 is less than a year old, and the company clearly didn’t want to mess with its initial sales momentum. So it started out by finding places to claw back some lost revenue around the edges. That meant raising the price of the original Switch, a few accessories, and even oddball devices like the Alarmo alarm clock. But the company clearly wasn’t happy about any of it; Nintendo is currently suing the US government over its illegal tariffs, demanding a “prompt refund, with interest.”

And now the Switch 2 is more expensive. Or at least, it will be soon. While the price is rising in Japan starting on May 25th, much of the rest of the world has some reprieve, with the changes going into effect in the US, Canada, and Europe on September 1st. That’s a few months to snap up a console at the original price. But the hike is also going into effect at just about the worst possible time, as the holiday months remain a huge sales period for game consoles, Nintendo included.

The company has done a remarkable job of weathering the storm that’s currently ransacking the games industry: not just the increased hardware costs, but also the persistent layoffs, game cancellations, and studio closures that have plagued its competitors. We’re living in a moment where even the most popular game in the world is struggling. Nintendo launched a new console amidst all of this volatility — the Switch 2 was officially unveiled on the same day as President Trump’s initial sweeping tariffs — and has been relatively successful. In less than a year the Switch 2 has sold close to 20 million units, and the company moved close to 15 million copies of launch title Mario Kart World.

So you know things are bad if Nintendo is willing to potentially disrupt that success by making the Switch 2 more expensive. Increasing costs is typically not a way to increase sales. Just look at Sony: The company sold only 1.5 million PS5s over the last fiscal year, a whopping 46 percent drop. I don’t expect a $50 increase will have quite the same negative effect for Nintendo; the PS5 is now $150 more than it was at launch, which is a big difference. But the Switch 2 was already controversially expensive, and at a time when everyone is feeling a financial crush, consumers especially, $50 isn’t insignificant. If nothing else, the Switch 2’s early momentum is likely to slow heading into its second year. Nintendo might be able to mitigate some of that if it has big holiday games up its sleeve — I have to imagine we’ll see a jam-packed Nintendo Direct sometime before September — but there will be some impact from the hike.

More importantly, the news raises questions about the future. If a comparatively underpowered Switch 2 costs $500, what can we expect from the next generation of premium game hardware? Microsoft is already talking about the next Xbox, codenamed Project Helix, which will have all kinds of fancy new tech to make games look better. But in the current landscape, how much will that cost? Valve is launching its console-like Steam Machines this year, and we still don’t know the price. That’s a pretty clear sign that they won’t be cheap. There’s a strong chance that Nintendo will come out of all of this relatively unscathed, though the company is forecasting a 16.9 percent sales drop over the next year. But it’s hard to see an overpriced new Xbox or an expensive living room PC reaching audiences beyond the dedicated hardcore fans. In this current landscape, there’s no space for console gaming to grow.

Announcing the changes today, Nintendo said it’s raising prices “in light of changes in market conditions” and that those new conditions are “expected to extend over the medium to long term.” Translated from corporate speak, Nintendo is saying something we all know: This problem isn’t going away any time soon. The question is how much of the console space will still be left if and when it finally does.