"It wouldn't be a surprise if Microsoft and Nintendo followed suit" - Analysts react to PlayStation's shock price rise as industry braces for more uncertainty

While GTA 6's upcoming release makes this an "awkward" time for consoles.

Earlier today, Sony announced a shock price rise for its PlayStation 5 family of consoles. When these changes come into effect on 2nd April, those of us in the UK will see the base PS5's retail price increase by roughly £90. The company cited "continued pressures in the global economic landscape" as the reason for the pricing changes.

Now, speaking with Eurogamer, industry analyst and research director at Ampere Analysis Piers Harding-Rolls says it is likely that both Microsoft and Nintendo will follow suit, and increase their own prices in the near future.

"The supply chain shock of the elongated increase in memory and storage prices – both essential for console hardware – means that there is some inevitability to the PlayStation hardware price increases announced by Sony today. It is likely that Sony had price protections for its components for a set period and this may well have come to an end," Harding-Rolls said. "With no sign of prices easing largely due to demand for AI infrastructure, Sony will have made the move to protect its slim hardware margins. It wouldn’t be a surprise if Microsoft and Nintendo followed suit in the not-too-distant future."

Harding-Rolls added that console companies such as Sony are in a "difficult position" right now. "A new wave of inflation is expected from the war in the Middle East, and this will compound the effect of the component price increases," he explained. "This may have had an influence on the scale of these price increases – the standard PS5 will rise by $100 or 18 percent in the US with a similar increase in the UK and Europe. Aside from a direct impact on hardware companies, I think this will cause some general industry concern about what the broader impact will be on market activity."

Continuing, Harding-Rolls said "the console and the AAA PC gaming markets rely on hardware investment to bring in new active players and drive market momentum, so if this weakens it might soften demand for new games". He noted these added pressures have come at an "an awkward time for Sony and Microsoft" with GTA 6 - easily one of if not the most anticipated games this year - currently expected to release in November.

"Both companies will want to take full advantage of the positive impact of this system seller release," Harding-Rolls said. "Likewise, it's awkward for Nintendo as it won't want to raise the price of the Switch 2 when it is trying to establish the new platform."

Image credit: Rockstar

Meanwhile, Chris Dring from The Game Business admitted the "situation facing video game hardware fills me with dread".

Said Dring: "You've got rapidly rising cost-of-living challenges driven further by the war in Iran, mixed with costly component prices impacting the pricing of these machines. One small positive is that we are most of the way through this console generation, so PlayStation has a strong install base to sell games to already. Everyone had hoped to see GTA 6 deliver a large spike in new console players, and this will certainly cause people to think twice."

He added it's not just about new users, either. "Some consoles break down and need replacing five years into a generation, will people be able to afford that? Beyond PlayStation, Nintendo is still at the start of its Switch 2 journey. It still wants to drive customers to its platform. How does it react to these costs?"

As for his expectations for the future, Dring believes that we are in for a "longer console generation" this time. "And we may see some people turn to streaming if they can't afford the hardware required to play GTA 6," he said. "We have to hope it's a short term problem, because this is an industry that was already struggling for growth in a hyper competitive attention economy."

Image credit: Eurogamer

It is of course not just Sony to have have been impacted by component shortages. Earlier this year, Valve announced a delay for its highly-anticipated Steam Machines due to RAM and storage price surges. The new hardware was initially expected to arrive in the first quarter of this year, however in February, Valve said this release window had been "revisited", with the company now hoping to release its machines on an unspecified date in the first half of the year.

For more on this topic, be sure to check out our Bertie's feature: "It's a perfect storm of unpreparedness, panic, and greed" - RAM prices are soaring, so what does it mean for gaming?