Explainer: Gaming’s great price correction. Why it’s suddenly getting so expensive to game

Delving into the economics and data behind the recent price push.

Hype for the Switch 2 has bleed into a broader macro-economic debate on how much it should cost to game. Source: Nintendo

Sony arguably fired the first salvo. Late last year, it launched the PlayStation 5 Pro with a $1,200 ($699 USD) price tag. This represented a hike of over $450 from the base model, with the promise of improved graphics and performance, but no disc drive. Essentially confining would-be buyers to either purchasing their own or relying on Sony's more expensive online store.

The internet recoiled at the price, but Sony's sales tell another story. In its Q3 last year (over the holiday period), the company had its best quarter yet for PlayStation 5 sales. Sony did not break out PlayStation 5 Pro in its results, but its overall console sales infer a bump in units shipped.

Fast forward to last week, Nintendo has now followed suit. The long-anticipated Switch 2 will launch at $699 ($450 USD), with a bundle containing the hotly anticipated Mario Kart World coming in at $749 ($499 USD). Once again, the price set off debate. The original Switch console cost $469.95 ($299 USD) back in 2017. The cost for entry for Nintendo's next generation of gaming had gone up by just under 50% in less than a decade — well outpacing inflation over the same period, which in Australia went up by around 24% between calendar years 2017 and 2024.

The final nail in the cost coffin may be Grand Theft Auto 6. Rumours are circulating that the game could be priced as high as $190 ($115 USD). For context, your average AAA game costs between $110 ($70 USD) and $140 ($80 USD) depending on the title. The quiet hope among major developers is that this title may work to push up the price of all games.

The writing is on the wall: gaming is getting more expensive. And gamers aren't happy about it — especially as global cost of living concerns continue to bite at budgets and other economic headwinds such as global tariffs loom. But why is this happening now? And what other factors are at play here? Let's break it down.

Why is gaming getting more expensive?

Earlier this year, analyst Matthew Ball put out a major 230-page report detailing the structural issues affecting the global gaming industry. Buried towards the end of it is a graph which goes some way to explaining the current price correction. As shown, the gaming industry only put up prices once every console generation (5-6 years), but it has not kept pace with inflation.

Earlier in the report, it featured a graphic to drive the point home, clearly demonstrating how gaming today prices have not really kept up with inflation. It shows what games in the 90s would cost, in US dollars in real terms, if they were sold today.

This is perhaps the easiest explanation as to why these increases are happening. But it doesn't explain the timing or sudden urgency behind the move.

There are two other factors at play. The first, as Phil Spencer pointed out early last year, is that the gaming market globally has peaked — it's not finding new consumers through growth alone. The steady increase of new players over the past two decades has essentially negated the need to raise prices to increase revenues.

The second factor is rising development costs — Ball has a chart on this too. Games, on the whole, have gotten more expensive to produce, largely due to the significant increase in headcount required to create them, noted here by the growth in “upstream” costs.

While it's difficult to confirm, and no gaming publisher would ever be as candid as to say it outright, this move has likely been on the cards for a while.

Will this work? Will gamers pay more?

Despite plenty of articles, YouTube videos and commentary on how costs in gaming are getting out of hand, if Sony's latest results are any indication, we haven't reached a breaking point quite yet. Those who game are willing to pay more to keep up with the hobby; the question is to what extent?

The major challenge that perhaps the industry did not anticipate is that it may be raising its prices just as the world may be heading towards a global recession — potentially created by a trade war. There's historical precedence for this with the Great Depression in the 1930s.

Gaming companies won't have to wait long to find out. Often, talk or even sentiment that there's a recession coming tightens discretionary spending. This psychology ends up slowing economies ahead of an actual slowdown. Should this come to pass, as a pure hobby enduring a price hike, it's likely gaming could be among one of the first industries to take a hit. This could serve as yet another test as to just how ‘recession-proof’ gaming actually is.

Nintendo is perhaps the canary in the coal mine here. The company is in an unenviable position, pulling preorders for its latest console in the US due to uncertainty around tariffs. As Bloomberg pointed out this week, 40% of Nintendo's total sales come from the US, and it — as per usual — intends to make profits off both software and hardware sales in the country.

There is conjecture on its impact though, and analysts are scrambling. DFC Intelligence put out a note this week revising down its estimate for Switch 2 consoles shipped, and suggesting prices could increases up to 20% over two years due to broader “macroeconomic challenges”. It later confirmed to Polygon that it believes the Switch 2’s launch prices in the US won’t change.

Cutting prices, however, creates its own challenges — especially after launch. As Infinite Lives mentioned last week, when the company dropped the price of its Nintendo 64 console at launch back in the 90s, to keep its fans happy it had to compensate early adopters with a free game.

What other factors are at play?

There are so many technology trends affecting gaming right now that it’s honestly hard to keep up. As Ball’s report also noted, ‘forever games’ like Fortnite, Grand Theft Auto 5, Elder Scrolls Online and Final Fantasy 14 Online, continue to maintain their share of gamers time, and chip away at funds that could be put towards new launch titles. Drastic price increases could work to funnel more players towards these games as a budget alternative.

There's one other spanner in the works here: Steam. While major publishers and gaming companies have been working to bolster their prices, the Steam Store has created a culture around steep discounting and waiting until a game goes on sale to purchase it.

Games retailing on the PlayStation store for $110 ($70 USD) can often be found on Steam for closer to $90 ($55 USD), and can often go on sale for significantly less too. Competition created by the Steam Store has driven down prices and put a focus on heavy discounting in order to draw in players and create buzz and engagement for a game.

A future systemic price rise from the major publishers will raise both the floor and ceiling of game prices. So even the cheapest AAA games could cost over $100 ($60 USD). But in turn, it may end up pushing more of the console gaming community — who will bear the brunt of all price increases — to PC gaming, where Steam is more readily accessible.

Over the next few years, we may end up seeing the gaming industry play its own version of The Price Is Right, testing just how much it can charge its customers without breaking apart its own ecosystems.

What do you think about the latest price hikes in gaming? Will you adjust your gaming habits in response to an increase in prices? Let me know in the comments.

*Editor's note: Infinite Lives reached out to Matthew Ball and several other economists and analysts for this piece. However, due to the investigation for it coinciding with the introduction of global tariffs, many were snowed under with other work and couldn't reply before deadline. All figures in this article are in Australian dollars, with US dollars added in for context.