Comment: The past few weeks have served as the cornerstone of what has been a rough few years for the international video game industry. Now it seems that the larger sector is headed for a major crisis, as several unstable trends seem to be approaching the crisis point at the same time.
The first and most obvious problem is the ongoing component shortage. Due to the rush to build AI data centers, both RAM and solid-state drives have increased in price in 2026, with analysts predicting that costs may not return to the bottom until at least 2028.
Both the PlayStation 5 and Xbox Series X|S are in the phase of their life cycle where they will generally decrease in cost per unit as technology improves. Instead, both Sony and Microsoft have raised console prices several times this year due to high demand for parts.
This would be a good time to get into video games, as we are almost six years into the current console generation. Rather, it is one of the worst. The base PS5 and Series X are likely to be more expensive as they launch in November 2020, and building a new gaming PC right now can be expensive.
The component crunch also hurt the appearance of Valve’s new Steam machine, which officially launched late last month with a starting MSRP of $1,049. Valve, based in Bellevue, Wash., was forced to offer new hardware at a much higher price than planned due to difficulties in obtaining parts.
That was reflected in its early reviews, with many outlets noting that the Steam Machine’s current price doesn’t match its capabilities. At $700, the Machine will be a great gateway product to PC gaming, the way the Steam Deck was, and a real contender in the console field, but the $1,049 price tag makes it an expensive curiosity for financially secure gadget heads.
Another bad sign came from Sony’s recent announcement that it will sunset the portable media platform PlayStation in 2028. The decision, which reportedly surprised many of Sony’s publishing partners, has serious ramifications for collectors, historians, developers, and high-profile consumers.
Sony has already caught one case of market abuse on the PlayStation Store, and that was for a few days before announced that it wants to kill discs. A digital PlayStation library means that Sony will have full control over the pricing and reach of every game it sells; license agreements state that anything purchased through a digital storefront such as the PlayStation Store is subject to removal at any time without notice; and players won’t be able to resort to any of the usual ways to cut costs such as inventory bins, buying used copies, or even trading games with a friend.
That suggests that Sony has decided that its best way forward is to continue making money from established audiences, rather than having more options for making games on a budget. There are free-to-play games on the PS5, of course, but most if not all are platform and/or designed as money sinks. Ask any parent whose kids have accidentally run up a big tab Fortnite.
If Sony has decided to stop virtual media, it is possible that Microsoft will follow suit. Although Xbox did not mention the console of the next generation, codenamed Project Helix, in the heat of the moment, has been eager to remove discs since at least 2013. Some sources, such as Windows Central, suspect that Xbox is already planning to do so.
(For now, Nintendo may be doing its bit. Although Nintendo has been forced to raise the price of the Switch 2 in line with its competitors, it has given no indication that it plans to stop selling game cards or Switch cartridges. In an uncertain world, Nintendo can be relied upon to follow its rare instincts.)
This sets the scene early for the environment surrounding the 10th generation of console hardware. If both Sony and Microsoft stick to the usual timeline, we’ll likely start hearing more about the PlayStation 6 and Project Helix in mid-2027, with a holiday 2027 or 2028 launch.
If they do launch in that timeline, then it’s hard to see how any system will sell for less than $1,000, as storage and RAM resources will still be limited by that point. That automatically calls out most of the potential audience in the market. Once the launch costs reach the four-digit range, the console ceases to be a hobby or a children’s toy and becomes an expensive extravagance. (As a general rule, you maybe you don’t want your console to be more expensive than the TV you attached it to.)
Furthermore, it is arguable that neither the PlayStation 5 nor the Xbox Series X|S have beaten their potential. Sony has famously wasted much of this generation with a major pivot to games-as-a-service, while Xbox has seemed more interested in ditching developers than making games or marketing. The 9th generation of consoles had a few big hits, but mostly despite it.
Not only is there likely to be limited demand for a 10th generation PlayStation or Xbox, but neither of them seem realistic. what is needed. The only reason to do it is to renew the product, and that has nothing to do with consumers.
Microsoft, following its acquisition of Activision Blizzard in 2023, is currently the second largest game developer in the world, while Sony dominates today’s console market. These two companies influence a lot of what’s going on in the modern video game industry, and as of right now, they’re both apparently willing to do the shortest possible thing at any given time.
Sony has decided that only part of its audience is really important, while Microsoft seems to bind Xbox with unreasonable expectations, possibly to justify its eventual sale or closure, and ignores at least one planned boycott.
Whenever the video game industry experiences any kind of major disruption, someone somewhere always asks if it’s the start of the other “Crash of ’83.” This is often hyperbole, but it’s hard not to see the parallels between then and now: the video game market is flooded, there are few exclusives left outside of Nintendo, many members of the gaming audience buy as few as 2 games a year, and the end of physical media will eliminate both retail support and a large general audience.
This happened as a slow, years-long collapse rather than the sudden shock of ’83, but a crash is a crash. It’s inevitable, but it will require a major course correction, all at once for several of the world’s largest entertainment companies.
That being said, it is unlikely that video games as a form of communication will face any kind of existential threat. Nintendo, as noted above, is in a good position to clear any potential problems with the mass market, PC gaming has stagnated, and the mobile sector is actually having a kind of quiet revival right now. There will still be video games to be played in 2030, barring a major catastrophe.
If there’s a big opportunity here, it’s that many of the big players in the gaming industry have voluntarily left the budget gaming market or been forced out by component costs. Some of the biggest hits of 2020 so far, such as Vampire Survivors, Among Us, Deadly Company, again Balatrocheap, retro-styled games designed to run on almost any hardware, from the PlayStation 5 to your 4-year-old tablet.
The best step forward for mainstream gaming, in fact, may be a step back, in the same way for projects like Panic’s Playdate retro mobile (still going strong 5 years later) or Seattle’s Tin Can, which is seeing success with its mobile phones for kids and families. The chase for big games, high frame rates, and realistic graphics for 30 years has brought us here, to the brink of the second big crash, while thousands of people log in every day to play games that can be run by a particularly big potato.
Instead of rushing to the 10th generation, the solution may now be to think simple and cheap, to make smaller projects, more focused than the 5-year monthly image of a typical AAA game. Otherwise, mainstream video games may end up like Western comics: increasingly expensive options presented to a few die-hard fans.
