There is an unwritten rule about technology: It is supposed to get cheaper over time, especially when new technology replaces older technology. It follows Moore’s Law and a few other rules, but it is basically what governs the fact that you expect to pay less today for an iPhone 14 compared to when it was released in 2022.

Now, the last thing you’d expect is that the iPhone 14 to keep rising in price, despite the fact it was launched a few years ago, but that is exactly what has been happening with gaming devices, notably PlayStations and Xboxes. The PlayStation 5, for instance, has had two significant price hikes in the last 12 months, increasing its overall cost by about 30%. In 2020, a typical device cost $499; six years later, it’s $649. It’s unprecedented.

Everyone has experienced inflation pain since 2022, of course, but it’s worth noting that gamers are experiencing unique pressures, which are causing prices to spike faster than other industries. It’s not just consoles either: Everything from graphics cards to gaming subscriptions to virtual currencies (such as Fortnite’s V-Bucks) is on the rise. Obviously, there are concerns among the billions of gamers worldwide.

The AI sector has had a huge impact on gaming costs

So, what’s behind the price hikes? A few things. First, there is the inflation that everyone else is facing – gaming is certainly not immune to that. Secondly, and perhaps most importantly, there is the AI industry, which has spiked the demand for many of the components, especially chips/RAM, that make the gaming industry tick. There is also the question of global supply chains, which the gaming sector seems to be more sensitive to. It’s a delicate ecosystem, and it has been unbalanced.

There are already signs of pain coming to the industry. Consider the rule on technology getting cheaper that we spoke about earlier: there’s also an unwritten rule, perhaps more of an assumption, that gaming is in the purview of younger generations – kids and their screens, right? Yet, evidence is mounting that Gen Z and Gen Alpha are both spending less time and money on gaming. The former, in particular, seems to be moving away from gaming in large numbers.

Gaming, of course, doesn’t need to be expensive. There are numerous ways to play games for free (legally) online, though many of these freemium experiences can be a bit annoying, as they constantly nudge you towards upgrades or throw in intrusive adverts. But there is a healthy dose of free and cheap options online. Even outside of video gaming, people are choosing to play social casino games (where you don’t play for real money) over shelling out for real-money games. The point, as such, is that there is a market for people who want to stick to a budget.

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The industry is starting to take notice

That said, there is a sense that gamers are going to get pickier as prices rise. Many game franchises have done well to retain players’ loyalty over time. It’s quite the trick to, say, convince people to buy the latest NBA 2K game every year, even though there are diminishing returns in new features that these games can offer. But if prices keep rising, players might consider holding on to last year’s copy a little longer.

In the fall, we should see a litmus test: Grand Theft Auto VI will arrive. It is considered the most eagerly anticipated video game in history. The development cost is reported to be in the region of $2 billion, making it not only the most expensive video game ever made but the most expensive piece of media. The publishers, Rockstar Games, will want to make their money back, so there are theories that this will exceed the standard price for a AAA game, perhaps exceeding $100 per copy. Sales figures are going to be interesting.

Of course, we might all say that gamers should simply cut back, like the rest of us in times of hardship. But this is an important industry, one that employs a lot of people. There are other challenges, notably AI’s role in the development of games and how that impacts the artists and developers who made their careers in the industry, but right now, the cost of this type of entertainment is the most pressing issue.

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