The immediate impact of the hardware pricing crisis is clear, but the long term risks are greater – a generation that grows up unengaged with consoles may be out of reach forever
Nobody needs to hear again about how the crisis in component costs is causing havoc on the hardware side of the games industry. This is an event to be weathered, not one that is within the industry's power to prevent. However, the long-term effects on the games business are worth considering. S&P Global Market Intelligence predicts a significant drop in console sales to around 27 million units next year, with a slow recovery expected from 2028 onwards.
The forecast assumes that component pricing will ease off by 2028, allowing next-generation hardware to launch in the $600 to $800 price range. However, the current situation with RAM production being controlled by a few companies may challenge this optimistic outlook. The forecast highlights the potential impact of 'missing' console sales over five years, leading to a major gap in the addressable audience for consoles.
This situation comes at a critical time for the console business, which has seen relatively slow growth in the installed base over the past two decades. While contemporary systems like the Nintendo Switch, PS5, and Xbox Series are commercially successful, the overall audience size has not seen significant expansion. The industry faces the challenge of stagnant market growth and the need to attract new consumers to sustain long-term success.
