When it comes to gaming, it's typically been the case that as a console ages during its active lifecycle, the price of buying one tends to go down, too. That's not the situation for this one, though: the PlayStation 5 Pro launched at $700 in November 2024 and now costs $900, while Microsoft's Xbox Series X has risen from $500 to $800. Even the budget Series S now costs $500, up from $300 at launch.
Alongside climbing prices, sales have also suffered. According to Circana, US Xbox hardware sales fell 33% year-on-year through August, reaching an all-time low, while PlayStation sales fell 25% to their lowest level since 2013. It seems pretty clear that the gaming market is in its most precarious position since the early 1980s.
Like Sony and Microsoft, Nintendo has raised its prices too, bringing the Nintendo Switch 2 up to $500 from $450. That's an 11% compared to the 29% increase of the PlayStation 5 Pro, even while the company is riding the high of launching a console that had the best first year of sales that any console ever has. The difference in the price increase, though, comes partially from a hardware philosophy that dates back to the industry's infamous 1983 crash.
Nintendo might not be able to save the gaming industry single-handedly, but it may serve as a useful indicator of where the gaming market can still thrive. The company has prioritized affordable, capable hardware over chasing the highest specifications, and that approach is looking better than ever. If Sony and Microsoft want their consoles accessible while components become more expensive, Nintendo might be the company they need to learn from.
The 1983 gaming crash wasn't really about console prices
Cheap home computers made consoles look overpriced
The North American video game market collapsed from roughly $3.2 billion in 1983 to just $100 million in 1985, a decline of almost 97%, and much of it was caused by an oversupply of software. Cartridge production exceeded actual demand by more than 200% in 1982, while Atari's catalog grew from around 100 titles in June to over 400 by December. Poor-quality games flooded stores, eventually ending up in bargain bins for $5 against their original $35 prices. That dragged down the perceived value of better games, too.
At this stage, Atari had lost control of its own platform, with Activision breaking away in 1979 and establishing the right to publish games without Atari's permission. By 1982, Atari's share of the cartridge market had fallen from 75% to under 40%, and without meaningful control over what appeared on its system, Atari couldn't prevent the flood of low-quality releases.
Low-quality games flooding the market became such a problem for Atari that the company buried an estimated 700,000 unsold game cartridges in a New Mexico landfill in 1983, including copies of the notoriously awful E.T. the Extra-Terrestrial. The story became an urban legend until an excavation in 2014 confirmed it was true. Atari had quite literally dug itself into a hole.
The price was still important to consumers, especially with the proliferation of home computers thanks to increased affordability. In a spar with Texas Instruments, the Commodore 64 dropped from $500 to $200, but a computer that could play games and do other tasks was competing with consoles that could only play games. Contemporary accounts at the time even highlight this disparity, with the Boston Phoenix asking why someone would pay more than $200 for a machine that could do nothing else.
Expensive hardware contributed to the crash, but it wasn't the primary cause, and the collapse itself was largely confined to North America while gaming continued to grow in Europe and Japan. Nintendo would go on to play a crucial role in reviving the American console market, helping rebuild an industry that had almost completely collapsed.
Nintendo's answer was a cheap console and a lockout chip
The NES wasn't as cheap as you remember
Nintendo launched the Famicom in Japan in July 1983 for ¥14,800, less than half the price of its rivals. President Hiroshi Yamauchi had prioritized affordability, stripping out features such as a disk drive, keyboard, and expansion capabilities. The result was a deliberately simple console built around playing games rather than doing everything.
When Nintendo brought the NES to America in 1985, its $180 Deluxe Set included two controllers, a light gun, the R.O.B. robot and two games. A cheaper $100 Control Deck bundle followed in 1986, and Nintendo continued reducing the entry price throughout the console's lifespan.
Nintendo also learned from Atari's mistakes, as Yamauchi believed the company had collapsed because it gave third-party developers too much freedom, allowing stores to become flooded with poor-quality games. Nintendo didn't want to repeat that mistake, imposing strict publishing rules, including a limit of five games per publisher annually and upfront payments for cartridges that couldn't be returned. On top of that, a 10NES lockout chip helped enforce those restrictions by preventing unauthorized games from running on the console.
The strategy worked out for Nintendo, with more than a million NES consoles being sold in America by the end of 1986. By 1989, US video game sales had recovered to $5 billion, surpassing their pre-crash peak. Nintendo succeeded not just because its hardware was affordable, but because it gave consumers a reason to buy games for it in the first place
Adjusted for inflation, the NES's $180 Deluxe Set would cost around $564 today, more than the Switch 2's current $500 price. However, that bundle included two games, a light gun, and R.O.B., making it a considerably more substantial package. Nintendo also offered a cheaper $100 Control Deck bundle in 1986, equivalent to around $307 today. The NES wasn't necessarily more expensive than the Switch 2; it depended on which bundle you bought.
The more important point of comparison, though, is how Nintendo sized up to the rest of the competition. The Atari 5200 launched at $269 in 1982, the Intellivision at $300 in 1979, and the ColecoVision at $175 in 1982. Adjusted for inflation, all three had higher launch prices than the NES Deluxe Set, although they were released several years earlier. Nintendo wasn't selling cheap hardware in absolute terms, but it was offering a competitive entry point into a market where consoles had historically been expensive. Combined with its much tighter control over software, that helped distinguish the NES from the machines that came before it.
Circumstances today are very different, but Nintendo's approach is pretty consistent. The NES didn't succeed simply by being cheaper, nor did the Wii, nor did the original Switch. Instead, what Nintendo has consistently demonstrated is the fact that people will buy comparatively modest hardware when there's an actually compelling reason to own it. While manufacturers have increasingly relied on more powerful hardware to justify each new generation, Nintendo typically chose a different approach.
The memory crunch is what broke everyone else's plan
Nintendo's price hike looks restrained by comparison
The underlying problem is memory. DRAM prices have continued to climb throughout 2025 and 2026, with AI infrastructure driving much of the demand. Memory manufacturers are prioritising high-bandwidth memory for AI accelerators, which consumes more production capacity than conventional DRAM. That leaves less capacity for the LPDDR5X and GDDR6 used in consoles, forcing manufacturers to compete for increasingly expensive components.
All three console manufacturers have acknowledged the impact as well. Sony warned investors that rising memory prices are increasing manufacturing costs, while Microsoft has linked its price increases to component shortages driven by AI infrastructure. Meanwhile, Nintendo expects component costs and tariffs to add roughly ¥100 billion to its costs for the financial year ending March 2027.
Comparing console launch prices with what they cost today makes the problem especially clear. Microsoft's Xbox Series S has risen from $300 to $500, an increase of 67%, while the disc-based Series X has jumped 60%, from $500 to $800. Sony isn't far behind, with the PS5 Digital Edition up 50% to $600, the disc model up 30% to $650, and the PS5 Pro up 29% to $900 in less than two years.
Granted, these increases have taken place over different periods, but Nintendo has raised the Switch 2's price by just 11%, from $450 to $500. That makes it the joint-cheapest current-generation console alongside the Xbox Series S, and $100 cheaper than the least expensive PS5. According to Circana, the average price paid for new gaming hardware in the US reached $502 in May 2026, up from $440 a year earlier. Against that backdrop, Nintendo's increase looks relatively restrained, even if $500 is hardly cheap.
Even Microsoft is reconsidering its priorities. Xbox CEO Asha Sharma told the BBC that future hardware needs to balance efficiency and affordability alongside performance, which is more or less a recognition of Nintendo's strategy. Xbox has historically competed heavily on hardware capabilities, but the economics of increasingly powerful consoles are becoming harder to justify.
This is where Nintendo's influence could extend to the wider gaming industry. Sony and Microsoft don't necessarily need to sacrifice performance or copy the Switch 2, but they may need to rethink how much performance their hardware actually needs to deliver. More powerful components are expensive, and pushing specifications higher with every generation becomes harder to justify when manufacturing costs are already on the up. Nintendo has spent decades proving that raw performance isn't the only thing that sells a console, and its competitors may have to take on a similar strategy.
The Switch 2 had the best first year of any console
People paid more for Nintendo hardware anyway
The original Switch had relatively modest specifications even at launch, packing Nvidia's Tegra X1, a chip developed in 2015 for devices such as Android tablets and the Nvidia Shield. The Switch 2 is a considerably bigger jump, equipped with a custom Tegra T239, 12GB of LPDDR5X, and support for DLSS and hardware ray tracing. Its higher price reflects the substantially different class of hardware, but that doesn't make it any easier for consumers to afford.
Its launch price wasn't welcomed, though; at $450, the Switch 2 cost 50% more than its predecessor's original $300 price, while Mario Kart World's $80 price tag drew criticism of its own. Nintendo was asking customers to spend considerably more on both hardware and games.
Despite the criticism, Nintendo managed to pull off an extraordinary launch with the Switch 2. The company sold 10.36 million Switch 2 consoles in its first four months, more than twice the original Switch's 4.7 million over the same period. By 30 June 2026, cumulative sales had reached 23.68 million, surpassing the first-year figures of both the Wii and Game Boy Advance.
Its performance in America was slightly less exceptional, though, with Circana ranking it as the second-fastest-selling console in US history over its first twelve months, behind the Game Boy Advance. Even so, the Switch 2 demonstrated that consumers were willing to pay considerably more for Nintendo hardware than they had in 2017. For other console manufacturers, this proves that the next generation doesn't necessarily need to compete on specifications alone.
Nintendo isn't immune to headwinds
Cheap hardware alone has never been enough
We know the reason Nintendo has been increasing its prices, and it actually raised the price of the original Switch first, shortly after the Switch 2's launch. What's more, the company forecasts a 27% decline in net profit for the financial year ending March 2027, with higher component costs and tariffs contributing to the pressure.
As expected, Nintendo's shares dropped in response. The slowdown is also reflected in Nintendo's hardware forecasts, with the company expecting just 16.5 million Switch 2 shipments for the year, down 16.9%. Despite its strong launch, Nintendo clearly isn't immune to weaker demand and rising costs.
Nintendo's history also shows that affordable hardware doesn't guarantee success. The Wii sold over 100 million units despite being less powerful than its competitors, while the similarly modest Wii U managed just 13.56 million and was regarded as a commercial failure. Nintendo's real strength has always depended on pairing its hardware approach with compelling games, but the hardware has never really been a blocker.
Nintendo benefits from a software business that continues generating revenue long after its hardware launches. The original Switch sold just 3.8 million units in the year to March 2026, yet software sales reached nearly 137 million. That established audience helps Nintendo maintain revenue even as hardware demand slows, which is another part of Nintendo's strategy that its competitors can learn from: hardware doesn't need to be the sole driver of success. Especially when an established software ecosystem can keep generating sales for years after a console launches.
What Nintendo can actually do for the industry
Not a repeat of 1983, at least not yet
Nintendo isn't immune to the memory shortage, and the Switch 2 certainly isn't cheap. However, its approach to hardware gives it more room to compete on price without chasing the specifications of Sony and Microsoft, which is especially important as component costs rise.
We're not quite seeing a repeat of 1983 just yet, and Nintendo isn't in a position where it can save the industry single-handedly. However, it might just have the blueprints for what the rest of the industry can do to succeed going forward. Sony and Microsoft don't need to abandon powerful hardware entirely, but they almost certainly have to reconsider the performance consumers actually need alongside how much they're willing to pay for it. Nintendo has spent decades building consoles around the games people want to play rather than competing on specifications alone, and that approach is becoming increasingly relevant.
The Switch 2 isn't cheap, and like all of the gaming companies, Nintendo has numerous problems. But its consoles, compared to the broader industry, are at least priced like a company that wants to sell you one.