If you haven’t heard the news, Sony announced that they are raising the prices of the PlayStation 5. Again. The disc-less version is now $600, and the Pro costs $900 MSRP. Nine hundred dollars. This comes on top of price increases of last year. As a reminder, the disc-less version launched in 2020 for $400¹. Sony isn’t alone with price increases, of course, with Microsoft hiking the price of their lagging console several times in addition to Game Pass Ultimate. It seems inevitable that Nintendo will eventually follow suit with the Switch 2, despite trying to raise peripheral prices to compensate.

Meanwhile, game studios have been shedding workers at breakneck speeds. Just this past week, Epic Games laid off over a thousand people (with $500 million in additional cuts) amidst lower Fortnite engagement. Overall, the industry lost 45,000 jobs in the last four years. Some of this is attributed to a post-COVID correction, when apparently every studio hired anyone they could and greenlit even the dumbest of live-service games (Concord, Highguard, etc), ironically chasing (fewer) Fortnite dollars.

The other part of it is simple economics. If the average budget for a AAA game is $300 million, even with no storefront cuts and a price of $80, it would still require 3.75 million copies to be sold to break even. A more realistic figure would be 70% of a $70 game, putting it at 6.2 million sales. Again, just to get back to $0, let alone show any profit. GTA 5 sold 225 million copies worldwide, so yeah, it’s still possible to make bank on certain bets. I’m also guessing that GTA 6 will make back its $1 billion budget.

On the other hand, if people have to buy a $900 console just to play it… I dunno.

This very well may be the tipping point beyond which AAA no longer becomes economical viable. Think about the PlayStation 6, which is assumed to be coming out in late 2027 or 2028. Do you believe the base model will be coming out for less than $700? And if you’re willing to drop that amount of money for the next-gen system, will you be satisfied with games that do not require the level of graphical fidelity it would provide? At the same time, it’s going to be difficult for game developers to hit those break-even sales figures if the userbase is balking at the price of the console.

One thing that I think about is whether this whole trajectory is already “priced in,” so to speak. Game development cycles are 5-6 years long, so it makes sense how all these live-service games, started in the most irrational of COVID exuberances, are simultaneously returning to Earth at terminal velocity. Concord et tal failing is one thing though; Fortnite eating its own tail is quite another. Remember when everyone started releasing MMOs trying to chase that World of Warcraft subscription money? After that development cycle of failure – during which WoW declined all on its own – we did not see a renewed interest in full-priced subscription MMOs. The industry moved on to F2P and live-service.

Well, the tides are shifting again. But where is the next sandbar? Are there any left? And if there is, can anyone afford to build on it again?

I suppose we’ll find out around, uh *checks calendar*, 2031. Just in time for Fallout 5.

_{¹ Inflation puts $400 in 2020 as being $750 today. Which… holy shit. Nevertheless, that isn’t how it normally works.}