00:00 Speaker A
A growing shortage of memory and storage components is driving up costs across the industry, already forcing Microsoft and Sony to raise console prices. And now Nintendo is next. Joining me now is Yahoo Finance Tech Editor Dan Howley.
00:13 Speaker A
All right, Dan. So, I I guess start big picture here, Dan. How how does memory, so we have memory and and storage shortages. They’re impacting the video game industry. How does the AI boom? How does that, Dan, translate into you paying more for an Xbox console?
00:29 Dan Howley
Yeah, it it doesn’t seem like it should, right? It just seems disconnected. but the reality is when you’re building these data centers, not you in particular, but companies, Meta, Microsoft, Google, whoever’s building them or building them for them, they have to use huge amounts of RAM or memory, is what we call it now, and storage, which used to be called memory, but I’ve gone over this rant before and forget it. Uh so memory uh is used in what’s called uh high bandwidth memory on these GPUs for the most part from from Nvidia. Uh basically, it’s the same type of uh DRAM uh that you use in a computer, uh in a smartphone, in a game console. But because margins are higher for the data center versions, these high bandwidth uh versions, these memory companies are selling them more towards the data centers. And that means that there’s a shortage for everyone else in the industry. And so as a result, prices rise. Now, we’re seeing that as well with uh storage. That’s basically, you know, where you keep your information. Uh your data is held up before you uh call it up to the GPU or CPU. Because of that, we’re starting to see prices on certain products rise and we’re starting to see some products disappear entirely. Now, when it comes to the games industry in particular, they don’t have an ability to downgrade their devices. So if you have a smartphone uh or if you have a laptop, if they’re entry level, you can kind of take out some of that memory and make a kind of downgrade device that people really won’t necessarily notice the difference with. These consoles though are set it and forget it basically and if there was a change, people would revolt. So, now, as a result of that, companies have to increase prices to keep up with the increased price of that memory. And so that’s actually starting to impact overall sales as well.
02:29 Speaker A
Yeah, just to put some numbers on this, Dan, in your very good story, my friend. You point out the Xbox Series X went from 499 to 649. Sony’s PS5 also, big hikes. How much sticker shock, Dan, do you think consumers, gamers can absorb before they say, you know what? I’m not upgrading?
03:00 Dan Howley
I I really think, you know, it’s it’s one of those things where uh what usually what happens is so these consoles launched the Xbox and the PlayStation launched in 2020, right? It feels like forever ago. At this point in the the the cycle of of these consoles, prices are usually coming down. These would be cheaper. The fact that they’re more expensive than when they first launched is bonkers, right? And so, you know, that I think in and of itself may keep certain people away. Uh, when it comes to uh uh uh the PlayStation, Xbox, those are those are for gamers who are really into gaming for the most part. Now, the big issue is for Nintendo. That’s a system that is for people who are really big into gaming, but it’s also a casual device because it appeals to a broader audience. So, if you have something like, you know, you want to play Mario Kart or just a regular Mario game, you might get a Switch and then, you know, not necessarily play it every single day. The fact that that price has increased means that Microsoft uh sorry, Nintendo is going to be under a lot more pressure. And so, we’re already seeing certain uh uh issues when it comes to the actual sales. So, uh Microsoft in its last quarter uh said that hardware revenue declined 33% year-over-year. Sony, meanwhile said that shipments of its devices, individual uh PlayStation 5 devices collapsed year-over-year, 46% from 2.8 million units in 2025 to about 1.5 million units in its most recent quarter this year. So, we’re seeing that impact now show up on the bottom lines for some of these companies when it comes to shipments uh and revenue. And, you know, for Nintendo, we already saw their stock price drop when they announced this price increase and we can expect something similar. The issue for Nintendo in particular is in the US, they’re giving consumers a bit of reprieve. It’s one of the largest markets for consoles in the world, so obviously they want to favor that. The issue though is they’ll start to uh implement this $50 price increase on September 1st. That’s just ahead of the all important holiday season. So, a lot of people may not be aware that the price is about to jump uh just before people may go out and start buying these for their kids or or you know, themselves or whatever. That may be an issue for them, especially if they don’t have a big game to sell. Now, I’ll just put put a bow on this. We’re expecting to see Grand Theft Auto 6 from Take 2. That’s supposed to be one of the biggest game launches in probably history. Could be one of the best selling games in history. Grand Theft Auto 5 has made more money uh than any movie, music, uh any kind of media product in history, right? So, we’re expecting perhaps that to happen again with six. Now, that could be a catalyst for more Xbox and PlayStation sales. Nintendo, not so much. We’re not expecting it to launch on Nintendo at all. It’ll be on PCs, but that’ll help out the Xbox and the Sony sales, Sony more likely than uh Xbox. Nintendo, they’re going to be left out in the cold.
