Sony, Microsoft, and Nintendo have issued a joint comment to the U.S. Trade Representative’s office concerning recent tariffs on Chinese goods. An excerpt of the statement can be viewed below:
These tariffs are a part of President Trump’s ongoing trade war with China, but this time console publishers are standing up, pointing out that 96 percent of consoles shipped to America are imported from China. These tariffs could increase the cost of consoles by up to 25 percent, a cost that would doubtlessly be passed on to the consumer, but would wind up causing problems for everyone involved, something pointed out in the comment.
With both Sony and Microsoft likely less than 18 months away from releasing new consoles, this news of a potential tariff could spell disaster. Both systems seem to be aiming to be incredible powerhouses, and as such were likely going to push the barrier on what would be considered acceptable pricing for consumers during next year’s holiday season. At the same time, Nintendo is rumored to be working on two new Switch models: one with an even smaller form factor, and a more powerful version for enthusiast customers. In the case of all three developers, a tariff which would cause them to have to price their consoles up to 25 percent higher than they’d planned would doubtlessly be damaging.
However, while Nintendo has their reasons to join in here, it feels like both Sony and Microsoft have the most to lose here. One of the reasons this generation had such a slow start with getting new games and fresh IPs instead of so many remasters was a belief that consoles were dead, one spurred on by lagging sales of the seventh generation consoles and the overall length of that generation. Part of the reason behind the length of that generation came from the initial high costs of those consoles to begin with; even by the end of that generation, Sony couldn’t get it’s PlayStation 3 down below $250 without making serious concessions (versions running on flash memory and having no internal hard drives).
At the beginning of a generation, what matters the most is adoption rate–how fast are consumers transitioning from the previous generation into the next one. High console sales at the beginning lends confidence to publishers and developers looking to spend millions of dollars on massive AAA+ experiences, because they believe they’ll receive a proper return on their investment. Over the next year, both Sony and Microsoft will be aiming to convince users that their console is going to be the best possible place to play games, and aiming for the fastest adoption rates possible. They won’t just be competing with each other, but with convince gamers to leave the old consoles, which will be cheaper and have massive libraries already to count on. As such, whether or not they will be able to escape high tariffs like this one will have a large effect on how the next generation plays out.