A hardware market freeze could transform the industry forever

Right about now is the moment when the console business should be getting one hell of a second wind. Six years deep into a hardware generation, with probably the most anticipated video game launch of all time just a few weeks out, this should be when the platform holders make hay, extending those mature install bases out into ever-wider audiences as fence-sitters finally pick up the hardware they’ve been holding out on for years.

Instead, even as a flurry of shortages for the seemingly supply-constrained PS5 Pro drives prices up into scalper territory, the overall picture from market data looks genuinely grim. Circana’s latest figures show Xbox hardware unit sales for the year through August down 33%, sitting at an all-time low. PlayStation is down 25%, its weakest showing since 2013 – a nadir it reached on the eve of PS4’s launch, with the market holding out for the new system.

The culprit isn’t a mystery. The average PlayStation sold this year has cost a consumer $597; recall that the digital edition of the console cost $399 at launch in 2020. Nobody seems to expect any improvement next year – 2028 is the year when most analysts pin some cautious optimism for a return to a semblance of normality. That’s when Circana’s Mat Piscatella said he’s hoping prices will stabilise, and when S&P Global’s forecast suggests that global console sales might start to recover.

Demand for games and entertainment won’t disappear just because console shipments tank, of course. Even as teeth are gritted and hatches battened down against the market conditions created by the hardware component crisis, it’s important to ask where the demand might relocate instead. If consoles have priced themselves out of their target market’s acceptable range, where will that market turn for its gaming fix?

It certainly won’t be to high-end PCs, where the pricing crisis is biting even harder than for consoles. This week brought reports (as yet unconfirmed by Nvidia) that the RTX 5090 graphics card is effectively discontinued, with the company allocating all of its output of GB202 chips to the far more lucrative RTX Pro workstation cards instead. Discontinuation is a technicality for almost everyone; the 5090 has cost more than a small car for the past year anyway, with retail prices north of $5,000 for a card that launched at $1,999. Lower-end cards and even previous generation 40-series cards also routinely command several thousand dollar price tags.

Perhaps this starts to sort itself out in 2028; perhaps the situation drags on for several years beyond that. Nobody really knows for sure, so for the sake of argument, let’s take the pessimistic case as a premise and see where it leads. Suppose dedicated gaming hardware, both consoles and discrete GPUs alike, is simply priced out of consumers’ reach for the next few years, perhaps all the way to the end of the decade. What does that actually do to the games business?

If new hardware is prohibitively expensive, the hardware people already own becomes the most important platform

I think the answer is actually deceptively simple. If new hardware is prohibitively expensive, the hardware people already own – or the hardware they’ll justify buying on non-gaming grounds – becomes the most important platform there is. If you follow that thread of thought, some interesting consequences fall out along the way.

The first, and most obvious, is very much in Sony’s favour – which I’ll grant is an odd thing to say given I just talked about the PlayStation posting a 13-year low in its sales figures. Sony, however, hasn’t been making decisions like a company facing a sales crisis and needing to win back consumers – and I think the tenor of that decision-making, and the way it has approached price hikes, may reflect its own understanding that this situation isn’t entirely unfavourable for it.

Overpriced hardware locks in the PS5’s install base advantage. Sony has shipped over 95 million units, and while that number is barely creeping upwards now, it isn’t going anywhere either – and there’s no prospect of anyone else selling new or aggressively priced hardware that can chip away at that dominance. The same pressures crushing hardware sales will hobble the PS6 when it arrives – nobody is going to enjoy the price tag on a next-gen console with a modern memory configuration – but they also freeze the current market in place, with the PS5 as the dominant home console for as long as that freeze lasts.

Sony’s business model assumes a reasonably brisk transition to new hardware, and that would probably still be its preference, but unlike Microsoft – which needs a generation transition to give it a fresh roll of the dice – Sony is under no pressure to force one. The company has already decoupled its profits from hardware sell-through; the games division posted record operating income last year alongside falling unit shipments. If a clean generational transition isn’t on the cards, Sony will be perfectly content to make hay from several more years of software sales, PlayStation Plus subscriptions, and digital revenue on its existing install base. Microsoft, enjoying no such luxury and trying to turn around a troubled business and brand, will find such a market freeze far harder to cope with.

The same logic, though, has consequences that are far less comfortable for Sony, and for consoles in general. If the device you already own is king, then the most widely owned high-performance computer on the planet is the smartphone – and as the most personal and most heavily-used device, it’s also the one most likely to get consumers to pay a premium for regular upgrades, even if it’s through gritted teeth.

Mobile gaming is huge already, of course, but it’s largely been seen as somewhat separated from the core gaming market for many years. That isn’t guaranteed to remain the case. Games like Fortnite and Genshin Impact already bridge mobile and more traditionally “core” platforms very effectively, and there’s been a slow movement building on the fringes of the mobile market to bring more core-style games and business models back to these platforms.

The likes of Capcom’s Resident Evil ports or Warframe’s mobile version haven’t transformed the market yet, but a change has been building quietly for a while – and as console and gaming PC hardware hits an affordability wall, the ubiquity of capable phones is going to be increasingly hard to ignore. Hooking a phone up to a TV, pairing a controller, and playing something console-shaped is perfectly possible today, albeit a bit of a faff in many cases; it’s only a few usability tweaks and a strong dose of necessity away from being a very normalised way of engaging with games.

There’s a global dimension to this, too. There are hundreds of millions of players in developing markets who were never going to own a console regardless of price; they’ve often been low on the priority list for major gaming companies, because revenue per user in those territories is minuscule compared to North America, Europe, or Japan. If players in those wealthy markets are similarly constrained to the hardware in their pockets, though, the whole equation shifts. A game designed for a phone-first audience suddenly has a shot at genuinely global appeal, rather than being a lesser version of something built for a living-room box most of its potential players will never own.

Mobile might not be the only beneficiary of the sudden appeal of gaming on hardware you already own. Even if I fully acknowledge that you could fill a library with optimistically incorrect predictions that the stars were finally aligning for gaming on the Mac, it’s hard to ignore just how ubiquitous Apple‘s laptops have become among younger demographics who are also very likely to seek out gaming experiences on their existing hardware. The Mac has always been the bridesmaid, never the bride – largely because Apple itself has fumbled catching the bouquet on every occasion – but the market fundamentals now may be so powerful that even the company’s butter fingers can’t let the opportunity slip entirely.

It’s not just that Apple Silicon devices have proliferated massively among students and young people in the past few years (thanks to the very unusual, for Apple, situation of them not only being very good devices, but also very competitively priced). The tooling might be about to catch up, too; a recently released open-source project called NotProton ports parts of Valve’s Proton to macOS and switches on the Steam Play functionality that has apparently been sitting dormant in the Mac Steam client, letting Windows games run straight from a Steam library via CrossOver.

You have a market that, in a few short years, could re-centre itself around a very different set of devices

We’ve seen what Proton did for Linux gaming and the Steam Deck; if Valve decides to make something like this official – that dormant code suggests it has at least thought about it – it could open the floodgates for Mac gaming at last, with the major benefit that this time it wouldn’t even require developers to go out on a limb with the expense and risk of porting games to the Mac directly.

Put all of this together and you have a market that, in a few short years, could re-centre itself around a very different set of devices and platforms than the ones we’ve grown used to. The temptation is always to treat a crisis like this as a temporary interruption to business as usual; a few lean years after which prices normalise, the PS6 and its rivals arrive, and everything resumes its natural course. The longer the situation continues, though, the more consumer behaviours will get accustomed to these alternative platforms, and the less likely a clean regression to the norm becomes. Habits formed over three or four years don’t simply evaporate; nor do development pipelines retooled around new target platforms, or players who discover that the phone or laptop they already owned was perfectly good enough.

Sony may be able to comfort itself, for now, with knowing that a frozen market is one that freezes in the PS5’s dominance. The risk is that if this freeze lasts too long, the landscape that eventually emerges from under the permafrost will have been changed forever.