The Crypto Craze Made it Hard on Gamers, and AI is About to Make it Much Worse.

Remember shelling out a few thousand dollars just for a graphics card? That was bad. But little did we know, that in a few years’ time, things were going to get worse. Much worse, in fact.

AI mania is upon us, and instead of consuming precious GPUs to mine virtual currencies, it is driving up the cost of RAM in conjunction with the already high (but somewhat “normalized”) price of GPUs.

As big as the hype behind Web3, Crypto, Blockchain, and NFTs was, AI seems to have completely consumed everything in its path… from the stock market, to your social media feed, to your word processor, to your local water and electricity utilities, and now to your beloved computers, cell phones, and gaming consoles.

So here we are. Data centers need everything a computer needs, and as it turns out, they need obscene amounts of memory. To make matters worse, Micron, SK Hynix, and Samsung are about the only companies in the world that can manufacture DRAM at scale.

The AI-driven memory shortage will be much broader and longer lasting than the crypto crunch. It’s DRAM + NAND. Consumer brands, like Micron’s Crucial, are getting canceled or deprioritized. And generally speaking, consoles are low-volume, low-margin devices compared to massive server farms or smartphones. That means consoles are invariably going to be considerably more expensive.

So what does this mean for the console giants?

A Bleak Outlook for Gaming Consoles

I grew up playing the NES and SNES. I didn’t even ask for the SNES, in fact, but I was of course blown away when I received it as a Christmas gift one year. Not only did I get a Super Nintendo for Christmas, but I also got at least three games and an extra controller to boot.

Why do I mention that? Well, let’s move on to my next console in the N64. I was still a kid at the time, so my parents bought the Nintendo 64 for me. Awesome. But what about everything else? Over time, I had to use every birthday, every Christmas, and mow a few lawns in between to get three more controllers, two or three memory cards, a rumble pack here or there, and all the games I wanted. The point is, by this time, owning a console was already a serious investment.

By December of 2025, both the Xbox Series X ($649) and PlayStation 5 Pro ($750) cost more. You’ll then need to get controllers. You’ll then need to buy the games themselves. And you’ll then need to buy a subscription in order to fully enjoy the functionality of these consoles. That’s not a small amount of money, but it’s still in reach for many gamers.

But I have a feeling that consoles are about to become crazy expensive. Like, $1000 for a base model expensive. For the most hardcore adult gamers, I’m sure this won’t matter too much. They’ll buy. But what about kids? Is a $1000-1500 Christmas or birthday present a realistic ask? And what about the more casual gamer who buys a console just to play a game of Madden here or there? Will a console purchase be worth it anymore?

The gaming giants have typically relied on selling their consoles at little or no profit (or at a loss) to lock in the software, subscriptions, and accessories revenue over the lifespan of that console generation. A major slump in sales is a major issue as it would jeopardize the entire monetization model of console gaming. And I think a slump is inevitable.

So what should Sony, Microsoft, and Nintendo do?

”Coping Strategies”

Option 1: Subsidize the Upgrade

You need console sales to push developer adoption, right? So maybe console makers will subsidize their game passes for the new consoles. To get the games the console needs in order to sell well over the long term, they’ll need to get the players to buy new consoles.

Buy the new PlayStation 6 and get 6 months of PlayStation Plus for free.

Maybe that would work. After all, if you dropped $1000 on the console alone, you’re probably going to start paying once your trial period is up. You spent all that money to upgrade your console and buy accessories, so after a short period of time you’ll be right back on board with your subscription.

Hardware as a Service

Another option could be hardware subscriptions. It’s hard not to cringe a bit while writing this, but console makers might begin leasing hardware with the console’s cost bundled in with their online service.

Microsoft already attempted this with “Xbox All Access”, which bundled a console with two years of Game Pass Ultimate into a single monthly payment and no upfront cost. Spreading the $1000+ price across a monthly payment over two years hides the sticker shock while locking players in to a long-term subscription, resulting in a predictable cash flow.

Hardware as a service would make a lot of people angry. In a world where everything is becoming a subscription, people are starting to long for the simplicity of “pay for it once, own it forever”. Despite this risk, console makers might have no other choice but to try this monetization model. Although most Americans finance many things (homes, cars, phones, etc), I think this monetization model is starting to lose favor with consumers in general as they become fatigued with vendor lock in and rising prices.

Option 2: Prioritize Retention

If there are fewer buyers of next-gen consoles, then more money has to come from current subscriptions. This would mean emphasizing current live-service retention rates, backward compatibility, and cross-save cross-progression functionality.

To bolster retention, perhaps Sony and Microsoft might convince developers to focus on backward compatibility the most. To keep those subscriptions rolling in, I suspect console makers will incentivize publishers to keep developing for their “legacy” consoles so players have a reason to keep playing and thus paying their monthly dues.

Remasters are cheap relative to a made from scratch AAA experiment. Demand is a known quantity, and it’s easier to publish a remake for existing hardware than it is to build a cutting-edge experience for a next-gen console that may or may not enjoy strong initial uptake. Although some players have expressed their frustration at the sheer number of remasters compared with fresh, innovative franchises, remakes are still more player friendly than some of the alternative solutions.

Option 3: Merchandising and Milking IP

Nintendo does this well already. They have theme parks, Pikachu plushies, Mario movies, Pokemon cards, and a host of other merchandise that sells independently of their console and game store strategies.

As great as it all sounds, IP-related revenue for Nintendo came in at about $348 million—just under 3% of the company’s overall sales for the period. And while it is true that the Pokemon franchise has grossed over $150 billion lifetime, with $100+ billion from merchandise alone, no other video game IP has anything close to Pokemon’s level of fame and clout.

So while IP and merch sound like a great thing, they are not meaningful substitutes for the revenue generated from the core business activities related to console gaming.

Option 4: Squeeze the Juice (Players)

This year, Sony raised its prices by about $50 for its entire console lineup. This console price increase followed the PS Plus price increase in over 20 countries earlier in the year. Microsoft has upped the price of Xbox Game Pass Ultimate from $20 to $30 a month with no 3-6-12 month discount to soften it. A ten dollar increase doesn’t sound like much, but consumers are becoming increasingly wary of subscription bloat as increases in the cost of living place greater scrutiny on each existing or additional commitment.

When Microsoft announced its Game Pass Ultimate price hike in October, the cancellation page on Xbox’s website supposedly crashed under the sheer volume of people trying to cancel. So while we don’t have any hard numbers yet, if this anecdote is true, then players are indeed quite sensitive to these price increases.

Nintendo’s Squeeze

When Nintendo designs its consoles, it doesn’t really push for top of the line graphics or the best spec sheet. This has been true ever since Nintendo launched the GameCube. As powerful as the Nintendo 64 was at the time, its game library still paled in comparison to that of the Sony PlayStation. Since then, it seems like Nintendo has focused on “different” rather than “powerful” consoles. Alongside designing consoles with more modest specs, Nintendo seems to have another strategy—offloading the cost of hardware onto the players themselves.

Nintendo appears to be taking more of an “Apple approach” to monetizing hardware. The Switch 2 shipped with a new “microSD Express” standard that is incompatible with the original Switch’s cards. This means that every Switch 2 owner has to buy new storage, with said cards running anywhere from $40 to $100+ for a 1TB card. Instead of eating the cost of storage themselves by making console specs beefier, they’re passing the price on to the consumer in the form of expensive expandable memory.

Then there are the game-key cards. These are basically plastic containers that mimic what a physical game’s packaging looks like, except that there is no game inside. Instead, you just get a license key for a download. It’s a savvy, albeit somewhat demoralizing, business move.

A darker side to the game-key cards is the effect it will have on the secondary market. It is well established that many games on official online stores are priced considerably higher than what the same game would fetch on secondary markets. So, the more games become “digital only”, the smaller the physical game re-sale market will be. This drives everyone to the online store, ensuring that Microsoft, Sony, and Nintendo can all make more money in the process.

(Oh yeah, and since the game isn’t on a physical cartridge, you’ll need to buy more of Nintendo’s proprietary storage if you wish to have more games simultaneously available on your Switch 2.)

Option 5: Going Retro

One potential lifeline lies in the legacy back catalogs. If adoption of next-gen consoles slows, retro gaming and preservation become powerful avenues for player retention. Microsoft already has backward compatibility spanning three generations on Xbox Series X, while Sony relies on PS Plus Premium Classics to emulate PS1, PS2, and PSP titles. (PS3 remains a challenge due to its cloud streaming tethers.) Streamlining native emulation, resolving decades-old licensing issues, and bringing deep libraries of legacy gaming to modern platforms could provide affordable entertainment for those who can’t stomach the $1000+ investment next-gen consoles imply.

This might not be a bad move. After all, Chinese handheld consoles aren’t a niche market anymore. Makers like Anbernic, Powkiddy, and Retroid Pocket have created a market worth roughly $3.8 billion in 2025, making the retro console segment the fastest-growing category in the space.

If major console makers focused more efforts on better emulation and upscaling, perhaps this could extend the lifespan of current-gen consoles until prices subside a bit. Retro gaming also offers something that few Steam games offer: Playing in the same room with other people. Steam can sell players an awesome AAA game for $5 during a seasonal sale, but it can’t sell the feeling of four people yelling at each other while battling it out on Rainbow Road, GoldenEye’s Facility with power weapons, or Halo’s split screen capture the flag battles at Blood Gulch.

Option 6: Delayed Hardware Cycles

If memory and storage prices remain elevated, which appears increasingly likely, console makers could elect to extend the lifespan of the current console generations.

This option takes positive elements of other paths (such as focusing on remasters, retro gaming, etc.) and extends an olive branch of sorts to gamers. Instead of launching the next PlayStation or Xbox, Sony and Microsoft could push the transition further out while offering remakes, greater access to “deprecated” IP, all the while using AI-assisted upscaling to improve their current offerings.

This may frustrate developers as they seek more clarity and certainty on how to develop their future games, but it’s arguably the least hostile solution because it doesn’t ask gamers to upgrade their hardware and all of the expensive accessories that come with such an investment.

If Sony and Microsoft did indeed delay their next hardware releases, they could build up some good will by making their existing platform subscriptions more valuable. Access to more remasters. Access to more retro titles. Access to more platform specific IP. This answers the question many gamers might soon start asking: “Why shouldn’t I just cancel this subscription and run Steam in my living room instead?”

Conclusion

The broad rise in cost of living, coupled with the steep increase in memory and storage prices, leaves console makers in a difficult spot. You may have read through the options listed above and thought “None of these sound good”. That’s kind of the point. The console business is shrinking, and it is the most loyal of console gamers who are left to absorb the costs of this reality.

Is this the direction console makers intend to go? If so, unwrapping a new console under the Christmas tree may soon become a thing of the past.