Gaming · Wednesday, 26 August 2026

01 · Briefing · what happened

A games console now costs $542 on average, and the reason is a data centre you will never see

Gaming 1 min 31 sources

US console sales had their worst July since the pandemic shortages. Unit sales fell 39% while the average price rose 16% - because AI data centres are buying the memory chips consoles are made of, and a console maker cannot outbid them.

$542

average console price

up 16% year-on-year [1]

-39%

console units sold

against a 29% fall in spending - the rest is price [1]

$85m

physical software sales

an all-time July low; the weakest month since 1995 [1][2]

-51%

Switch 2 units

with another price rise landing on 1 September [1][7]

At a glance

US gaming hardware spending fell 29% year-on-year in July, to $282m - the lowest July total since 2020, when consoles were unbuyable because of pandemic supply chains. [1]
Unit sales fell further than spending: down 39%. The gap is the price. [1]
The average selling price of a console rose 16%, to $542. [1]
Every platform fell: PlayStation 5 down 6%, Xbox Series down 18%, Switch 2 down 51% against its record launch year. [1]
The named cause is not gaming at all. It is the memory shortage created by the rush to build AI data centres, which the trade has taken to calling the RAM-pocalypse. [3]
Console makers have raised prices to cover component costs, and Nintendo confirmed a further Switch 2 rise from 1 September - $50 more in Canada, taking it to $679.99. [1][7]
A leaked price for the next Xbox would make it the most expensive Xbox ever. [8]
Software went the same way: physical game sales hit $85m, an all-time July low, and the weakest month since 1995. [1][2]
Sony will stop producing discs for new PlayStation games from 2028, and Xbox will not say whether its next console has a disc drive at all. [2][13]
Nintendo now accounts for 63% of US physical game spending this year; PlayStation is 32%; Xbox was not mentioned in the figures. [1][2]
And the measurement is closing: Xbox and EA have stopped sharing digital sales data with the firm that produces these numbers. [10]
PlayStation owners staged a protest by logging off, which is the only lever a customer has when the price is set somewhere else. [11]
The July comparison is exact: hardware spending in 2020 was $163m, when consoles were unbuyable because of the pandemic. This July it was $282m, and the machines are on the shelves. [4][5][6]
Almost nobody is buying new physical games on Xbox in the US at all, which is part of why its share does not appear in the split. [9]

Forces in play

Memory bought elsewhere High↑

AI data centre construction has taken the memory supply, and console prices rose to cover it [3]

Buyers stepping back High↑

units down 39% while spending fell 29%, and a customer protest that consists of logging off [1][11]

Physical media ending High↑

$85m is the lowest month since 1995, Sony stops discs in 2028, and Xbox will not answer the question [2][13]

Visibility of the numbers Building↑

Xbox and EA have stopped supplying digital sales data to the analyst everyone quotes [10]

In play Memory makers — selling to data centres first, and to consoles with what is left Console makers — raising prices to cover a cost they did not set and cannot negotiate Circana — the analyst whose numbers everyone quotes, now missing two platforms The buyer — outbid in an auction they were never told about

How it unfolded

Through 2026 AI data centre building drives a memory shortage across consumer electronics [3]
July US hardware spending falls 29%, units 39%, average price up to $542 [1]
This month Xbox and EA stop sharing digital sales data [10]
1 Sep a further Switch 2 price rise takes effect [7]
2028 Sony stops producing discs for new PlayStation games [2]

Where this points

Watch the average selling price rather than unit sales: units can fall for a dozen reasons, but a price that keeps climbing while demand falls is the signature of a cost the seller does not control.

Also today

9 more stories on this beat.

Two live-service games switch off their servers

1047 Games ended development on Empulse and Splitgate: Arena Reloaded, saying neither generates enough revenue to cover dedicated servers it had been subsidising. From 3 September both move to peer-to-peer hosting so players can still find matches. Riot is winding down its fighting game 2XKO in December. [15][16]

Why it matters — A game that needs a server is a game with a monthly bill, and the bill arrives whether anyone is playing or not.
The Xbox layoffs keep echoing

Union members held another round of 'Save Our Devs' rallies across North America, a Bethesda artist said yearly layoffs are new under Microsoft, and Schell Games cut staff including named members of its marketing team. [18][19][20]

Why it matters — The rallies are about studios already closed. What the Bethesda comment adds is that the cuts have become annual rather than exceptional.
The studios that left came out owning their work

Double Fine confirmed it holds the intellectual property and publishing rights to all its games after splitting from Xbox, and the Psychonauts studio is formally making a comeback. [21][22]

Why it matters — A studio that leaves a publisher usually leaves its back catalogue behind. This one did not, which is why there is a comeback to report.
New money is arriving from outside the industry

The Journey studio launched a publishing arm for other independent developers, Creative Artists Agency spun up an indie funding venture, and Makers Fund expanded its footprint. [23][24][25]

Why it matters — A talent agency funding games is a bet that the scarce thing is the maker rather than the machine.
The mobile giant wants to double

Sweden's MTG, which bought the maker of Raid: Shadow Legends last year, laid out plans to double the company's size. [26]

Why it matters — While console hardware contracts, the part of the industry that needs no hardware at all is buying.
Europe's industry, counted

The EU games industry generated 24bn euros in 2024 across about 6,600 studios and more than 95,000 workers, according to a newly consolidated report. [27] A separate piece asked whether co-development - studios building each other's games - can carry the industry through this. [28]

Why it matters — The figures are two years old by the time they are compiled, which is how an industry this volatile ends up being governed on stale numbers.
Physical editions keep being cancelled

Danganronpa 2x2 cancelled its Switch 2 physical pre-orders after a pivot to game-key cards - a card in a box that downloads the game rather than containing it. Commentators argue Sony is discarding something it does not understand. [12][14]

Why it matters — The object being sold as physical media increasingly is not one, which is a large part of why the physical numbers look the way they do.
Delays and doubts

Embark pushed Arc Raiders' Expeditions update to early 2027, and a former manager said a new Mass Effect looks unlikely under EA's new ownership. [17][29]

Why it matters — Both are what a squeezed industry looks like from the schedule side: fewer things, later.
More of GTA 6 is out before GTA 6 is

Over four minutes of prologue gameplay is circulating, days after the publisher subpoenaed Microsoft and Discord trying to find the leaker. [30]

Why it matters — The legal effort and the leak are now running in parallel, and the leak is winning on speed. Amid all of it, people working in games were asked what gives them hope, and answered mostly about each other. [31]

02 · Lesson · why it matters

The auction you were never told about

When a far richer industry needs the same component you do, your price changes without anyone bidding against you in a room you can see.

How it works

Two very different products need the same component
One of them earns far more from each unit of it
So that buyer can pay more without feeling it
The component's price rises for everybody
The other market only sees that things got expensive
And blames whoever is standing nearest

The twist

You were not outbid in an auction you could see. Nobody told you the auction existed. The price of the thing you wanted was set by a buyer in a different industry, for whom that component is a rounding error and for you is most of the cost.

Where you've seen this

Rents near a new employer

the flat did not change; the person willing to pay for it did, and they are not from here

Building materials during a boom

a home extension is bid against a motorway, and loses without ever meeting it

Nurses and agencies

the same person costs a hospital more because another hospital has to pay whatever it takes

Farmland and energy

a field is priced by what a solar developer will pay, not by what it grows

The catch

It cuts the other way when the small buyer is early: the same shared supply chain is why a console is cheap at all, built from parts that phones and laptops paid to develop. The link is not the problem, the asymmetry is.

And the whole of it

Nobody in this chain is behaving badly. The memory maker sells to whoever pays most, which is its job. The console maker passes on a cost it cannot absorb. The data centre buys what it needs to serve people who will never think about a games console. And the result is a customer logging off in protest at a company that also lost.

03 · Lab · your turn

Bidding Against Someone You Cannot See

Run a console business through a memory shortage, find that all four options lose, and then see who was actually setting the price.

04 · Truth · what's really going on

Stripped of the framing

Console prices did not rise because console makers got greedy or because games got better. They rose because the memory those machines are made of is being bought by AI data centres, and a games company cannot outbid a hyperscaler for a chip.

Why it lands — A price rise arrives attached to a brand, so the anger goes to the brand. The buyer who actually moved the price is in a different industry, has no consumer-facing name in this market, and will never be mentioned in a single complaint about the cost of a console.

Claimed

What people said. Not yet a fact.

Circana's analyst

Higher hardware prices driven by the RAM and component crisis have significantly affected selling rates for the PS5 and Xbox Series. [1][3]

Named, quoted, and consistent with the price and volume figures published alongside - the price rose 16% while units fell 39%, which is what a supply-side cost shock looks like from the demand side. [1]
Sony

Ending physical discs from 2028 is simply following shifting consumer preference. [2]

The physical numbers do support a decline. What the framing leaves out is that the decision also removes resale, lending and ownership - none of which is a preference the data measures.
Take-Two's chief executive

For big games, discs 'don't really make sense'. [2]

Said by a company that had already decided not to ship its biggest game on a disc. It is a defence of a decision, presented as an observation about the format.

Verified

What we could actually stand behind.

US hardware spending fell 29% to $282m in July, units fell 39%, and average price rose 16% to $542. [1]

How we checked — One analyst's dataset, but reported independently by four outlets with matching figures, and internally consistent: the gap between the spending fall and the unit fall is exactly the price rise. [1][4][5][6]
Physical software sales were $85m, an all-time July low and the weakest month since 1995. [1][2]

How we checked — Two outlets, same source, same figure, with the platform split reported the same way in both.
Nintendo accounts for 63% of US physical game spending this year and PlayStation 32%. [1][2]

How we checked — Published as a year-to-date share, so it is a measured split rather than a monthly wobble. Note the two figures sum to 95% and Xbox is simply not mentioned. [2]

Nobody knows

Open questions — ours included.

How much of the console price rise is the memory shortage and how much is margin.

Nobody has published a bill of materials. The analyst attributes it to components; the manufacturers have not broken it out, and nothing in the reporting separates the two. [1][3]
How big the digital market actually is now.

This is the honest answer to almost every question here. Xbox and EA have stopped supplying digital sales data to the firm producing these figures, so the physical numbers are increasingly the only ones anybody can see. [10]
Whether Xbox's next console has a disc drive.

Its chief executive was asked and would not say, which in this context is closer to an answer than a refusal. [13]
How long the memory shortage lasts.

It depends on data centre construction schedules set by companies with no relationship to this industry, and none of them publish one. [3]

Who gains

Memory manufacturers — They are allocating supply to whoever pays most, and a data centre pays more per chip than a console can. [3]
Digital storefronts — As discs end, the resale market and the lending of a physical copy end with them, and every future sale runs through a store the platform owns. [2][13]
Platforms that stopped reporting — Xbox and EA withdrawing digital data means the only publicly quoted figures are physical ones - the numbers that make their position look worst are now the numbers nobody has. [10]

Who pays

Anyone buying a console — The average price is up 16% to $542, and a further Switch 2 rise lands on 1 September, for hardware that has not changed. [1][7]
Players of two shut-down games — Dedicated servers go off on 3 September because they cost more than the games earn, and the games move to players hosting for each other. [15]
People who wanted to own a copy — Discs end in 2028, physical editions are being cancelled mid-pre-order, and a boxed game is increasingly a card that downloads one. [2][12]

05 · Hope · carry this

The two games whose servers are being switched off are not being deleted. Both move to peer-to-peer hosting so players can keep finding each other, which is how the studio's first game survived losing its servers a year ago.