The US video game hardware market is facing unprecedented challenges, with sales of both PlayStation 5 and Xbox Series X/S consoles reaching new lows. Analyst Mat Piscatella of Circana has expressed concern, stating that the current situation is the most precarious the market has seen since the early 1980s, a period that coincided with a significant industry collapse.
Price sensitivity has emerged as a major issue. Piscatella revealed that Xbox hardware sales in the US are down 33% year-on-year, while PlayStation hardware units have seen a 25% decrease. These year-to-date figures represent an all-time low for Xbox and the lowest point for PlayStation since 2013. The average selling price for an Xbox console in 2026 year-to-date is $529, a 26% increase from last year, and for PlayStation, it's $597, a 20% increase. Both figures are at all-time US highs for these platforms.
These price increases are largely attributed to the high demand for memory components, which are being diverted to power AI data centers. This shortage affects not only consoles but virtually all consumer electronics, leading to price hikes across the board.
Industry leaders have echoed these concerns. Micron's CEO recently warned that memory shortages are expected to persist until at least 2028. Similarly, Xbox boss Asha Sharma noted that the price paid for console storage components had more than doubled between fall of the previous year and her joining as CEO in February, with further significant increases anticipated, potentially exceeding five times the prices paid just two years prior.
While the upcoming launch of Grand Theft Auto 6 is anticipated to provide a boost to console sales, Piscatella cautioned that its impact is contingent on pricing and product availability. If the demand for memory components for AI continues to outstrip supply, manufacturers like Microsoft and Sony may struggle to produce enough consoles to meet potential demand, further exacerbating the current market difficulties.