A recent report from The Game Business, presented during the Summer Game Fest, sheds light on the rising costs of living and how these factors, along with tariffs, are influencing consumer behavior in the U.S. According to Mat Piscatella, a Circana analyst, U.S.
consumers are becoming more cautious with their spending, especially in the entertainment sector, including video games. With essential costs like food and housing continuing to climb, people are cutting back on discretionary spending.
As inflation continues to affect prices across the board, including food (which has risen by 2.3% compared to last year), utilities (up 15.7%), car insurance (up 5.4%), and shelter (up 4%), it’s clear that consumers are facing significant financial pressure. Tariffs, especially those introduced during the Trump administration, are only expected to exacerbate these challenges. Despite differing opinions on tariffs, 69% of consumers believe they will lead to higher costs across various industries, including video games.
One notable impact of these rising costs is a decrease in video game spending. Circana’s data reveals that 30% of consumers plan to reduce their spending on video games and entertainment subscriptions, choosing instead to prioritize essentials. Even major companies like Nintendo have paused pre-orders for the Nintendo Switch 2 in the U.S. as they assess the potential impact of tariffs on pricing. While the price of the console has remained stable, accessories have become more expensive, and there’s still a possibility of price increases down the road due to ongoing tariff concerns.
While some argue that tariffs are not the main issue, and point to factors like the rise of free-to-play games as a bigger challenge for the industry, it’s clear that the combination of higher prices and consumer reluctance to spend will continue to impact the gaming sector. Despite the much-anticipated release of Grand Theft Auto VI, the future of the video game industry may depend on how quickly it can adapt to these economic pressures and offer consumers value amidst rising costs.
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