Game Console Sales Face Significant Decline

If you’re looking for another reason to be frustrated with generative AI, it turns out the technology is playing a role in the decline of gaming hardware sales. A recent report on U.S. gaming market trends for July 2026 reveals some troubling figures.

According to industry analyst Mat Piscatella, hardware spending has hit a July low not seen since 2020. Back then, the gaming industry was grappling with global supply chain disruptions due to the COVID-19 pandemic, which made it tough to find many game consoles.

In addition to a 9% drop in game sales compared to last July, gaming hardware sales plummeted by an astonishing 29% year-over-year.

So, where does AI fit into this picture? The tech sector’s frantic push to establish AI data centers has led to a shortage of RAM, a crucial component in consumer electronics. This crisis has been dubbed the “RAM-pocalypse” or “RAM-geddon.” As a result, console manufacturers have had to hike hardware prices significantly to offset rising component costs. Piscatella noted that “higher hardware prices driven by the RAM and component crisis have significantly impacted the selling rates of both PlayStation 5 and Xbox Series X, with a price increase for Nintendo Switch 2 hardware set for September 1st, 2026.”

All major console makers have raised their prices recently. Sony increased the base PS5 price from $499.99 to $549.99 in August 2025, followed by another $100 hike this April, bringing it to $649.99—$150 more than its launch price in 2020. Meanwhile, Microsoft’s Xbox Series X has seen three price increases, now retailing at $799.99, which is $300 above its initial launch price. The Nintendo Switch 2 is also facing a $50 price increase in September.

Typically, at this stage in a console generation, we would expect to see significant price cuts, which usually help expand player bases and boost software sales. However, with the ongoing RAM and component shortages disrupting this trend, it’s uncertain how Sony and Microsoft will navigate the next generation of consoles.

Microsoft has positioned the upcoming Project Helix as a high-end, niche platform, while Sony’s president and CEO Hiroki Totoki recently stated that there’s no set release date for the PlayStation 6. In light of the memory chip shortage, Totoki remarked, “We need to take some action. Otherwise, we cannot survive in this landscape.” Clearly, the gaming industry is facing some challenging times ahead.

And brace yourself—graphics cards are likely about to get a lot pricier.