If you ever want to make gamers get out and vote, letting them know they’ll end up paying more for their consoles with tariffs will do the trick. In a joint letter to President Donald Trump, representatives for Microsoft, Nintendo, and Sony sent a joint letter addressing the impact of tariffs on the video game industry. We have the main focus of the seven-page document below, but essentially, it means that American consumers will end up paying $840 million more for consoles than they would without Chinese tariffs. There are dozens of reports out showing consumer electronics will cost much more if tariffs are put in place against the Chinese government, as a good chunk of those products come from China or Taiwan. How do you feel about these new tariffs?
Although our video game consoles provide a critical foundation for our businesses by driving demand for games and services, we sell them under very tight margin situations, meaning that we price video game consoles at—or slightly above—cost to make them as affordable as possible, and look to the sale of video games and services, which are much lower priced, to drive economic returns. Console purchasers are extremely price sensitive. In 2018, approximately 110 million console gamers in the United States spent around $15 billion on video game software and services, equating to over $130 in annual software and services spend per gamer.
Video games are a core part of the fabric of American entertainment culture. Two out of three households have at least one video game player and 60% of Americans play video games daily. A price increase of 25% will likely put a new video game console out of reach for many American families who we expect to be in the market for a console this holiday season. For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have, according to a recent study prepared for the Consumer Technology Association by the independent economic group, Trade Partnership. That study also noted that “[e]ven after accounting for new tariff revenue, the result is a net $350 million loss for the U.S. economy for each year the tariffs remain in effect, with the burden carried by U.S. consumers.”
Given that the main purpose of video game consoles is to play games, as significant as the impact of tariffs would be for video game console makers and consumers, the harm to the thousands of U.S.-based game and accessory developers who depend on console sales to generate demand for their products would be equally profound. The ripple effect of harm could be dramatic. Our consoles have generated a vast ecosystem of small and medium-sized game developers. A significant number of the games played on Microsoft, Nintendo, and SIE video game consoles are not developed by our companies in-house.