Well well well, 2019 is really turning out to be a year for year for unexpected team ups. We’re starting to have cross platform play, Sony and Microsoft are snuggling up to make streaming services better and now all three of the gaming giants are working together against a common enemy, and it’s President Trump.
Trump is slapping tariffs on goods imported from China, and guess where all the consoles are made. Here is a portion of the statement made by jointly the three companies.
In 2018, over 96% of video game consoles imported into the United States were made in China.
The video game console supply chain has developed in China over many years of investment by our companies and our partners. It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions. Each video game console comprises dozens of complex components sourced from multiple countries. A change in even a single supplier must be vetted carefully to mitigate risks of product quality, unreliability and consumer safety issues. Tariffs would significantly disrupt our companies’ businesses and add significant costs that would depress sales of video game consoles and the games and services that drive the profitability of this market segment.
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
They also highlight the other businesses that rely on consoles, such as accessory developers and programmers.
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.
You can see why the big three are worried, especially with Project Scarlett and PlayStation 5 on the horizon, 25% slapped on to the price of already expensive brand new PS5 is going to kill sales.
You can read the full statement from Sony, Microsoft, and Nintendo here.