Analyst Warns: U.S. Tariffs Threaten the Future of Physical Video Games

Since January, the U.S. has rolled out various tariffs on imported goods. Recently, a significant 25% tariff on products from Mexico and a 20% tariff on goods from China took effect. This could mean higher prices for gaming consoles and accessories. Analyst Mat Piscatella warns that this situation might push some physical game sales to the brink of collapse.

Many companies, including Nintendo and Microsoft, have started moving production away from China. However, China remains a key player in global hardware production. Mexico also plays a crucial role in manufacturing discs. These tariffs threaten to raise production costs, which could lead to some developers abandoning physical game releases altogether.

Piscatella shared his thoughts on BlueSky, predicting, “It wouldn’t surprise me if physical games subject to these tariffs just don’t get made, with publishers opting for a fully digital approach.” He characterized the current landscape as quite chaotic.

Last month, Nintendo’s president, Shuntaro Furukawa, mentioned that the company is aware of these geopolitical risks. They are already producing in Vietnam and Cambodia. He expects the tariffs to impact Nintendo’s finances but believes the effect will be minor.

Back in 2019, similar tariffs threatened the gaming industry. A joint letter from Nintendo, Sony, and Microsoft urged for exemptions, which were granted. However, this time, there doesn’t seem to be a united front among game companies, leaving them to brace for the tariffs’ impact.