Former PlayStation exec says game prices should increase with each console generation

Former PlayStation and Sony Interactive Entertainment America CEO Shawn Layden believes that video game prices should incrementally increase with each console generation to account for the ballooning costs of development alongside inflation.

Layden stated that the video game industry’s reluctance to do so has led to dangerously thin profit margins. In a recent interview with GamesIndustry.biz, Shawn Layden noted that premium game prices have remained stagnant for over two decades, despite ever-increasing development costs. Layden commented:

“I think it’s because everyone’s afraid. No one wants to be the first one to raise the price, because you’re afraid to lose traffic. So what you do is you just end up eating into your operating income, your profit margin.”

According to him, the “fear” of being the first hampers net profits as companies stick to the same retail price. Layden further compared the PS1 era with the PS4 generation and said:

“There were more sports cars in the parking lot in the PS1 era than there were in the PS4 era, because if you’re selling 20 million units at $60 for something that only cost you $10 million to make, that’s different than selling 20 million units at $60 for something that cost you $160 million to make.”

Layden believes that the industry’s growth-at-all-costs mentality, despite declining net profits, has sparked an industry-wide crisis, where game budgets exceeding $100 million require sales of 25 million or more to break even, a feat that’s achievable by outliers like Rockstar Games or FromSoftware.

Instead of direct price increments, Layden noted that publishers have discreetly elevated revenues via add-ons, stating:

“They said, ‘Okay, what if we maintain the price and then we nickel and dime you with the DLC, microtransactions, battle pass, season pass, whatever you want to call it, and try to make up the excess there?’”

The current generation has seen a slight upward trend in baseline pricing as some AAA titles have launched at $70, while others are testing the waters with a more aggressive $80 price tag, such as Nintendo Switch 2’s Mario Kart World.

These trends come amid overall U.S. consumer spending on video games reaching $58.7 billion in 2024, a slight uptick compared to the previous year, even as inflation continues to remain ‘sticky’ for consumers, amidst an administration that is leveraging tariffs as part of its ongoing trade war.