Trump tariffs could accelerate death of physical games claim experts-Adam Starkey-Entertainment – Metro

Make gaming worse again (Getty/Microsoft/Sony/Metro)

Donald Trump’s second presidency could impact the way we consume games along with console prices, as potential tariffs threaten to affect costs across the US.

While Donald Trump isn’t technically US president again until his inauguration on January 20, his policies have already sparked concern across the games industry.

Trump previously said he will impose a baseline 60% tariff on all Chinese exports, in an attempt to encourage American-made goods. A report by The Consumer Technology Association has already suggested this could lead to a 40% price hike for video game consoles in the US, as the majority of the hardware components are made in China.

Although in recent days that baseline tariff seems to have been revised down to 35%, it’s still unclear if any tariff will go ahead (Microsoft, Sony, and Nintendo successfully argued for an exemption during Trump’s first presidency) but business experts have suggested that if they do, they could ‘fast-track’ the shift towards digital games and streaming.

In a newsletter by Joost van Dreunen, business professor at the NYU Stern School Of Business, he proposes the worst case scenario from Trump’s 60% tariff could ‘present a dramatic restructuring of the US console market’ and reduce sales to levels last seen in the early 2000s. This is ‘despite two decades of market expansion and a substantially larger gaming population’.

As for the long term effects, he suggests the increase in consumer costs for consoles will accelerate the ‘current push into new distribution channels and monetisation strategies’, citing cloud gaming and streaming services specifically.

‘By potentially raising console prices, Trump’s trade policies create immediate pressure to find hardware-independent delivery methods,’ Dreunen states.

‘Just as the 1983 crash and 2008 recession catalysed new distribution models, these tariffs could fast-track the industry’s shift toward cloud gaming, streaming services, and transmedia distribution, marking a classic transition from content innovation to distribution innovation in the pendulum cycle.’

While it’s unclear if the price of physical games could be impacted by these tariffs, video game industry analyst Mat Piscatella recently speculated that if it does, the price of digital games could go up as well as a result.

‘If new physical video games are hit with an import tax which prompts an increase in their price to consumers, the most likely scenario would be the price of digital games would be raised to be at parity,’ Piscatella wrote on Blue Sky. ‘Or the alternative would be to abandon physical. Either way, not great.’

If this does happen, Microsoft might be in the best situation to deal with this transition, as the company is already trying to separate the Xbox brand away from a single console and push its Game Pass subscription service on other platforms.

Although that ignores the inconvenient fact that streaming is all but impossible for people in rural areas, where internet services are slower and less reliable, and even at the fastest speeds inferior to playing on a console or PC.

The big question is whether this will have a significant impact on the next generation of consoles, which are expected to be announced over the next couple of years. A bump in console prices might lead more people to buy the cheaper all-digital model, or convince companies to ditch making consoles with physical hard drives entirely.

All this depends on whether Trump’s proposed tariff plans actually go ahead without exemptions. While it’s very likely the major video game companies will try to protest any additional charges, Trump’s sweeping win across all three branches of the US government (the Republicans didn’t have control of the Supreme Court during Trump’s first term) will likely mean his policies face less resistance.

While this will mostly impact the US market, these potential tariffs could cause companies to bump up prices around the world to make up the difference and to ensure US customers don’t feel they’re paying more.

Could Trump tariffs bring about the rise of an all-digital future? (YouTube)

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