AI is turning Nintendo and Sony products into accidental luxury goods

{"text":[[{"start":5.2,"text":"The rush to build AI data centres has created all sorts of unexpected winners and losers. It’s a good time to sell electrical components or air conditioning, for example. But it’s a bad time to be Mario, the world’s most famous Italian plumber."}],[{"start":19.9,"text":"Shares in Nintendo, the video games group behind Super Mario, have fallen almost a third this year. Rival Sony is down 20 per cent. Games companies are struggling as rising costs linked to the AI boom force them to price their products like luxury goods rather than mass-market toys."}],[{"start":37.849999999999994,"text":"Nintendo and Sony have both increased the price of their flagship consoles this year. Microsoft raised the cost of its Xbox Series X twice last year. The most expensive version of Sony’s PlayStation 5 now pushes $900, and analysts expect its successor could cost more than $1,000."}],[{"start":null,"text":"

"}],[{"start":55.949999999999996,"text":"Trade tensions haven’t helped, but the biggest problem is the soaring cost of components. Nintendo’s Switch 2 contains equipment from the likes of Nvidia, SK Hynix and Arm, all of whom are preoccupied with supplying AI data centres. Demand far outstrips production capacity and, as a result, prices have surged. Nintendo reckons component prices and tariffs together will cost it an extra ¥100bn ($622mn) this year. The pressure is unlikely to ease any time soon; SK Hynix has predicted the memory supply crunch could last until 2030 at least."}],[{"start":94.3,"text":"There’s a limit to how far console makers can lift prices without driving away customers. Nintendo expects the number of Switches it sells this financial year to fall from about 20mn to 16.5mn. Sony has said it might have to “think of new ways of selling” its next PlayStation, “including changing business models”. While hardware makers are the first casualties, falling console and PC sales would also eventually affect third-party game developers such as Take-Two and Ubisoft."}],[{"start":126.19999999999999,"text":"Gaming has always involved an unusual mix of the tech and media industries. As the tech side gets harder, it makes sense to lean more heavily on media. Making the most of valuable intellectual property, for example, could mean more adaptations such as Nintendo’s recent The Super Mario Galaxy Movie, which grossed more than $1bn in cinemas."}],[{"start":145.79999999999998,"text":"But the core gaming products could also be less preoccupied with technological firepower. Nintendo, again, has a head start here. Its most successful recent consoles — the Wii and the Switch — were less powerful than the contemporary PlayStation or Xbox, but offered fun new ways to play. Third-party developers, similarly, could make more games that don’t need a top-of-the-line PC or console to play. One of the most successful games of the past decade — Stardew Valley — looks like it came out in the 1990s and can be loaded on to a $45 Raspberry Pi personal computer. "}],[{"start":182.09999999999997,"text":"This sort of innovation isn’t easy: between the successful Wii and Switch was the disastrous Wii U. But the alternative — competing for supplies against hyperscalers with investment budgets reaching into hundreds of billions of dollars — is a game that console creators are never going to win."}],[{"start":206.24999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781854637_1839.mp3"}