With the US rolling out new tariffs, industries—including gaming—are bracing for change. After a rocky 2024, many in the industry now face further uncertainty as the cost of gaming is set to rise even further.

In response to the first set of tariff announcements, the ESA, which represents several major video game companies, including Microsoft, Nintendo, Sony, Square Enix, Ubisoft, Epic Games, and EA, released a statement saying, "Tariffs on video game devices and related products would negatively impact hundreds of millions of Americans and would harm the industry’s significant contributions to the US economy." For publishers, this means higher production costs. For players, it could mean more expensive consoles, accessories, and even digital games.

Speaking about Nintendo’s upcoming console, the Switch 2, video game analyst and friend of Anzu, Joost van Dreunen echoed the ESA’s sentiments, outlining what this might mean for players: "The broader economic environment, particularly potential tariff impacts from the incoming US administration, could significantly influence consumer reception" toward new hardware.

Despite the shift to $70 AAA games, video game prices have remained relatively stable for decades, refusing to budge with inflation, even in the face of drastically rising development, technology, and software costs. However, 2025 may be the year this begins to change, with rumors suggesting that the highly anticipated Grand Theft Auto VI could launch with a $100 price tag for the standard edition. If this sets a precedent, other publishers may follow suit, marking a turning point for the industry.

The tariffs will also likely have a major impact on physical game production, adding further costs to an already expensive process. Executive director of games at market research firm Circana, Mat Piscatella, recently shared on BlueSky, "With 25% tariffs on imports from Mexico on the way, I can see a sharp downtick in the number of disc-based games that get released physically in the US, as much of that production infrastructure is in Mexico. If they do get made, I expect higher prices both physically & digitally."

Higher physical game prices often lead to increases in digital prices, as publishers aim to maintain pricing parity across both formats. Additionally, digital storefronts usually adjust prices in response to market expectations and competitive pressures, further contributing to rising costs for players.

Beyond game discs, controllers, headphones, peripherals, and gaming consoles may also become more expensive for US players due to tariffs—especially those produced outside the US by companies like Nintendo and Sony. We already saw this happen a few years ago when, due to supply issues and "high global inflation rates," Sony increased the price of PlayStation 5s in select territories, including Japan, Canada, and Australia.

The Impact on Gaming Trends

So, what does all this mean for the gaming industry?

1 - A Surge in Free-to-Play Games

The pandemic fueled the F2P boom, with new titles such as Call of Duty: Warzone and Genshin Impact dominating the charts. Rising prices may make AAA games inaccessible to many players. Pivoting to an F2P or heavily discounted pricing model, funded by alternative business models, could be a viable solution for publishers looking to reach a broader audience.

2 - Reviving Back Catalogs for Monetization

We may also see developers release older games for free, funded by new monetization models. A great example is EA’s decision to make The Sims 4 free-to-play, which led to a significant boost in player numbers. In the six months following this change, the game added over 16 million new players, reaching 85 million by May 2024. Increased engagement followed, with players logging 1.4 billion hours in the game in 2022 alone.

3 - Mobile Gaming Will Continue to Grow

Rising costs are raising the entry barrier for console and PC gaming, likely pushing even more players toward mobile gaming. However, the mobile space is highly competitive, with premium, immersive experiences expected at little to no cost. To succeed, developers must optimize gameplay, marketing, and monetization strategies to stand out in an oversaturated market.

4 - A Boost for Cloud Gaming

Cloud gaming’s promise has long been discussed, but rising hardware costs could accelerate its adoption. Advances in low-latency streaming technology, improved data center infrastructure, and widespread 5G deployment are making cloud gaming more viable than ever. These improvements help reduce input lag, enhance graphical fidelity, and provide smoother gameplay experiences across a variety of devices. Cloud gaming provides players with premium console gaming experiences with mobile accessibility.

Microsoft has aggressively pushed in this space with its "This is an Xbox" campaign, reinforcing that smart TVs, smartphones, tablets, and laptops can all function as gaming devices. Additionally, Sony’s PlayStation Portal, which combines local and cloud streaming, has seen strong commercial success. Within two days of its release, it sold out in the US and UK and became the best-selling PS5 accessory of 2024.

Evolving Monetization Strategies in Gaming

The standard business model for console and PC gaming has traditionally been a one-time purchase. While GTA VI may test the limits of this model, publishers like Take-Two rely heavily on recurring revenue from in-game transactions. With GTA Online generating over $1 billion annually, publishers are focusing more on in-game purchases rather than relying solely on initial game sales.

As loot boxes face increasing regulatory scrutiny and pay-to-win microtransactions are met with player backlash, alternative monetization models must evolve. Subscription services such as Game Pass and PlayStation Plus require enormous scale to remain profitable, making sustainable, long-term monetization strategies even more crucial.

With rising costs across the industry, game developers are exploring multiple monetization strategies, from ad-supported subscriptions to evolving in-game economies. As traditional revenue models face increasing scrutiny and limitations, new approaches are emerging to help developers sustain long-term engagement while keeping games accessible.

Among the evolving monetization models, intrinsic in-game advertising (IIGA) has emerged as a sustainable and player-friendly solution, widely adopted by major publishers. Alongside ad-supported subscriptions and in-game economies, IIGA offers a non-intrusive way to generate consistent revenue while enhancing player engagement—without disrupting the gaming experience.

Unlike paywalls or intrusive microtransactions, which can frustrate players and hinder progression, IIGA seamlessly integrates into the game world, adding to its realism while supporting long-term engagement. It’s a win-win for both developers and players: developers are incentivized to improve and expand their games to keep players engaged, leading to longer play sessions and higher revenue potential.

As costs rise, gaming moves toward a cross-platform future, and cloud gaming gains traction, monetization strategies must evolve to keep games sustainable, engaging, and widely accessible for players worldwide. IIGA is already playing a key role in this shift, offering a scalable, immersive alternative to traditional ad models—one that benefits both players and developers alike.