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• Published on 2 August 2025
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 11 September 2026
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Published on 11 September 2026
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So, Nintendo has finally blinked. Faced with the dreary realities of supply chains and inflation, the company is bumping up the price of its Switch console. The immediate reaction from many was a predictable groan, another casualty of our turbulent economic times. But I think that’s a rather short sighted view. To me, this isn't just a story about a more expensive piece of kit. It’s a quiet signal that the financial gravity in the gaming world could be shifting, and not in the way you might think.
There’s a classic business model, often called the ‘razor and blades’ strategy. You sell the razor cheap to lock customers in, then make your real money selling them an endless supply of blades. For years, console gaming has worked on a similar principle. The hardware was often a loss leader, a subsidised gateway to the far more profitable world of software. Now, with the gateway itself becoming more expensive, consumer behaviour may well adapt.
When faced with a pricier console, do gamers simply throw their hands up and take up knitting? I highly doubt it. Instead, they’re more likely to stick with their current hardware for longer. And what do you do when you’re not buying a new machine? You buy more things for the one you already own. More games, more downloadable content, more digital bells and whistles. The spending doesn’t stop, it just gets redirected.
This is where things get interesting for an investor. If money is flowing away from hardware and towards software, you have to ask who is best placed to catch it. Look at a company like Electronic Arts. Love them or loathe them, their mastery of recurring revenue from franchises like FIFA and Madden is undeniable. A gamer who decides against a new console is a prime customer for the latest team updates or in game purchases.
Then you have Take-Two Interactive, the publisher behind behemoths like Grand Theft Auto. They are experts at extending the life of a single game for years, even a decade, with online content that keeps players engaged and spending. A higher barrier to new hardware could simply push more players deeper into these vast digital worlds. It’s a compelling narrative, this idea that the real money is moving away from the box itself. I’ve explored this very idea in a basket I call The Software Shift: Beyond The Console Price Hike, and the logic seems to be holding up.
Of course, it's never quite that simple, is it? This entire thesis rests on the assumption that discretionary spending on gaming holds up. If the economic squeeze gets tight enough, people might cut back on games just as they cut back on everything else. A rising tide of hardware prices could, in a worst case scenario, dampen enthusiasm for the entire sector.
Furthermore, the software world is a brutal arena. For every blockbuster hit, there are dozens of flops. Competition is ferocious, and capturing the fleeting attention of the modern gamer is no mean feat. And let’s not forget the regulators, who are casting an increasingly sceptical eye over in game monetisation. This is an investment theme that comes with its own set of risks, as all do. But the underlying logic, that of a shift in spending habits, remains a powerful one to consider. The hardware makers are feeling the pinch, but the creators of the games we all play might just find themselves in a rather enviable position.
View the full Basket:The Software Shift: Beyond The Console Price Hike
View the full Basket:The Software Shift: Beyond The Console Price Hike
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 11 September 2026
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Published on 11 September 2026
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