Microsoft, Sony and Nintendo have found themselves in a situation which could see their current consoles hit by price changes.
This is connected to the ongoing trade and tariff talks between China and the United States.
This includes the US trade representative weighing up whether to apply a new round of tariffs on a number of items, including video game consoles.
If they were applied, PS4, Xbox One and Nintendo Switchs could see a price increase, something that all three companies are working to avoid.
And as you might imagine, any changes made now could also affect the price and release plans of the PS5 and Xbox Scarlett in 2020.
All three companies have set out their arguments against the new tariffs, but it appears they are also prepared to make more significant changes.
According to a new report from Nikkei Asian Review, several companies are looking to change their production setups in regions like China.
The report reads: “Microsoft, Google, Amazon, Sony and Nintendo are also looking at moving some of their game console and smart speaker manufacturing out of the country, multiple sources told the Nikkei Asian Review.
“Other leading PC makers such as Lenovo Group, Acer and Asustek Computer are also evaluating plans to shift, according to people familiar with the matter.
“Tech companies’ plans, spurred by the bitter trade battle between Washington and Beijing, have not changed despite the truce that was struck between U.S. President Donald Trump and Chinese President Xi Jinping at last weekend’s Group of 20 summit in Osaka.
“Multiple sources said the situation was still too uncertain, while rising costs in China were also prompting manufacturers to examine alternatives.”
Since this report was posted online, Nintendo has confirmed their plans to change their production setup.
“Nintendo Co Ltd plans to shift part of the production of its Switch gaming console to Vietnam from China to diversify manufacturing sites,” a spokeswoman at Nintendo told Reuters.
“The move would make Nintendo the latest company to relocate production out of China amid a Sino-U.S. trade war punctuated by tit-for-tat import tariffs spanning industries.”
For the record, neither Microsoft nor Sony have confirmed its own plans for such a move.
However, back in January, Sony did reveal they would consider doing something similar if it proved necessary.
It’s also unclear what direct effect these changes to the supply chains of these companies would have on console prices.
However, a joint statement from Nintendo, Sony and Microsoft set out what the proposed new tariffs could do to the industry.
“A price increase of 25% will likely put a new video game console out of reach for many American families who we expect to be in the market for a console this holiday season,” the joint letter explains.
“For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have, according to a recent study prepared for the Consumer Technology Association by the independent economic group, Trade Partnership.
“That study also noted that “[e]ven after accounting for new tariff revenue, the result is a net $350 million loss for the U.S. economy for each year the tariffs remain in effect, with the burden carried by U.S. consumers.
”Given that the main purpose of video game consoles is to play games, as significant as the impact of tariffs would be for video game console makers and consumers, the harm to the thousands of U.S.-based game and accessory developers who depend on console sales to generate demand for their products would be equally profound.
“The ripple effect of harm could be dramatic. Our consoles have generated a vast ecosystem of small and medium-sized game developers. A significant number of the games played on Microsoft, Nintendo, and SIE video game consoles are not developed by our companies in-house.”
More news is expected to be revealed at about the PS5 and Xbox Scarlett consoles in the coming months.