The Video Game Industry as We Know It Is Over. Something Unsavory Is Taking Its Place.
The video game industry loves to all figures: record-breaking sales numbers, astonishing revenue growth, dazzling quantities of competing players. It makes sense that the people who make and play games love numbers: They're proof that someone is winning.
We have a new incredible number from the world of video games: In spite of an alarming price tag , it took only four days for the Nintendo Switch 2 to become the fastest-selling home video game console of all time , with 3.5 million units sold over the weekend following its June 5 release. This is tremendous business, enough for investors to take note and consider Nintendo a safe haven in a moment of extreme economic volatility . This kind of success is typically a point of pride to proponents of the video game industry, hard data proving the medium's significance to any doubters. The trouble is that the success of the Nintendo Switch 2 is likely not an indication of more boom years to come, but the last bit of open road before a steep cliff.
The casual observer has no way of knowing this, but the video game industry as we know it is effectively over . This might sound confusing—after all, don't games still make huge amounts of money? Yes, they do. But the nature of that money, or how it's made, has never been more different. The old model—the fate exemplified by the Nintendo Switch 2, where someone purchases a console with the expectation that they'll be able to buy and play a steady cadence of interesting and varied games for it over the better part of a decade—is evaporating. Instead, something more amorphous and extractive has taken its place.
The new normal of gaming is now shaped by the likes of Fortnite or Roblox , online offerings that are less games than platforms for users to make their own content or for other companies to advertise their wares. For every blockbuster film like James Gunn's Superman , there is a corresponding Fortnite promotion , and it's not always clear who pays for it, and how much. Epic Games, the maker of Fortnite , does not disclose the terms of its brand deals, but the ceiling for them appears to be astronomical. In 2024, Disney acquired a $1.5 billion stake in Epic to deepen a partnership that already saw Marvel, Star Wars, and other Disney characters appear in the game. That's enough money to fund several video games of Disney's own, and it's telling that Disney found Fortnite a better place to spend its money.
This is because some of the most popular titles in gaming are not premium products purchased for $60 to $80 apiece, like Mario Kart World . They're free-to-play games, relying on add-on subscriptions or slot-machine gambling economies (colloquially known as “gacha games” after the Japanese capsule toy vending machines ) to keep players hooked indefinitely—and spending money all the while . They are also platform-agnostic, just as playable on phones and tablets as they are expensive game consoles like the PlayStation or the Xbox.
Perspective is hard-won and difficult to obtain in any arena. Hollywood, for example, is only just starting to acknowledge that the streaming wars that have defined the business of late weren't being waged between rival networks or studios, but with YouTube . The gaming industry finds itself in a similar situation: The paradigm has shifted, and new types of games fueled by gambling logic or the streaming-adjacent appearance of endless content have net new players in droves, separating them from their cash at scale. Keeping up under the old model of building expensive new hardware and accompanying flagship titles is nigh impossible now due to the economic realities of the industry. It's expensive and time-consuming to produce the kind of work that has defined the industry. Showstopping games like Marvel's Spider-Man 2 , published by Sony for the PlayStation 5 in 2023, reportedly took upwards of $300 million and five years of development to make—an exorbitant amount that means that brands like Sony and Microsoft, respectively the second- and third-biggest gaming companies after Nintendo, can't offer a regular cadence of releases to compete with free-to-play cash cows. Other game publishers can only fill in the gaps so much—that is, of course, after you account for the waves of studio closures as investor capital has dried up and corporate owners ruthlessly pursue endlessly increasing profit margins.
In short, the video game industry is in the same sort of trouble that every industry is in, as private equity and inadequate regulation leave every sector of the US economy in shame. There's still just enough gas in the tank for Sony and Microsoft to keep making big, flashy games, but the ecosystem around them is dead. That creates enormous pressure to make sure that the few games that do get released are nothing less than massive hits—or to become something else entirely. This is how we get Microsoft's investment in becoming the Netflix of games—which, as streaming companies competing with Netflix are learning, is merely a race to become the biggest loss leader —taking its $599 Xbox and trying to remake it into a lifestyle brand, building out a service for playing video games over the internet on devices you watch to stream video, backed by a subscription catalog. Meanwhile, Sony is taking a different approach: Its ambitions lie in becoming gaming's version of HBO, as exemplified by the acclaimed television adaptation of its most acclaimed franchise, The Last of Us .
Yet Nintendo, against all odds, remains resilient. The company has long zigged where competitors zagged, eschewing cutting-edge hardware in favor of more affordable technology, making games more regularly, and marketing around new gameplay ideas instead of costly photorealistic graphics. This endears the company and its products to games critics, who can enjoy Nintendo games without having to contend with the ideological project of making games comparable to HBO shows. Stubborn asynchronicity has meant the company can still release a product like the Switch 2 and operate as if it is in a state of business as usual.
But, as Nintendo's accelerating theme parks and movie efforts indicate, business as usual might not be enough, even for this 135-year-old company. Even without volatile US trade policy making things difficult for the Kyoto-based business and its partners, Nintendo, like The Wire ’s Marlo Stanfield, has made it clear the price of the brick is going up . In 2023, Nintendo joined its peers in raising the standard price of games from $60 to $70, shedding a standard that had been in place since 2005. With the Switch 2, Nintendo has escalated again, charging $79.99 for Mario Kart World and reserving the right to do so for other games in order to find “ the right price for the value of this entertainment .” While still more affordable than many hobbies that require regular supplies and raw materials purchased from specialty shops, games of the sort Nintendo makes are quickly becoming a luxury good, competing for an ever-shrinking portion of the pie. And when every company is raising prices on everything , spending money on games with free equivalents out there doesn't make much sense. Even if they are meant to be gambling traps.
The Nintendo Switch 2 is a nice machine, a meaningful upgrade to the wildly popular console that was friendly enough to cause droves of people to pick up the hobby during the lockdown days of the COVID-19 pandemic. It has been marketed with confidence—that is to say, barely, with no real buzzy launch title beyond Mario Kart World , a game that every Nintendo owner was going to buy anyway. (Its predecessor, Mario Kart 8 Deluxe on the original Switch, is that console's top seller by a wide margin .) Nintendo's only other offering is the strange $9.99 Nintendo Switch 2 Welcome Tour , an infotainment experience where the player walks through a Nintendo Switch 2–shaped museum to learn why they just made a good investment. It is equal parts thoughtful, amusing, and insulting, which also happens to be the cycle of emotions one experiences regularly as an adult who plays video games.
The makers of video game consoles are often not just selling the gadget you order from the store. Instead, they are selling an idea: that you are buying a ticket to several years' worth of entertainment you will be happy to have the privilege of buying. The Nintendo Switch 2 has made that argument—in a few weeks, it will be home to a strange and wonderful-looking Donkey Kong game , while later months will bring the usual suspects: a Pokémon game, a Metroid sci-fi adventure, and other unannounced surprises. People who buy a Switch 2 right now can sample the most complicated types of games the new console can handle—the vibrant Street Fighter 6 , the slick and cerebral Hitman , and the anime-inflected fantasy farming of Rune Factory —in addition to nearly every game that was released on the original Nintendo Switch. It's a bounty, really. But in video games, nothing is as seductive as potential, and the potential that the gamemaker is selling now is the same business it's been in for decades now.
Nintendo was founded in 1889 as a playing-card business, bolstered by the fondness that gangsters had for card parlors as one of many loopholes in Japan's late-19th -century gambling ban. When the Nintendo Entertainment System arrived in the United States in 1985, nearly a century after the company's founding, it marked a new beginning for video games following a disastrous 1983 industry crash . Forty years later, the game industry that we knew is no more. Competitors have cycled in and out; bitter rivals are now eager partners. It's fitting that Nintendo has released what may very well be the last video game console of its kind at this moment. It's made for a neat little bookend for this era of video games: a grand opening, and a grand closing.
