Gaming meets its match

Nintendo’s Mario has battled giant turtles, fire-breathing dragons, and the occasional angry mushroom. But after four decades of saving the kingdom, he’s facing an enemy that no amount of jumping can defeat: rising memory chip prices.

The real-world boss battle is playing out at Nintendo and Sony, which reported contrasting earnings today as the AI boom threatened to make video game consoles even more expensive:

• Nintendo: Quarterly operating profit fell 16% to $468 million, missing expectations, as Switch 2 sales plunged 41% year-over-year amid higher prices and a shortage of blockbuster games. Stronger software sales helped cushion the blow, and the company maintained its full-year forecast of 16.5 million Switch 2 sales. Shares fell 1.24%.
• Sony: Companywide operating profit jumped 45% to $3.95 billion, beating expectations, while gaming profit surged 83% despite a decline in PlayStation 5 sales. The company raised its annual profit forecast by 9%, sending shares up 6.19%.

The final boss

AI data centers are gobbling up memory chips, pushing prices higher and squeezing supplies for consumer electronics manufacturers. Just two days ago, Apple CEO John Ternus called memory pricing “unprecedented” and warned that costs would keep climbing. That leaves gaming companies with a tough choice: Pass the extra costs on to customers and risk hurting demand, or absorb them and watch their profit margins shrink.

Nintendo, for one, raised the US price of its Switch 2 by $50 to $499.99 in September. The company expects rising component costs and tariffs to add roughly $634 million to its expenses this fiscal year, although it says it has secured enough memory and has no plans for another price hike.

Nintendo’s physical games business faces another potential headache: Taiwan’s Macronix, a major supplier of chips for Switch cartridges, is phasing out ROM production to focus on more profitable memory products (including those used in data centers).

Sony faces similar pressure from rising memory costs, although the PlayStation maker says it has secured enough chips to meet projected sales this year.

The holiday heist

“It’s getting harder and harder to sell video game hardware these days, and only hits help,” Kantan Games CEO Serkan Toto told CNBC. Nintendo released its highly anticipated remake of The Legend of Zelda: Ocarina of Time today, while Sony could benefit from the long-awaited release of Grand Theft Auto VI later this month.

Now that the holiday shopping season is upon us, GTA bandits have a new mission: steal not only shoppers’ hearts, but their wallets, too.—SY