Sony and Nintendo play the long game over Trump tariffs

The gaming business has been remarkably stable during economic downturns. However, Nintendo stock has dropped 10% in the last week, which is a big drop after it hit an all-time high last month and gained more than 40% in the six months before the sell-off.

Fears that Trump’s tariffs will make game prices go up in the US also caused shares of Sony Group, the company that made PlayStation, to drop 6%.

The current rise in US tariffs under Donald Trump’s administration is causing worries about rising costs and problems in the supply chain. This has had a knock-on effect on shareholders’ confidence in the Japanese game makers.

The problem isn’t just with US gamers and Japanese system makers; it’s also with China. The video game market is in danger because US taxes on Chinese goods have gone up sharply from 10% to 20%. 

A lot of gaming consoles are made or depend on suppliers for key parts in the People’s Republic. This means that the industry has to deal with rising prices and possible problems in the supply chain.

The aftermath for Sony and Nintendo

The tariffs don’t directly target games, but they do affect hardware exports to the US, such as computers, mobile phones, and game consoles. This could raise prices for customers.

The fight over tariffs could also take attention away from a bigger fight going on in the gaming business. Price alone will not be enough for console makers to make money and keep market share as they get ready for their next big hardware shift. 

That said, the real fight for dominance is to get players more involved. Digital ecosystems and recurring income are becoming increasingly important for growing margins.

That will have a huge impact on the industry and force game companies to find new ways to make money, like subscriptions, special content, and going into new markets. Concerns about tariffs may be making investors sell gaming stocks, but they may not be seeing the bigger, more important game that’s coming up.

Nintendo is especially at risk. Its customers have always been price-conscious. This means passing on higher costs to them could lower demand. Taking on the effects of tariffs on the inside is also tricky because profits are already being squeezed.

The company has already lowered its profit forecast for the year to March and lowered its full-year console sales estimate from 12.5 million units to 11 million units.

For Sony, China is becoming more than just a place to make things. It is also becoming a good place to reach players. For a long time, this market was seen as weak for Sony because mobile gaming is so popular there. 

But new growth is making this market stronger for the company. With more customers, it should be better able to handle the costs that come with tariffs.

In addition, even though prices have recently dropped, the overall picture for gaming is still good. For example, Sony’s PlayStation 5 has been selling very well. It set new sales records over the holidays and sold over 9.5 million units in the last quarter, which increased Sony’s income forecast for the whole year to $87.6 billion.

Japan-based game makers experience a market crash

Many Japanese companies that depend on other companies’ technology have also been hurt, like DeNA, the company that made the Pokémon TCG Pocket.

The Japanese studio’s shares hit a record high on February 21, up 137% in a year, thanks to Pocket’s huge success. However, as one of the biggest new mobile games of 2024, the game will only last as long as players can get their hands on cheap, up-to-date phones.

Since March 3, DeNA’s shares have gone down almost 10%. Data shows that 26% of TCG Pocket players’ buying has come from the US. This makes the US the second most important market for the game after Japan. 

Capcom’s shares are also down about 10% since the day before Trump’s news. Although the company’s new Monster Hunter game, Monster Hunter Wilds, broke sales records when it came out.

Capcom’s fastest-selling game ever, it sold more than eight million copies in its first three days after its release on February 28. The company’s stock price did go up, but only for a short time.

Other mobile companies’ shares have gone down a little since the tariffs were announced, but that’s to be expected since shares change all the time. CyberAgent, which owns Cygames, has seen its shares drop by 1%, and Square Enix has seen its shares drop by 2%. The stock price of Puzzle & Dragons maker GungHo has dropped almost 4%, and the stock price of Mixi has dropped almost 6%. 

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