Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Console gaming is serious business — and resilient, too. The industry has weathered economic downturns with remarkable consistency. Yet the latest escalation in US tariffs under Donald Trump’s administration presents a rare challenge, raising concerns over cost pressures and supply chain disruptions.Shares of Nintendo are down a tenth in the past week, a notable pullback after hitting an all-time high last month and gaining more than 40 per cent over the six months before the sell-off. Shares of Sony Group, the creator of PlayStation, fell 6 per cent on concerns that Trump’s tariffs will drive up console prices in the US. But the issue extends beyond US gamers and Japanese console makers — it’s about China. A steep rise in US tariffs on Chinese goods to 20 per cent, from 10 per cent, is a direct threat to the console market. A significant share of gaming consoles are assembled in the People’s Republic, or rely on its suppliers for key components, leaving the industry to face rising costs and potential supply chain disruptions.Nintendo is particularly exposed. Its customers are historically price sensitive, so passing additional costs on to them could depress demand. Absorbing the tariff impact internally, meanwhile, is also difficult because profitability is already under strain. The company has already cut its full-year console sales forecast down to 11mn units from 12.5mn and slashed its forecast of profit for the year to March. Despite the recent sell-off, the broader outlook for gaming remains strong. Sony, for example, has experienced exceptional sales momentum for its PlayStation 5, which set new records during the latest holiday season, selling over 9.5mn in the latest quarter — lifting Sony’s full-year revenue forecast to $87.6bn.More significantly, China is emerging as a valuable market for reaching gamers, not just as a manufacturing hub. Long considered a weak spot for Sony due to mobile gaming’s dominance in the country, new growth here is strengthening Sony’s position. This growing consumer base should help it absorb tariff-related costs more effectively.The tariff tug of war risks distracting from a bigger struggle in the gaming industry. As console makers approach their next major hardware cycle, price will no longer be the sole driver of profitability and market share. Instead, the real battle for dominance lies in deepening player engagement. Recurring revenue and digital ecosystems are becoming increasingly important to expanding margins. That will reshape the sector in profound ways, driving gaming companies to develop new revenue streams such as subscriptions, exclusive content and expansion into emerging markets. Investors offloading console stocks due to tariff concerns may be overlooking the bigger, high-stakes game that lies [email protected]
