Switch 2 Sales Surge as PS5 and Xbox Hit Historic Lows
The Nintendo Switch 2 has become the second fastest-selling console in U.S. history, while May 2026 saw PlayStation and Xbox hardware sales plummet to historic lows following significant price increases. This stark contrast in market performance is detailed in the latest monthly report from industry tracking firm Circana.
According to Circana’s data, the Switch 2 sold 5.9 million units in its first 12 months on the U.S. market. Mat Piscatella, Senior Director, Video Games at Circana, noted this makes it the second fastest-selling hardware in U.S. history, trailing only the Game Boy Advance, which sold 6.5 million units in its first year a quarter-century ago. The Switch 2 was the best-selling console platform in both unit and dollar sales for May 2026 and the year-to-date period.
Conversely, PlayStation 5 unit sales collapsed by 58% year-on-year in May. Circana's report attributes this dramatic drop to "recent price increases," with Sony having raised PS5 prices in April. The result was PlayStation hardware's lowest May sales total since May 2000.
Xbox hardware, while seeing a 7% year-on-year increase in spending for May, experienced a 12% decline in unit sales. More critically, the report states Xbox hardware unit sales were "the lowest ever recorded for a May month." Microsoft had previously increased Xbox Series console prices in October 2025 and has announced another price hike effective August 1, citing an ongoing component crisis.
The RAMpocalypse and Rising Hardware Costs
The dramatic price increases hitting PlayStation and Xbox consoles are being driven by a severe component shortage, termed the "RAMpocalypse," which has more than doubled memory costs. According to industry reports, semiconductor manufacturers are prioritizing production of high-margin DRAM and NAND for AI data centers, creating a critical shortage for consumer hardware like game consoles. Microsoft has stated that console storage and memory prices have increased by over 2.5x and are projected to double again by the fall of 2027.
This crisis has fundamentally altered the traditional hardware pricing model. Data from Circana for May 2026 shows the average price paid for a new unit of video game hardware rose to $502, a 14% increase from $440 a year prior. The increases are even more pronounced for individual platforms: the average PS5 price surged 33% year-on-year to $672, while the average Xbox Series price climbed 22% to $524.
Unlike smartphones or PCs, consoles are typically sold at a loss or break-even point, making them acutely vulnerable to component cost inflation. Sony attributed its recent PS5 price hike to "continued pressures in the global economic landscape," a direct reference to these supply chain challenges. With Microsoft forecasting further component price doubling, the industry faces sustained pressure that contradicts the historical trend of consoles becoming cheaper over their lifecycle.
Industry Leaders Warn of Changing Business Models
Industry executives are warning that the current trajectory of rising console prices is unsustainable and will force a fundamental shift in how platforms operate. The warnings come as May 2026 sales data reveals historic lows for PlayStation and Xbox hardware following a series of price hikes, with the average price paid for a new console now exceeding $500.
New Xbox CEO Asha Sharma directly addressed the crisis, stating that soaring costs necessitate "radically different business models" for the next hardware generation. In comments reported earlier this month, Sharma indicated the industry has reached an inflection point, questioning whether mass-market audiences can be expected to pay "thousands of dollars" for a new console generation. Her remarks underscore the severe pressure Microsoft faces from the ongoing "components crisis," which has already forced multiple Xbox price increases.
Sony, facing its own challenges, has been more guarded about its future plans but has acknowledged the pressure. The company has stated that final decisions regarding the launch date and cost of its next-generation console, the PS6, are still pending, citing ongoing memory shortages impacting production. Industry reports have suggested both Sony's PS6 and Microsoft's next console, referred to as Project Helix, could launch with price tags around $1,000—a figure that aligns with Sharma's warning about four-digit console costs.
The core issue, as cited by Microsoft, is the "RAMpocalypse"—a severe shortage and price inflation for memory and storage components driven by insatiable demand from AI datacenters. Microsoft has stated that console storage and memory prices have already increased by more than 2.5 times and are projected to double again by the fall of 2027. This creates an unprecedented scenario where hardware prices are rising steeply mid-generation, contrary to the traditional pattern of cost reductions over a console's lifespan.
The immediate market reaction to these pressures has been stark. Following Sony's price increases in April, PlayStation hardware unit sales in May 2026 fell to their lowest total for that month since May 2000. Xbox, despite a recent spending increase due to higher prices, recorded its lowest-ever unit sales for a May month. The data suggests that consumer tolerance for rising console costs is rapidly eroding, setting the stage for the "radically different" approaches foreseen by platform leaders.
Can GTA 6 Save the Console Market?
The console industry is now looking to Rockstar Games' Grand Theft Auto 6, launching November 19, as a potential catalyst to reverse a steep market decline. The title is widely seen as the year's most significant release, with the power to drive hardware purchases during the crucial holiday season. However, its impact faces significant hurdles due to ongoing console supply and pricing issues.
One major retailer has already warned that there may not be enough console stock to satisfy the anticipated surge in demand for GTA 6 this holiday season, according to the primary scout sources. This potential shortage coincides with a market where the average price for new hardware in May 2026 had already climbed to $502, a 14% year-over-year increase.
The core challenge is that the "RAMpocalypse" component crisis, which has driven recent console price hikes, shows no signs of abating. Microsoft has projected that console storage and memory prices will double again by the fall of 2027. This sustained cost pressure raises questions about whether even a blockbuster title can overcome consumer resistance to increasingly expensive hardware.
Ultimately, while Grand Theft Auto 6 represents a major opportunity for a market recovery, its success may be limited by the structural issues of rising costs and constrained supply. The game's performance this November will serve as a critical test of software's ability to drive hardware adoption in an increasingly challenging economic environment for console gaming.