Sony, Microsoft, Nintendo May Move Console Production Out of China

Whoever wished on that cursed monkey paw for Sony, Microsoft, and Nintendo to team up is finally getting the cruelly ironic twist on their wish. The three main video game console companies have joined forces to petition President Trump to exempt game consoles from his proposed $300 billion worth of tariffs on Chinese-produced goods.

The companies plead their case in a joint letter to the Office of the United States Trade Representative dated June 17. They point out that 96 percent of game consoles purchased by consumers in the United States are produced in China. Furthermore, production of consoles is so complex that moving the industry out of that country, in part or in whole, is simply not feasible. Every game console is an amalgamation of numerous complex parts provided by a vast web of international suppliers, they explain. Changing their production pipeline even slightly would require a series of expensive revisions including basic quality control tests, as well as tests to confirm the new product conforms to various trade and consumer safety regulations. The whole financial ecosystem is very delicate. It also has surprisingly narrow margins — consoles are often sold at a loss, with individual machines sometimes being sold for hundreds of dollars less than what they cost to produce.

What the exact effect of the proposed 25 percent tariffs would be on the games industry is not yet clear, but it would certainly be ugly. It’s possible that game companies would be forced to distribute their additional costs across their consumer base, leaving players paying more at the storefront level for consoles, peripherals, and games — a report by Trade Partnership Worldwide estimated that the cost to consumers might be as high as an additional $840 million. In their letter, the companies also speculate that the proposed tariffs on consoles would hurt small and mid-sized software developers since if fewer consoles get sold as a result of their increased price or lower profitability, there will be a decreased demand for games, and less money to fund the ones that actually do get made.

Trump’s trade war with China is also sending ripples through the tabletop game industry. Tabletop gaming exists at a much smaller scale than video games, with small groups of independent developers working directly with Chinese manufacturers. Writing for Polygon, Pathfinder Adventure Card Game and Apocyrpha developer Mike Selinker outlined how even slight losses of potential profits to tariffs could result in products becoming completely unprofitable, resulting in the closure of smaller studios and loss of dozens or hundreds of jobs.

Trump’s proposed tariffs are proving to be wildly unpopular both internationally and domestically, and he has faced pushback on them from his own party. They are, in other words, proving to be so unpopular they’ve had the power to unite not just Sony, Microsoft, and Nintendo, but also the Democrats and Republicans. The next step is clearly human sacrifice, dogs and cats living together. Mass hysteria!

Patrick Lee
Patrick Lee is a writer, illustrator, photographer, designer, and serial arsonist from Toronto. He has written for The AV Club, and for his personal website, About Face.

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