Yes, hardware prices increase over time. Unlike the software, hardware has generally kept up with inflation. It's why we don't lament consoles no longer costing $200-250 at launch, and why $400 was enough to kill a system 30 years ago but is reasonable today.

But what's different this time is that you have the head of state of a single country unilaterally placing blanket tariffs on imports. There were already bad enough problems due to COVID-induced component shortages, which drastically affected supply, but Trump's trade war BS made it worse. The end result of this is that this is the first generation where not only have there been no price cuts, but actual price increases. The data has been pretty clear that hiking the price of hardware up by significant amounts puts a lot of downwards pressure on sales. If both COVID and tariffs never happened, this generation would have proceeded just as smoothly as the preceding generation. There would have likely been big price cuts for both the PS5 and XBS. Instead of the PS5 disc edition costing $550, it might only cost $400-450 right now. But this decade has since nearly its very beginning been anything but normal. While we aren't in a major recession again (yet), sales are slowing in a way that didn't happen when there was the actual Great Recession happening back in the late 00s (U.S. hardware sales grew and even peaked in units and possibly in adjusted revenues).

I do agree that Big Tech trying to shove "A.I." down everyone's throats is likely to have some pretty damn bad negative affects on next-gen consoles, possibly pricing many people out, unless Sony & MS decide to eat the loss and make it up through software. Video gaming as an industry might struggle for a few years until the A.I. bubble pops, though that could also cause a major recession.

People need to stop panicking, Sony just knocked it out the park with 2 mliion European sales.

So no, PlayStation is not dead. The USA on the other hand......

Between November and December, Switch 1 might reduce the deficit with Switch 2 in the US by about 800k launch aligned

Yes, even with the terrible USA sales, global sales PS5 in November has outsold PS4's 2018 November by over 700k units.

5m units sold for October+November they should easily be looking at an 8m+ holiday quarter and Sony clearly beating their forecast. Is the forecast still 15m for the FY or did they update it at some point?

It’s a uniquely US issue, I’ve noticed. For instance, NS2 outperformed NS1 November 2017 by nearly 100k WW despite falling significantly short in US. This is because NS2 saw a very solid boost over NS1 in EU, JP, and (likely) Other.

Similarly, PS5 saw an unprecedented YoY increase in EU. (Though not having JP left WW overall down. Took too hard of a hit in the US.)

Curious why that might be? I’m doubtful of it being an economic issue as (i) hardware sales have been powerful every other month this year, with NS2 even shattering records, and (ii) there is little precedent of economy correlating to poor gaming industry (e.g. 2000, 2008, and 2020–pres.).

Yes I'm not exactly sure. PS5 deals were obviously much better in EU, but even so the decline shouldn't have been so big. Worst November in 30 years for the industry is crazy while the other regions are doing fine.

This is also after they chose NOT to increase the price of the Switch 2 due to tariffs. The Switch 2 isn't priced any worse in USA to EU, if anything its better.

Question is if December is also a disaster or not.

Considering everyone saw a record low (despite it being the Switch 2 first November) There isn't a single unique factor as to why the performance is as is . The economic turnover,different tariff policies and the lack of actual real price deals on the hardwars likely mixes into the results we're seeing today.

Sure we didn't have any kind of low precedent before during such a period but when you see that the last few years have been anything but normal for the industry, is it truly a wonder why we're flabbergasted. December is likely to be affected as well, but the usual stronger performer will likely be the same as usual.

The single factor is the USA.  Everywhere else is clearly fine.

I think the main problem for Switch 2 is that next year it will likely see a price increase due to tariffs as well as RAM prices increasing due to AI, its already a hard sell for the general public at the current price so the price increase for Switch 2 next year will for a long time heavily impact its sales potential.

I think the Switch 2 will likely become a new version of 3DS, mega popular in Japan but set for steep decline in Europe and the US.

Huuuuh, yes ?! This is a statement about the US so sure, worldwide sales are absolutely fine but over simplifying the factors by "it's the USA" explains nothing.