Sony, Microsoft and Nintendo, three of the biggest game console makers in the world, have teamed up to come out against President Trump’s escalating trade war with China, warning that the president’s tariffs on Chinese goods could cause significant disruption to the gaming industry and its consumers.
Executives at all three companies came together recently to file a joint complaint to the United States Trade Representative regarding what they called “the enormous impact and undue economic harm that proposed tariffs on video game consoles would have on the entire video game ecosystem.”
{mosads}“While we appreciate the Administration’s efforts to protect U.S. intellectual property and preserve U.S. high-tech leadership, the disproportionate harm caused by these tariffs to U.S. consumers and businesses will undermine—not advance—these goals,” the companies wrote.
They went on to ask that the Trump administration remove a section pertaining to video game consoles from its final list of proposed tariffs and to thus “refrain from applying tariffs on these products.”
“The video game industry makes groundbreaking, high-technology video game consoles that entertain and engage consumers of all ages and support businesses of all sizes across the United States. As makers of virtually all video game consoles in America, Microsoft, Nintendo, and SIE (Sony Interactive Entertainment) lead the growth of this dynamic and highly innovative segment of the gaming market,” the companies said in the complaint.
“Economically, the video game industry contributes substantially to the U.S. economy, and its year-on-year growth is impressive,” the companies continued. “The U.S. video game industry generated total revenue of $36 billion in 2017 and $43.4 billion in 2018, reflecting over 20 percent in growth. This industry directly and indirectly employs more than 220,000 people.”
“Ninety-nine point seven percent (99.7 percent) of video game companies qualify as small businesses and can be found in each of the fifty states; many develop software for video games across the range of platforms, from PCs to mobile, including the video game consoles that we manufacture, and are an integral part of the booming app economy,” the companies wrote.
However, should Trump’s proposed tariffs of video game consoles take effect, the companies warned thousands of U.S. jobs would placed at risk, innovation in the game industry would be stifled, and consumers, video game developers, retailers and console manufacturers would pay the costs with higher prices.
“Although we appreciate the Administration’s goal of strengthening the protection of IP in China, video game consoles are not the focus of the Chinese practices targeted by this investigation,” the companies continued. “Video game consoles are not priorities in any Chinese industrial policies, e.g. Made in China 2025. Indeed, Chinese- developed and branded video game consoles are virtually non-existent; one video game console that launched in 2016 has not been well received by the market.”
“Moreover, because margins are tight due to the nature of our business model, incentives to steal IP to make counterfeit consoles are exceptionally weak,” they added. “Video game consoles are also relatively complex types of equipment, so the amount of effort and cost required to manufacture infringing or illegitimate products would not be justified by potential returns.”