‘Funflation’ is back and hitting gaming and streaming services

For decades, video games have been a go-to hobby for Alyx Green. But in recent years, Green has felt priced out.

Instead of buying the biggest releases, the Illinois graduate student has opted for cheaper alternatives from smaller studios or turned to board and card games. In some cases, the 31-year-old watches videos of others playing hot games on YouTube in lieu of actually playing.

“The price has been going up,” Green said. “It’s just hard to keep up.”

U.S. consumers have for years grappled with “funflation,” used to describe the sharply higher prices for live experiences like concerts or sporting events that were halted during pandemic lockdowns.

Sticker shock first felt by consumers outside the home is now following them into their living rooms. After a wave of price hikes from some of the world’s largest companies, including Amazon, Apple and Netflix, even at-home pastimes like streaming movies or playing video games are pinching the pocketbooks of consumers like Green.

Exclusive data analyzed for CNBC by PNC Financial Services shows that, as pricing pressures mounted, the average consumer pulled back on home entertainment in June compared with a year ago. That was most prominent among Gen Z and Millennial consumers, who each cut their transactions by about 4%.

“Funflation is back in 2026,” said Brian LeBlanc, PNC’s senior economist.

“We’re seeing that very clearly in things like travel, entertainment, concerts,” LeBlanc said. Now, “we’re also starting to see it more in home leisure.”

Unwelcome news

Microsoft‘s Xbox and Apple each announced price hikes for devices in late June, which Apple acknowledged in a statement was “not welcome news.” A month earlier, Nintendo said that it was raising the price of its Switch 2 in the U.S. by 11%.

Companies blamed higher prices on more expensive components as a result of the artificial intelligence-driven memory chip crunch.

Deborah Weinswig, founder of Coresight Research, said some of the increases could price out consumers.

Xbox CEO Asha Sharma said in recent interviews that gaming is becoming unaffordable and that the company will focus on making less-costly consoles. Microsoft announced this week that it was laying off thousands of workers in its Xbox unit and spinning off several gaming studios.

“We’ve reached a point where it will be hard to imagine that mass audiences can afford thousands of dollars to spend on a console generation,” Sharma said on stage during a Fortune event early last month.

Computers and related devices had gotten cheaper over time, adjusted for inflation and their capacity, as production became more efficient. But that trend has begun to reverse as component costs take off, meaning the disinflationary relief for shoppers looks to be coming to an end, said Elizabeth Renter, NerdWallet senior economist. 

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