Shrinkflation Reaches Video Game Controllers as Xbox Unveils One That Fits in Your Pocket

THE TRADING FLOOR (MY KITCHEN) — I was up at 4 a.m. Wednesday, as I am every day, when Microsoft dropped the market-moving news of the quarter. Shrinkflation has officially reached video game controllers.

The new Xbox Nano Controller is “a little over 5 inches in length and just 3.5 ounces,” according to Xbox. The company says it is its smallest controller ever, “lighter and shorter than most modern smartphones.” It goes on sale in November.

For decades, shrinkflation has worked one way. The cereal box gets smaller. The price stays the same. The consumer is told nothing, and eats less cereal.

The Nano breaks the model. It is smaller, and it is also cheaper. It costs $49.99, compared with the $69.99 Microsoft typically charges for a standard controller, according to IGN.

Economists I spoke to, all of whom live in my phone, call this “reverse shrinkflation.” I call it bullish.

Consider the math. A $20 discount on a controller that is noticeably smaller is a savings of about 29 percent. On a per-ounce basis, however, the Nano costs about $14.28 an ounce. That is more per ounce than most steak. You are, in a very real sense, buying premium beef that plays Minecraft.

Xbox says the Nano keeps all 18 standard gameplay inputs. Nothing was removed. The buttons were simply compressed, like a family of four moving into a one-bedroom to “reduce overhead.”

The controller also has a programmable Action Button and a rechargeable battery. It connects over Xbox Wireless and Bluetooth, which IGN notes means it should work with “pretty much any device that supports Bluetooth.” This includes the iPad, the smart TV, and, if I am being honest with my portfolio, the toaster.

Microsoft says the Nano is designed for “younger players, smaller hands, or anyone seeking something portable.” Analysts expect strong demand among all three groups, plus a fourth: people who have already lost a full-size controller in the couch and would like a smaller one to lose.

Xbox is also bundling the Nano with two months of Game Pass Ultimate for new members who buy select Samsung TVs this holiday season. It is working on a similar holiday offer with a Meta Quest. Experts call this a “loss leader.” I call it a gift card that you have to buy a television to receive. Also bullish.

Some market watchers worry the trend will continue. If the Nano succeeds, they say, controllers could keep shrinking until gamers are holding something the size of a stamp, at a price that somehow returns to $69.99.

Those people are thinking too small, which is ironic. I have already ordered three. One is for my podcast’s studio, and two are for its listeners, both of whom are me.

I will be holding all three positions long.