Opinion | If Sony doesn't accept a loss on initial PS5 console sales then Microsoft's Xbox Series X will wipe the floor with the PlayStation 5
Price is one of the most discussed topics in regard to both the PlayStation 5 and Xbox Series X at the moment. While neither Sony nor Microsoft has yet revealed how much their pride and joy will cost, gamers have been hoping that both tech giants keep in mind the important aspect of affordability, which has been previously considered as the most vital factor in a potential next-gen console purchase.
The expected cost of the upcoming PS5 console has definitely endured some highs and lows: Not long ago a Canadian retailer offered up a pre-order price of CAD$559 (US$397) while a placeholder price published by a Danish retailer stated 6,989 krone (US$1,043). Although some PlayStation fans have claimed they would be willing to pay over US$1,000 for the PS5, it would seem like commercial suicide for Sony to go anywhere near that high.
Over time, price suggestions have started accumulating around the US$500 mark. For instance, an early prediction made by a Japanese research analyst settled on ¥49,980/US$499 as a potential price for the console, and this was long before Sony revealed the PS5’s specifications. The same analyst also estimated that Sony would sell 21 million PS5 consoles in the first two years of its product life cycle.
However, with the recent news that Sony might have to restrict shipments of the PS5 in its first two quarters to 5-6 million units, there has been growing concern that demand, along with the high cost of the components and assembly (estimated at a total of US$450), will force Sony to place a high price tag on the PS5. Xbox chief Phil Spencer stated in an interview that “we will not be out of position on power or price”, so this is Sony’s game to win or lose.
Sony will have to take a considerable hit with the initial release of the PS5 to remain competitive or surpass the Xbox Series X’s sales. But the figures involved will be astronomical: If Sony prices the first six million units at a gamer’s most optimistic price of US$399 and the costs are exactly US$450, then that is a loss of US$306 million just on hardware sales. Both Sony and Microsoft are huge companies with vast revenues, but Microsoft has a much greater operating income and can more easily afford to undercut the PS5 console.
With more power and potentially a cheaper price for the Xbox Series X that could leave Sony’s success with the PS5 solely resting on how strong its first-party game lineup will be. In fact, PlayStation boss Jim Ryan has already made it clear that these all-important titles “will make or break PlayStation 5”.
Currently, US$500 to US$550 seems to be the most widely expected range for the PS5’s price tag, but if Sony can aim for an initial price between US$399 and US$450 for its next-gen console then a Holiday 2020 success is practically assured, even if it costs hundreds of millions of dollars for the Japanese company in the short term.