Sony released its highly anticipated PlayStation 5 back in November, and since its debut, it has been almost impossible for retailers to keep it in stock for more than a few hours. It sold almost 5 million units in 2020, unsurprisingly becoming history’s most successful console (a record previously set by its predecessor, the PlayStation 4). However, new reports indicate that the console is actually costing Sony more dough than it is making them. Shocking, right? Yeah, I’m surprised too.
According to The Direct, Sony’s move to sell the PlayStation 5 for a lower price than its manufacturing cost is dealing a heavy blow to the company’s Games and Network Services arm. The Direct cites Sony’s newest financial report, which said, “[SIE reports] loss resulting from [the] strategic price points for PS5™ hardware that were set lower than the manufacturing costs.”
With an ever-growing library of blockbuster games such as Spider-Man: Miles Morales, Demon’s Souls, and the ill-fated Cyberpunk 2077, the PlayStation 5 certainly seemed to have more than enough to offer to entice even the most hesitant gamers to snatch up a copy or three. But according to the aforementioned report, it had more to do with Sony’s decision to offer both a $400 Digital Edition and a $500 version with a disc drive. The average cost of the PlayStation 5 sits between $460 and $490 (because of those $400 and $500 respective price points). The amount of money it takes to manufacture each console is far more than what Sony is charging for it.
The PlayStation 4 hit stores in November 2013, garnering acclaim from critics and some mild griping from players who lamented the fact that it wasn’t backward-compatible. Former PlayStation CEO Andrew House revealed that the console sold over 2 million units in just two weeks, which, at the time, was insane. In September 2016, Sony hoped to increase sales further by announcing new versions, or”upgrades,” of the PlayStation 4: the smaller PlayStation 4 Slim and the higher-end Playstation 4 Pro. Given the fact that game console companies are always looking for ways to improve upon previously-released products, it probably will not be too long before the Playstation 5 gets an update (with a new price point, too.)
Here’s the thing, though: both the X-Box One and the PlayStation 5 were originally priced at a loss. If you go even further back than that, you will remember that the PlayStation 3 was sold for $600 less than its $800 production cost. As crazy as this may seem to some, the companies do this to increase software sales at the outset. They rely on launch games to turn their efforts into profits.
The Xbox Series X, which released around the same time as the PlayStation 5, also offers some great games and sells for $499. That console was also well-received by gamers and critics alike. In contrast, the digital-only Xbox Series S will run you $299.
Do you have a PlayStation 5 or an Xbox Series X(or S)? If not, are you considering buying either one? What do you think of all these price points? Let us know, and stay tuned for any and all PlayStation 5 updates that may come our way!