PlayStation 5

I think Deadline has a point. They can choose a price point where the digital edition is slightly below cost and the regular edition is intentionally sold at a larger price differential, and at a profit. It both emphasises the value of the digital edition, and increases the average sale price.

We heard estimates that build cost for the PS5 was about $460 earlier this year. So they can do the digital version at $399 at a $50 or so loss and the disc version at $499 at a small profit.

Assuming they don’t give retailers any margin at all.

Isn’t the item itself typically sold with low (no) margin, and the profit made on the add-ons (i.e., the discs, extra controllers, and the like)? Why would this be any different?

There is a difference between low margin and neither the manufacturer nor retailers making any money.

That said, it does seem like the PS3 was sold at a loss.

The more I read the conjecture in this thread, the less I know what to expect. I am still hoping for $549 for both systems.

Sony doesn’t do subsidies anymore. They stopped with the PS4. Its always sold at least at cost.

At PS4 launch Sony said it was sold at a loss, but calibrated such that the margin from other initial purchases (plus, a couple of games) would cover it.

I dunno about the cost estimates. I’ve seen claims that Sony initially lost over $100 on each PS3 at launch. That seems insane, but apparently the costs related to the Cell architecture dropped quickly over the following months.

I guess my take comes from the “after you Gaston” stuff on picking an MSRP between Sony and Microsoft. If they wanted their flagships to launch at $500, I don’t understand why they would be so hesitant. Adjusted for inflation, the PS2 launched at just over $500 and it did great numbers. Other successful consoles have launched for nearly that much.

So my uninformed guess is that both companies really, really want to launch their flagships at either $550 or $600. Too much red ink at $500. But the only thing worse than red ink is getting undercut by the other guy saying “$499!”

It’s no wonder Nintendo cannot play this game any more, apples to apples. Their revenue is a pittance compared to Sony, an insignificance compared to Microsoft.

Yes, that is the game of chicken we’ve been referring to.

Rumors about Lockhart seem to be around a lower GPU performance (as well as memory). I wonder if this is an attempt at a cost competitive advantage against the PS5 to take advantage of binning.

Nintendo never played that game. They’ve always treated their console more like toys, and they have an advantage that neither Sony nor Microsoft have: even without a single third-party game, their first-party titles can keep them profitable for a console cycle.

I mean look at the Wii. They could have over-engineered their motion controls and made them super precise, thrown in a high-powered GPU, and upped the production value on the console itself, then sold it at $399. But they’d never dream of trying to sell a console at that high a price, so they bring their costs down accordingly.

Microsoft was selling the Xbox One X for $499 until this year. Granted, not a stellar success - but it showed Microsoft could still build a great console. I don’t think that a $500 base price point is the issue, but rather “how much more than $500 can we get?”

Comments from Microsoft suggest they value Game Pass memberships very highly. That can change the initial system sales economics significantly. I suspect Microsoft will undercut Sony by $50 and include 1 month of Game Pass Ultimate plus another 3 months as a “Day One” bundle. This adds $60 of value to the package and lets them brag about how many games - especially first party AAA titles - you can play immediately for free. Microsoft can then drop the Ultimate to just 1 month in 2021 to reduce their cost without it being a big headline.

Best of all for Microsoft is Sony doesn’t seem to have a good answer to this currently. PlayStation Now could be, but Sony’s made no moves in that direction so far. It started as an answer to PS3 backward compatibility after all.

That’s what I referenced earlier about including $60 of store credit to provide more value but you’re right, they would do it as months of game pass instead.

This fits their apparent strategy of getting every gamer on Xbox and PC hooked on Game Pass.

Game Pass is pretty sweet, not gonna lie. That and Microsoft integrating PC gaming instead of shunning it have me leaning towards the Xbox over the PS5 at the moment.

I started this generation with just the PS4. It’s a solid machine. Sony is not a good steward of the platform and is actively customer hostile in some of their policies.

I moved to Xbox for the last 2 years, ended up with an Xbox One X for every member of the family. My kids and I each got a gaming PC recently. That’s really cemented the value of the PC+Xbox ecosystem for me and I’m really excited for the XSX.

Pretty interesting how things flip in the console wars. Microsoft came off as incredibly consumer hostile in the lead up to the Xbox One, which they then had to spend the first half of the generation walking back and recovering from. I too got a PS4 at launch because no way in hell was I buying the Xbox. Been pretty impressed with them the last couple years or so, though.

I’ve always been an Xbox gamer- first console bought each generation since they were introduced, though I eventually got a PS3 (used, but with hardware back-compat so I could play missed PS2 games) and finally a PS4 Pro last fall. I’m definitely picking up an XSX sometime near launch, if I can afford it (i.e., if things keep going well small-business-wise).

But having picked up a PSVR, I’m definitely interested in that console at some point, too, for the PSVR2 or whatever they call it. I’m really disappointed that MS has just dropped that entirely.

I’d agree that they’ve been trying to differentiate since the Wii. But I suspect that direction was intensified because the Gamecube cratered so badly. That console was comparable in power to the PS2 and Xbox, with a low MSRP, and it just died.

One could argue that back then, the “kiddie” label hurt when it was all about edgy. But the lesson Nintendo took away was “we’ve been losing to one deep pockets company and now there’s two of them. We can’t go head to head with them.”

Are there a huge number of people who decide which console to buy based on price? I buy Sony because I value their exclusives more and I like their controllers more and I’m already hooked into the PS+ ecosystem to the tune of hundreds of games. If price was everything, Apple would sell nothing. I don’t care if the PS5 costs $550 and the MS console costs $499. I’ll still buy the PS5.

Sure, we know that from the PS3/X360 generation. Sony came into that launch with a monstrous lead and squandered it entirely due to their pricing. The following generation MS made the same mistake.