Sure they can, if they believe they’ll sell a ton more consoles doing it. That’s how subsidies have always worked.
It’s not even a subsidy! They are saying (under my scenario) that for every Digital Edition they will make at least $50 more per user than they would for the Standard Edition. And that’s not even counting what you would assume would be larger-than-average profits from the purchase of other digital entertainment, like movies/TV shows/etc. When you watch a blu-ray movie on a PS5 Sony gets $0. But if you buy it or rent it from Sony on the Digital Edition, they get their cut.
It’s pretty much a prisoner’s dilemma situation in business. Both companies probably want to sell their products north of $600… and if they both do, they both win. But if one of them cheats and sells below $600, they destroy their competitor.
For the me , the average Playstation user who primarly uses a PC for gaming .
I ended up with :
PS3 : 18 games
PS4 : 15 games, still want to get Last of Us 2 and that Ghosts of Tsushima , probably my last 2 games for the PS4.
All physical media.
That’s exactly right, and Sony has a real opportunity to hit MS here.
Digital Foundry says $8, and they’re as well informed about this as anyone saying anything publicly will be.
If I had to guess, I’d assume that this has to do with discounts. A large proportion of AAA games are not bought at full price.
I see where your 11 games estimate is derived from, but it’s worth remembering that this includes games that are digital-only, i.e. they get the same money from both console editions.
The only way I could see a deeper subsidy happening is to kill the second hand market / lending games to friends, without getting the xbone backlash. I think in the end I bought 5 or 6 games on the PS4, and played another 4 on disks borrowed from friends.
I’m not sure why anyone would suppose that an entry level product needs the same profit margin – long term or short term – as a premium product. That’s almost never the case.
In this situation, just because the cost of making the PS5 fat is less that $50 more than the PS5 thin, I think there’s very little chance that the consumer will only see a $50 price difference.
Finally, I suspect that the adopters in the first 6 months will prefer the premium versions of both consoles. The production will likely reflect that. It reminds me of a board game kickstarter where the campaign is designed around most buyers opting for a deluxe option. If more than 20% of your customers are opting for the entry level of a kickstarter game, you probably effed up the pricing tiers.
So even if the PS5 thin costs more to make than it sells for, it may not be a big deal for Sony.
Because here the problem being solved is that these consoles are expected to be very expensive to manufacture. So expensive that it’s going to raise the spectre of various failed high priced consoles from the past.
Sony and MS are probably aiming to sell them at cost, or maybe lose on the order of $50 at most. So if the price differential between the editions is much larger than the difference in BOM, it won’t be “sell low-end product for small margin” and “sell luxury product for huge margin”. It would be “sell low-end product for massive loss” and “sell luxury product at cost”. And then the questions
The premium product thinking already exists in the console space. It’s limited edition consoles. They usually look cool, and are targeted at fans of a specific game, or maybe the console maker’s history. The non-digital PS5 looks actively ugly compared to the digital edition. People will reluctantly buy it for utility, if they think they need the disk drive.
They look that different to you?
I just looked how many games in total are in the PS4 library… I’ve got a 140 or so. Most of these are PS Plus and digital only smaller games, and it’s been many years. I think i have 12 or 15 disk games.
One is symmetric, and one is not. So it looks much better in that regard.
Yeah I only get the exclusives.
disk
You people giving me a migraine.
Oh I do think it’s overwhelmingly likely the PS5 lite will be $50 less than the PS5 full fat. I was just speculating that Sony has an opportunity to really stick it to MS. But I don’t think they’ll take it.
You’ve all forgotten one very real possibility, which is that Sony pulls a Sony and launches the digital-only PS5 at $599 and the optical-drive model at $649 or higher.
I feel like Microsoft has the most to lose here, given that they were behind in the current generation and they’ve got the slightly more powerful machine next gen that likely will cost more to produce. If I were them, I’d just wait it out. Wait for Sony to announce their price, and then price yours based on that. If you can’t afford to be lower than them (which is likely, given their higher cost), just match them. If Sony prices it high enough that you CAN afford to be lower than them, go lower and have the potential to really do much better next generation compared to the current one. But what they can’t do is announce the price first and then have Sony undercut them again.
Yes, that makes the most sense to me. It’s pretty much Sony’s ballgame with console releases, they could probably name their price and people would go for it. MS can’t do the same. So either they wait out Sony and price below, or go balls out and price aggressively before Sony can beat them to it. And while I could see the two consoles releasing at very similar prices, I’d be really surprised if MS lets Sony undercut them a second time. They just have more to lose.
Well also don’t forget capacity; it doesn’t do any good to undercut and win the market if you haven’t enough product to sell.
That MS (if i recall) announced that they were going to have a constrained supply of (X) this Holiday season shows that it won’t just be a winning point on the demand curve.
I don’t believe that really changes the pricing relationship between the PS5 and Xbox Series X at release. They both may adjust pricing to account for that, but I still think they’re both going to end up being really close to each other regardless. Just my opinion, of course.
The one thing I’d like to see is both consoles adopting more inputs on the standard gamepad. I think fancy gamepads have additional triggers. If something like that came as standard, we’d have at least the option of richer interaction without tying our fingers in knots or punching our horses.