Pricing for parts may make PS5 cost more than $450, report finds

Sony may be waiting for Microsoft to blink first before it names a price tag.

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[Corruption]

We're facing a recession. I don't care how powerful it is, nobody is buying a 500 dollar console and Sony knows it. They tried this before with the PS3 and it cost them a console generation.

I bought a PS3 at launch. My friends made fun of me for spending that much on a gaming console. Later, three friends of mine each went through four Xbox 360s due to RRoDs, while I know many more that went through two or three. Meanwhile, my launch PS3 continued to work like a champ until I traded it in a few years ago.

That $600 was a bargain compared to a cheaper console that people had to buy three or four times.

Why did your friends do that? I had 3 or 4 360's crap out on me and Microsoft replaced them for free every time, even when they were out of warranty. They thew in a couple of free months of Xbox Live in addition.

Don't get me wrong, the issues with the 360 were an unmitigated disaster, however their customer service response was pretty stellar in my experience.

 

[chrisakachuck]

This Canadian actually bought his day-one PS4 cheaper than Americans because Sony kept the pricing on par with USD despite the fact our dollar had started to take a hit. A few months later Sony corrected the pricing and Canadians who waited ended up paying more. Fast forward to 2020 and I already know I'll be purchasing a PS5 for more than the PS4. Doesn't really matter from my POV as $600-900 for a console that will last a decade is a lot better than the $1000+ I spend on a phone that is toast in a couple years.

 

[Echohead2]

We're facing a recession. I don't care how powerful it is, nobody is buying a 500 dollar console and Sony knows it. They tried this before with the PS3 and it cost them a console generation.

I bought a PS3 at launch. My friends made fun of me for spending that much on a gaming console. Later, three friends of mine each went through four Xbox 360s due to RRoDs, while I know many more that went through two or three. Meanwhile, my launch PS3 continued to work like a champ until I traded it in a few years ago.

That $600 was a bargain compared to a cheaper console that people had to buy three or four times.

In my circle of friends everyone eventually tired of the 360 hardware failures and had switched to PS3 in the later half of that generation. Had I known the 360 would be such a troubled piece of hardware I would have just bought a PS3 at launch and sat on it the whole generation.

odd...I didn't know anyone with any problems from their 360s, but one did have the YLOD on their PS3.

 

[TnT993]

Well, I think that even this 500-600 dollars that will cost is pretty much fair praice considering that one S20 Ultra costs 1400 dollars, and this PS5 you can use next 5-6-7 years.
When you calculate how much PS5 would cost you per day in 6 years, if it costs 600 dollars, it would be 3.5 cents, without games.

Another thing that justifies the price is community. Unlike PC that I'm currently on, where I can't find player to play co-op Overcooked 2 or any co-op based game, my friend can easily find 2-3 players to play with at any given time of the day, which is something fantastic.

And that goes for many many MP/co-op based games.

 

[Jackattak]

Well, when a GPU for a PC can easily double or triple that price, I don't think it will be the end of the world. Blame price inflation and call it a day.

Was going to say this. I am a PC-only gamer (and a budget-conscious one since having a baby) and my budget in a single-salary household is ~$600 on a new PC and ~$300 on a new GPU every 3-5 years, depending on tech advancements.

I don't think this will be a problem, personally.

 

[SamuelAxon]

Did anyone actually think the PS5 would launch at less than $450 to begin with? The PS4 and Xbox One both launched well above that and I figured we're only going up from here given numerous factors. I never expected either the PS5 or the Series X to launch for less than $500, though I'm sure they'll go down over time.

Edit: Apparently the PS4 launched at $400 and I have a terrible memory, so I take it back. I still expected these to be pricier though, given the hardware that's already been revealed. There's no way a console with those features and specs was gonna ship for $400.

 

[faustshausuk]

There are a couple of workarounds they could consider:

1. Assuming full backwards compatibility, allow purchasers to choose from a selection of digital PS4 titles for free. This would provide at least the appearance of value.
2. Adopt an installment payment option a la Apple’s iPhone plan. $45/month over a year, including a year of PS Plus.

Either or both of those would work for me.

 

[Tofystedeth]

I got my 360 from a friend who gave it to me after the 4th time he'd had a it refurbished/replaced by MS and he just broke down and bought a new one.

It never gave me any issues at all. Guess 4th time was the charm.

 

[chrisakachuck]

Did anyone actually think the PS5 would launch at less than $450 to begin with? The PS4 and Xbox One both launched well above that and I figured we're only going up from here given numerous factors. I never expected either the PS5 or the Series X to launch for less than $500, though I'm sure they'll go down over time.

I paid $399 CAD for my PS4 on launch day. That is definitely not more than $450 USD you claim it is. ;-)

 

[solidsnake1298]

> The current-generation PlayStation 4 reportedly cost $381 per unit to manufacture originally. At launch in 2013, units sold for about $20 more than that—a thin margin, to be sure, but a margin nonetheless.

I'm pretty sure retailers didn't sell the console for nothing. Sony took a loss on each one sold at that point.

My experience on this is not current, but I worked at GameStop during the XBox 360 launch (2005) and we netted almost nothing for the consoles, which had a minimum retail price set by the manufacturer. There's a reason the company relies so hard on making up sales in high-margin used games. Big-box stores make it up in other sections.

I second this. I worked at BestBuy from 2006-2008 when the Wii was flying off the shelves and PS3's were still hard to find. BestBuy's employee discount at the time was wholesale + 5%. Our discount was zero on all game consoles. Both because there was zero margin (we were expected to up sell games, accessories, and warranties) and because I think it was a policy from Nintendo/MS/Sony to discourage employees from buying and reselling consoles on eBay.

 

[Corporate_Goon]

This Canadian actually bought his day-one PS4 cheaper than Americans because Sony kept the pricing on par with USD despite the fact our dollar had started to take a hit. A few months later Sony corrected the pricing and Canadians who waited ended up paying more. Fast forward to 2020 and I already know I'll be purchasing a PS5 for more than the PS4. Doesn't really matter from my POV as $600-900 for a console that will last a decade is a lot better than the $1000+ I spend on a phone that is toast in a couple years.

I'm planning on investing in a PS5 at launch - my understanding is it'll basically treat PS4 games like it's a PS4 Pro, so as a PS4 owner who skipped the Pro, I'll be getting an upgrade to my current PS4 games to a better-than-pro experience (thanks SSD) and setting myself up for the next generation, too.

I'm happy to drop $600 on that.

 

[Deputy Cartman]

So many people never seem to check inflation, and the fact articles, newscasts, etc. almost never include inflation-adjusted numbers bugs me:

US Inflation calculator

PS1 (1995): $299 = $506.12 (2020)
PS2 (2000): $299 = $447.93 (2020)
PS3 (2006): $599 = $766.49 (2020)
PS4 (2014): $399 = $434.79 (2020)

$470sh is historically about on par with past PlayStation consoles, aside from a certain historical anomaly that even Sony admits was a mistake.

 

[PoweredByHentai]

Honestly, I thought the biggest mic drop of 2013 was the "How to share your games on PS4" video that they made on the spot.
https://www.youtube.com/watch?v=kWSIFh8ICaA

That said, are the DRAM prices (that Bloomberg mentioned) affected by the current South Korea vs Japan spat over war-time atrocities/slave/sex labor issues? Because Japan is refusing to export 3 chemicals that are used for DRAM processing according to this article:
https://www.cnbc.com/2019/07/23/japan-s ... rices.html

 

[Corporate_Goon]

> The current-generation PlayStation 4 reportedly cost $381 per unit to manufacture originally. At launch in 2013, units sold for about $20 more than that—a thin margin, to be sure, but a margin nonetheless.

I'm pretty sure retailers didn't sell the console for nothing. Sony took a loss on each one sold at that point.

My experience on this is not current, but I worked at GameStop during the XBox 360 launch (2005) and we netted almost nothing for the consoles, which had a minimum retail price set by the manufacturer. There's a reason the company relies so hard on making up sales in high-margin used games. Big-box stores make it up in other sections.

I second this. I worked at BestBuy from 2006-2008 when the Wii was flying off the shelves and PS3's were still hard to find. BestBuy's employee discount at the time was wholesale + 5%. Our discount was zero on all game consoles. Both because there was zero margin (we were expected to up sell games, accessories, and warranties) and because I think it was a policy from Nintendo/MS/Sony to discourage employees from buying and reselling consoles on eBay.

Even when retailers are only making 1-2%, manufacturers are still losing money if it costs them $380 to make a $400 console. They have to ship all those consoles out to distributors, and the distributors will take a cut too, even if it's only 1-2% as well. If your "margin" between manufacturing cost and retail price is 5%, you're *definitely* losing money.

 

[nehinks]

We're facing a recession. I don't care how powerful it is, nobody is buying a 500 dollar console and Sony knows it. They tried this before with the PS3 and it cost them a console generation.

I bought a PS3 at launch. My friends made fun of me for spending that much on a gaming console. Later, three friends of mine each went through four Xbox 360s due to RRoDs, while I know many more that went through two or three. Meanwhile, my launch PS3 continued to work like a champ until I traded it in a few years ago.

That $600 was a bargain compared to a cheaper console that people had to buy three or four times.

Why did your friends do that? I had 3 or 4 360's crap out on me and Microsoft replaced them for free every time, even when they were out of warranty. They thew in a couple of free months of Xbox Live in addition.

Don't get me wrong, the issues with the 360 were an unmitigated disaster, however their customer service response was pretty stellar in my experience.

My 360 got the red ring and Microsoft told me it's out of warranty and I should have bought an extended warranty through Futureshop (where I bought the 360). Your experience is probably made up or an isolated scenario. I ended up buying a PS3 instead and haven't left Sony's ecosystem. I was a die-hard original Xbox fanboy as well and the 360 ruined that.

Err, what country are you in? I had two replacements, one under warranty, the other not, and both were as good as customer service can be. The 2nd replacement still runs fine...although I never turn it on anymore, with how good the backward compatibility is on the One.

 

[Corruption]

We're facing a recession. I don't care how powerful it is, nobody is buying a 500 dollar console and Sony knows it. They tried this before with the PS3 and it cost them a console generation.

I bought a PS3 at launch. My friends made fun of me for spending that much on a gaming console. Later, three friends of mine each went through four Xbox 360s due to RRoDs, while I know many more that went through two or three. Meanwhile, my launch PS3 continued to work like a champ until I traded it in a few years ago.

That $600 was a bargain compared to a cheaper console that people had to buy three or four times.

Why did your friends do that? I had 3 or 4 360's crap out on me and Microsoft replaced them for free every time, even when they were out of warranty. They thew in a couple of free months of Xbox Live in addition.

Don't get me wrong, the issues with the 360 were an unmitigated disaster, however their customer service response was pretty stellar in my experience.

My 360 got the red ring and Microsoft told me it's out of warranty and I should have bought an extended warranty through Futureshop (where I bought the 360). Your experience is probably made up or an isolated scenario. I ended up buying a PS3 instead and haven't left Sony's ecosystem. I was a die-hard original Xbox fanboy as well and the 360 ruined that.

You can call me a liar for having a different experience as you or you can do a quick Google search and see they did in fact replace many out of warranty 360's.

 

[chrisakachuck]

This Canadian actually bought his day-one PS4 cheaper than Americans because Sony kept the pricing on par with USD despite the fact our dollar had started to take a hit. A few months later Sony corrected the pricing and Canadians who waited ended up paying more. Fast forward to 2020 and I already know I'll be purchasing a PS5 for more than the PS4. Doesn't really matter from my POV as $600-900 for a console that will last a decade is a lot better than the $1000+ I spend on a phone that is toast in a couple years.

I'm planning on investing in a PS5 at launch - my understanding is it'll basically treat PS4 games like it's a PS4 Pro, so as a PS4 owner who skipped the Pro, I'll be getting an upgrade to my current PS4 games to a better-than-pro experience (thanks SSD) and setting myself up for the next generation, too.

I'm happy to drop $600 on that.

I'm in the same boat. I still use my day-one PS4 and never bothered upgrading the console. I just upgraded the hard-drive. The PS5 is going to force me to finally go out and buy a 4K TV though. I feel that will basically be a requirement for the next generation and I'll be missing out if I just stick to 1080 for another generation.

 

[MaskDeMasque]

So many people never seem to check inflation,

Oh damn, I totally forgot. I feel dumb.

This should be editor's pick.

 

[Nonapod]

I think $599 is probably reasonable but I wonder how many people would spend $699 for a PS5 or Series X? With a $450 BOM it seems like they'd almost be taking a loss at $599, although I can't be sure.

 

[SamuelAxon]

Did anyone actually think the PS5 would launch at less than $450 to begin with? The PS4 and Xbox One both launched well above that and I figured we're only going up from here given numerous factors. I never expected either the PS5 or the Series X to launch for less than $500, though I'm sure they'll go down over time.

I paid $399 CAD for my PS4 on launch day. That is definitely not more than $450 USD you claim it is. ;-)

Huh, I was wrong, I remember it being more. Maybe I was thinking of the PS4 Pro; I take it back.

 

[IntergalacticWalrus]

I'm sure if you account for inflation, those prices aren't that high compared to earlier generations.

 

[Statistical]

Cheaper is always better but I don't think $450 to $500 launch cost is a deal killer for Sony. Now if they had a build cost of $700 yeah that would be a problem.

 

[ewelch]

Planning to pick up the PS5 the second it's out. I'll pre-order at BestBuy and have six months to pay it off. I retire next month. (Been playing video games since Pong.) Time to game is going to be plentiful. Maybe I should come up with a good streamer name and make a few bucks.

 

[Old_Fogie_Late_Bloomer]

Lockhart

Odd that Microsoft, not Sony, would use that as a codename.

 

[Kevin G]

Traditionally console hardware has been sold but manufacturers make it up in licensing. Infamously MS never made a penny off of the original Xbox and the Xbox 360 was basically break even for hardware. The high cost of the PS3 looked like it'd end up losing money overall until late in its life span. This is why the followup generations from both MS and Sony were focused on being cost effective to make for their prices.

The problem for this generation is that they need to really beef up the hardware to demonstrate a big graphical jump over the previous generations. The mid-cycle refreshes were nice but they also make it harder to show off what a generational leap is (ie are you comparing the PS5 to the launch PS4 or the PS4 Pro that runs games at a higher resolution and/or frame rate?).

The core components aren't going to be that bad but it'll be storage and memory that really, really hurts costs. GDDR6 is expensive and it seems that the console makers are going all NVMe flash based for storage. I'm kind of surprised about how high end the NVMe flash storage they're aiming for actually is according to rumors. Fast PCIe 4.0 is a nice thing but more humble 2x lane PCIe 3.0 still would provide a big boot for games over spinning rust. I suspect that they're projecting hardware over the course of the console's life span but nothing would really impact starting out low and replacing the drives mid-cycle with faster/cheaper ones as the SSD market continues to evolve.

 

[Rommel102]

Phones cost $1499 what is $499 for a console?

 

[xizar]

If they deliver on the promise of backward compatibility with PS4 and PS3 (and all the others) such that I can slap Lolipop Chainsaw in the drive and it runs, I'm okay with the overpowered console with a (reasonable) profit margin.

Shit... if I can play Baldur's Gate: Dark Alliance 2 (smoothly) again, I'm okay with an unreasonable profit margin.

 

[Mordicus]

And maybe AMD isn't anymore desperate to earn some money from Sony and Microsoft on custom designs. There is probably more margins selling RyZen for gaming PCs than for consoles.

 

[Vorador]

Specs leaked suggest we're getting some beefy hardware for the PS5 and the xbox SX, so price will likely be pretty high at launch.

The question will be, how fast the bill of materials will drop.

Historically, the highest priced console has sold less in the longer run. I don't think Sony wants to repeat what happened with the PS3.

 

[Corporate_Goon]

If the old playstation BOM was $381 and it sold for $20 more, there would still be a negative margin for Sony. The retailers definitely weren't selling it for a loss. Not sure what the retailers' margin would be but it would have to be at least 15% if not the normal 30%.

This has been covered repeatedly in this thread already but no, margin on launch consoles is not 15-30%, it is 1-5%. Retailers make that up on things like extended warranties and the sale of accessories with margins in the 30-50% range.

 

[nehinks]

What about the effect of COVID-19? I'd read that electronics manufacturing is already seeing some hits. Hopefully it'll be mostly finished by the actual launch, but I could see it having an impact on manufacturing/supply chain leading up to launch.

 

[GenocideOwl]

We're facing a recession. I don't care how powerful it is, nobody is buying a 500 dollar console and Sony knows it. They tried this before with the PS3 and it cost them a console generation.

I bought a PS3 at launch. My friends made fun of me for spending that much on a gaming console. Later, three friends of mine each went through four Xbox 360s due to RRoDs, while I know many more that went through two or three. Meanwhile, my launch PS3 continued to work like a champ until I traded it in a few years ago.

That $600 was a bargain compared to a cheaper console that people had to buy three or four times.

I had plenty of xbox 360 RROD.....I just fixed it myself. wasn't really that hard if you have any knowelege of PC part building.

beyond that MS extended the warranty for the 360 and people got their shit fixed officially. if your friends spent money to buy extra xboxes for some reason that is on them.

 

[Legatum_of_Kain]

I’m calling it, $550 with a bundled download game.

The value on Sony’s side is backwards compatibility, and if Microsoft’s one has the same, it’s going to be an ugly race of exclusives.

 

[Rainywolf]

How would the digital only next gen Xbox be half the price? That sounds impossible without making it almost a streaming only box.

The only way it makes sense is if its just the Xbox One or maybe One X, in a new form factor. Otherwise yeah some sort of relatively low end device like a Roku or maybe more like the Nvidia Shield?

 

[GenocideOwl]

This Canadian actually bought his day-one PS4 cheaper than Americans because Sony kept the pricing on par with USD despite the fact our dollar had started to take a hit. A few months later Sony corrected the pricing and Canadians who waited ended up paying more. Fast forward to 2020 and I already know I'll be purchasing a PS5 for more than the PS4. Doesn't really matter from my POV as $600-900 for a console that will last a decade is a lot better than the $1000+ I spend on a phone that is toast in a couple years.

I'm planning on investing in a PS5 at launch - my understanding is it'll basically treat PS4 games like it's a PS4 Pro, so as a PS4 owner who skipped the Pro, I'll be getting an upgrade to my current PS4 games to a better-than-pro experience (thanks SSD) and setting myself up for the next generation, too.

I'm happy to drop $600 on that.

I'm in the same boat. I still use my day-one PS4 and never bothered upgrading the console. I just upgraded the hard-drive. The PS5 is going to force me to finally go out and buy a 4K TV though. I feel that will basically be a requirement for the next generation and I'll be missing out if I just stick to 1080 for another generation.

I will stick with my 65" plasma till it dies. Not really interested in dropping another few grand on a good OLED unless I have to. That or I see a really good deal and can convince the wife maybe we should....