Will the global PS5 price increase reach the US market?

Three years after the PlayStation 3 launched, Sony cut the price of its most popular model by another $100. It was the second such price cut to that point. Two years into its useful life, the PlayStation 4 is down $50.

Just two years into the reign of the PlayStation 5, Sony has announced that the price of its hard-to-find console is going up. up. Much like PlayStation 3 and PS4, there are different circumstances and different powers in charge that lead to this unusual move. But the rise in prices is affecting all markets. except the United States. So while American buyers probably shouldn’t expect a $50 discount, let alone $100, once the PS5 turns two, or maybe even three years old, they should also expect to be dragged into a situation involving chains. supply, currency values ​​and investor anxieties. ?

Daniel Ahmad, a senior analyst at Shanghai-based gaming research firm Niko Partners, isn’t so sure. “It is unlikely to increase in price in the US given the strength of the US dollar” against other currencies, and that likely drove the initial increase in MSRP. He arrived in Europe, where the dollar and the euro are 1: 1 for the first time in 20 years, for €50 more; touched the UK (where the pound is at its lowest against the dollar since 1985) for £30 more; and tagged Japan for another ¥5,500 yen.

In an email to Polygon, Ahmad noted that the United States is the largest and one of the most competitive console markets, making a price increase there more risky. But another industry analyst familiar to the gaming public, Michael Pachter of Wedbush Securities, is somewhat more bearish on behalf of consumers.

“If they have the opportunity to raise the price in the US, [Sony] I probably will, but raising the price is such a dumb idea,” Pachter said in an email. “I hope they learn the lesson and keep it limited to the other markets.”

As for why Sony would agree to something consumers wouldn’t want (not to mention the fact that he considers it a bad move), Pachter pointed out that Sony’s previous decisions to price games at $70 and bail out the E3 activities (before COVID canceled them). ) are moves that also alienate consumers, but Sony appears to be able to pull them off without suffering much short-term punishment. The simple fact is that demand for the PlayStation 5 remains very high, even as consumers pay more than the asking price to get a bundled or new console from an aftermarket.

“We continue to see strong demand for the PlayStation 5 in all the markets we analyze and anticipate, if supply conditions improve,” Ahmad said, “that Sony will still be able to meet its unit sales targets despite the price increase given that demand still outstrips supply.” The price increase in non-U.S. territories, he speculated, was likely done “to keep hardware profitability stable and meet targets set for the [fiscal year].”

Ahmad noted that while Sony told investors a year ago that it is no longer selling the disc-drive PS5 model at a profit, its disc-less digital drive is still selling at a loss. “It is likely that Sony has increased the price of the console to keep the profitability of the hardware stable and to reach the objectives set for the [fiscal year]Ahmad added.

Pachter agreed in part. “They had planned to be profitable now [on the PS5] They were on the right track, but I guess they’re making less than planned, so they decided to shift the burden onto consumers,” Pachter said.

And going back to satisfying red-hot demand, which is keeping a price rise in the US at bay and could drive prices down elsewhere, the console’s design may still get in the way of stabilizing the supply chain. “Sony and Nintendo designed their consoles to use proprietary chips for mundane functions like Bluetooth,” Pachter said, “and the supply chain hurt them the most because they couldn’t substitute many of these chips.”

The fact that the price increase affects all markets, but the US seems to acknowledge that Sony sees a very competitive market there, where Microsoft hasn’t struggled with the same kind of supply issues (but of course not has sold so many units). Bleeding US customers for another $50 worth of the PS5 probably wouldn’t affect their demand as much, Pachter said.

But it would send another message to households about the value of a more expensive console, with its own subscription to manage, and an Xbox Series X with Game Pass as an option. It would be “one more reason to sign up for Game Pass instead of buying a PS5,” Pachter said, “and the timing is questionable.”

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