I don't think many of you realize that if the bill of materials is $450 and they sell the console at $499 they will be taking a loss between $50 to $100 a box due to other costs.
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Bloomberg: PlayStation 5's Bill of Materials have been pushed up to $450 due to scarce NAND and DRAM components
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Taking on a 200+ dollar loss per console = "Eating more food"
I'm D E A D XD
They are willing to take a loss, as MAU is the important metric. People thinking they will be $399 are dreaming, as like you say, the loss will be tremendous.
So i seriously don't get the issue here. "they never did this before" doesn't cut it, honestly.
The wording on that article is weird tbh.
I mean yeah...breaking news, Sony might be about to release in 2020 hardware more expensive than the Pro model from the PS4 that was released 3 years ago.
It's not too hard to get the gist of what I'm saying. That's ok though. Not sure where Xbox would be losing 200 compared to Sony's 100 comes from anyways.
Should we make an avatar bet thread on the launch price of the PS5? It seems pretty binary at either $399 or $499 USD.
So you think the actual cost (parts, production, and into my hands) is ~$600?
Well, looking like Sony will have to take a loss per console to be loss leader. I remember when PS4 launched they took a loss per unit but made it back through PSN, 3rd parties, 1st party sales, etc. A break even scenario could also happen, but knowing Sony and MS warchest to withstand Xbox losses, they'll lose the expenses game and bleed quicker. I have a feeling that Sony might have to increase PSN or release more 1st parties on PS5 launch to withstand console sales losses should they go the $450 to $499 price route. At least that's more manageable than launching a console at $399.
If this launches at less than $500, don't take it as a victory. Sony will make it up by (1) increasing the subscription costs of PSN or (2) increasing the price of peripherals. Or both. Hell, they may do that anyway, but it will be cheaper for us to eat the higher price up front than have to pay for it over the next several years via fees.
Something to note (and it's probably been mentioned in the thread already). Most console makers will sell the console itself at a loss (though eventually its sales will become profitable), but often make it up in other areas, both in licensing revenue from game licenses (both in licensing fees getting the games on their system and a percentage share of the games sales), as well as profits from their own titles. Plus other sectors I didn't mention. This is usually an area that would make up the difference.
Now, will Sony sell the console for a much lower or higher loss? I don't know. It's hard to tell with them, especially for modern Sony. I do feel the $500 would be the absolute upper limit, otherwise I feel we'll get another PS3 situation on our hands.
Now, will Sony sell the console for a much lower or higher loss? I don't know. It's hard to tell with them, especially for modern Sony. I do feel the $500 would be the absolute upper limit, otherwise I feel we'll get another PS3 situation on our hands.
When you add in warehouseing cost, retail markup, shipping, marketing, fabrication and overhead it can be.
MS will take their loss on Lockhart, if anything.
Remember the talk of $500/400/300 XSX/PS5/XSS?
I'm not sure how realistic $300 for Lockhart ever was, but if PS5 is $499 the attractiveness of a $300 Lockhart is all the greater.
Very easy for me to see all the "next gen consoles - compared" articles all concluding that XSS is the next-gen console to buy if you can forego Sony exclusives, because on sets less than 75 inches the difference between 1080 and 4k isn't noticeable for most people. And packaging in three months of Gamepass could be enough to convince some current PS4 owners to leave their digital PSN libraries behind and save the $200.
MS' two-ski next-gen condole strategy is endlessly fascinating. Could be genius. Could be disaster.
Gotcha. Do we know how much materials were for PS4 when it launched?
I think it will be pretty standard, in terms of non-cross-gen games. That is, a minority of the games of course, but more than one or two. I think it's maybe not coincidence that the first two PS5 games we know about are not also coming to PS4. Assuming they're at launch, that's two already, and they haven't even discussed first party offerings yet. Add in a couple more first party, a couple of partnered indie/second-party titles, and I expect it'll be a fairly standard launch in terms of exclusives vs cross-gen titles.
It was $381 at launch and they were taking a loss selling at $399.
PS4 costs $381 to make, according to hardware teardown
The PlayStation 4 costs $381 for Sony to build, $18 under its retail price of $399. The figure comes from a hardware teardown by research firm IHS that included the bill of materials, which amounts to $372, as well as per-unit cost of assembly in the assessment. The teardown notes that the...
www.engadget.com
$381 according to the article. Doesn't mention all the other associated costs, though.
I'm still thinking Sony is gonna shoot for $399 even if they have to sell at a loss for a little while. They did it once with PS3 so it wouldn't be out of character for them, and they know a $399 PS4 is a huge part of what won them this generation. The rarity thing is a temporary issue, where as pricing higher than MS could incur long term headaches.
Could just be coincidence, but Albert Penello's reading of the Sony CEO's comments about pricing and limiting budgets was that the Sony BOM costs were likely trending higher than anticipated, and that they were considering their options on how to deal with that. This story fits right into that theory.Just a quick FYI: The author of this article, Takashi Mochizuki, is known for making up shit:
And in May 2018 he also wrote this, and claimed he got this info from Sony PR (which was obviously a lie):
Sony Says the Next PlayStation Is Three Years Off
Sony wants to spend three more years readying its next videogame move, the head of the PlayStation business said—a slight slowdown in the six-to-seven-year update cycle for the console since the first one in 1994.www.wsj.com
Bloomberg: Sony did not say that PS5 is 3 years away
Yesterday, WSJ reported "Sony Says the Next PlayStation Is Three Years Off". This was quickly picked up by several news outlets: Gamespot Kotaku Polygon Ars Technica ...and many more. But apparently, without any additional fact-checking, which is kind of interesting considering this is...www.resetera.com
So better take this article with a huge grain of salt.
Not necessarily, when people can pick up a $150 XB1S at Gamestop and play 98% the same games it's going to be a bit harder to sell a $300 (optimistic) entry-level next-gen machine. By the time Xbox's next-gen exclusives start rolling in, the XSX will probably already be cheaper than its launch price and bundled to hell and back, depending on sales performance
Very true.. and good points. Hell. Take the loss on both. Get everyone in the ecosystem and then make the money back on gamepass and live and all the rest of that type of stuff. We shall see. What an exciting console launch this is going to be!
I haven't been following these next gen threads but I'm shocked a lot of people expected a 400$ price point for next generation. The old machines were underpowered out of the gate and allowed that price point. There's been no indication this round of consoles will do the same.
You really think the XSX will be even near 300 one year after release?
And hell, even if it was, do you think Lockhart would just be chilling at 300 the entire time?
Sounds like Sony had a choice to make. Sell it at cost but make up for it in games, PS Plus, etc - or - sell it at a loss but increase the price of services to compensate.
$399 would mean a minimum loss of $80-100 per console, probably more after all other costs are factored in.
So why don't they just sell it at cost for $449.99? No loss, no profit. Only a $50 increase from the PS4 which released over SIX years ago.
If Xbox X does $499.99, they win. If Xbox X does $399.99, an extra $50 for a (hopefully) more premium console isn't much to ask.
If Xbox X does $499.99, they win. If Xbox X does $399.99, an extra $50 for a (hopefully) more premium console isn't much to ask.
Perfectly happy with a $499 launch price. $399 would have been way to cheap and cost us all in performance
I agree with all of this (well, mostly). What I'm saying is that I won't be surprised by such a high price since I can totally see why they would need to price it like this. Whether they will or even will actually need to at the end of the year remains to be seen.
xbox one s performance compared to series x performance will be such a massive gulf that most people will not want to go with the cheaper (and soon harder to find ) option. I disagree with your point in every way imaginable.
I think the Pro isn't selling to a huge percentage either, probably better than X1X but its not replacing the base PS4 or anything close. But thats because far cheaper alternatives lots of consumers are content already existed. If both new systems launch at 499 there isn't an alternative, they will do fine as long as the products are good (the base X1 wasn't all that great, and their vision with it wasn't either).
Traditional rates shouldn't matter for a console, even if they do mid gen upgrades again you're looking at about 3 years at a minimum. Personally speaking i'm fine with replacing a system after 3 or 4 years (I bought my Pro in 2017). I like how after 7 years I am not really bothered by huge performance and IQ issues. Something that plagued the PS3 and 360 in the later years.
No need. Nadella has already committed to Xbox and Xbox + Azure. Spencer's a VP on the executive board now, and has been for a few years.
You won't see any pivot away from
Gaming in the near and mid term.
'Access to the warchest' and ' blank cheque' are two distinctly different things. At no point did I imply or insinuate a limitless budget.
The only explanation I can hazard as to why you completely misconstrued my last comment is that you may not be a native English speaker.
Like, I can't understand how "Microsoft will continue to fund Xbox as long as Nadella thinks it's important" translates to "Xbox has a limitless budget "
The $450 figure doesn't include additional costs such as packaging, transportation, retailer margins etc. The actual cost is significantly higher.
Also people that are asking Sony to eat gigantic costs are delusional. Why would Sony choose to sell sth at a huge loss over selling less consoles? Why is player base more important than actual profitability? There are only so many losses you can cover from subs and peripherals.
The XSX will drop in price much faster than the Lockhart would, especially if it launches at 300. They cant cut component costs very much at that price, especially as quickly as they could for XSX.
Yeah i dont buy that, the XB1S and PS4 Slim still outsell the 1X/Pro models by quite a margin, and if cross-gen drags on and XGS isnt making next-gen exclusives right off the bat, then the Lockhart is even less attractive to budget gamers because it's basically an XB1X with faster loading and lower resolution.
I don't really have too many qualms with paying $500-600 for a PS5, considering the quality of the components. For a device that is going to last me 6+ years, that doesn't seem to outrageous a price to pay. Especially considering the fact that a lot of us, myself included, pay $1000+ for cell phones that we're lucky if they last us 2 years. I also don't plan on investing in Microsoft's offerings this gen, at least at launch, so the higher price for one console is not as tough a pill to swallow.
You shouldn't try to talk down to me, I didn't misconstrue anything. You said that you suspect that Microsoft would "fund it as much as they need to" implying going above any standard budget it may be given at the start of the fiscal year. You might not know this, but no matter how important a product is to a company, it still has a set budget at the start of the year.
They make the other costs up in software and subscription sales. When console makers talk about selling at a "loss" they're talking about the BOM, from my understanding, not research and development costs.
I certainly don't see them repeating the PS3 strategy, especially when PS4 was all about avoiding that. They still sold at a loss, but not a big one.
$499 could very well signify a loss too. No way Sony would lose further $100 as that would mean more years without potential profit. Would take a long while for parts to become cheap enough to offset that difference.
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Between coronavirus, trade wars, the decision to use really expensive components, and the scarcity of said components.
PS5 and XSX are coming out at a really bad time.
PS5 and XSX are coming out at a really bad time.