Console gamers are used to a gradual decrease in hardware costs over the lifecycle of a console, but the unprecedented global economic environment has led Sony to increase the recommended retail price of both models of the PS5 across a wide number of sales territories globally with immediate effect. The US price will remain unchanged.
According to Ampere Analysis data, by the end of June 2022, Sony had sold through 21 million PS5s worldwide compared to Microsoft’s Xbox Series consoles at 13.8 million.
The headline price increases are as follows:
- Europe – Increase of €50 per model to €549.99 for the disc version and €449.99 for the digital version
- UK – Increase of £30 per model to £479.99 for the disc version and £389.99 for the digital version
- Japan – Increase of ¥5000 per model to ¥54,980 for the disc version and ¥44,980 for the digital version ex. tax (note: effective Sept 15th due to ‘lottery’ buying schemes used in the market)
- Australia – Increase of AUS $50 per model to AUD $799.95 for the disc version and AUD $649.95 for the digital version
- Canada – Increase of CAD $20 per model to CAD $649.99 for the disc version and CAD $519.99 for the digital version
- Mexico – Increase of 1,000 Mexican pesos to $14,999 Mexican pesos for the disc version and $12,499 Mexican pesos for the digital version
- China – Increase of 400 RMB to 4,299 RMB for the disc version and 3,499 for the digital version
Increase in supply chain and distribution costs alongside strong US dollar forcing Sony’s hand
Given the facts that the PS5 has been severely supply constrained since launch, with many consumers unable to buy Sony’s latest console, and that Microsoft has shown no indication yet of increasing its Xbox Series pricing, there is no doubt that this price increase will have been a hard decision to make.
However, with inflation and price increases being felt through the component supply chain, much of that priced in US dollars, alongside continued high costs in distribution, Sony has now had to pass on some of those cost increases to try and maintain its hardware profitability targets. It follows price increase across the consumer electronics sector including Meta’s Oculus Quest 2, which saw $100 increase in early August.
Although wide ranging, the PS5 price increases are relatively nuanced and are taking place in markets where the impact is being felt the most with an added layer of squeeze coming from the strength of the US dollar. Price increases will take place in at least 45 markets globally, but not in the US, due again to the strength of US dollar currency. The US is the biggest console market globally, and where Sony competes with Microsoft most closely for market share.
Potential impact and Microsoft’s response
While we believe there will be disappointment for some consumers that have been trying to buy a PS5 without success, or that were saving to buy the console just in time for the price to increase, the high pent up demand for Sony’s device means that the price increase of around 10% across most markets will have minimal impact on sales of the console. We expect Sony’s sales forecast for the PS5 to remain unchanged.
At this stage there is no indication that Microsoft will be increasing prices for its Xbox Series consoles. Undoubtedly, Microsoft will take advantage of Sony’s increase to push its ‘value’ message, especially around the Xbox Series S, Game Pass and All Access offer as we enter the holiday shopping season. As such, this move hands some advantage to Microsoft.