The PlayStation 5 recently increased in price. At 550 €, it is approaching a psychological level which had plagued the first months of the PS3, launched at 600 €.
The PS5 has exceeded the symbolic bar of 500 €. Sony has decided to increase the price of its latest generation console, launched in November 2020, in order to absorb rising costs and unfavorable currency trends – linked to the complex economic environment. Never in the history of video games has a PlayStation console suffered inflation. Normally, we observe the opposite phenomenon: the older it gets, the less expensive a console is.
Now at 550 € in its most expensive version (the one equipped with a disk drive), the PlayStation 5 is approaching a psychological level that Sony had dared for the PlayStation 3. Released in 2007 in Europe, the console was proposed at 600 €, a far too high price which seriously weighed down the first months of marketing. Ex-CEO of Sony Computer Entertainment America, Jack Tretton confided in 2016 to IGN: ” It was difficult and extremely expensive to produce. So when the price was set, everyone knew it was not consumer friendly. And surprisingly, Sony was losing money, even at this rate. » The PS3 ended up quickly dropping in price.
Launched at 600 €, the PS3 quickly fell
The PlayStation 3 was extremely expensive when it was released but, in reality, its price was justified when one was interested in embedded technologies. The PS3 was based on an ambitious in-house processor, endowed with a power that the developers never knew how to tame (and which was to be declined in other tech products). It also offered an – excellent – Blu-ray player for less than €600, at a time when dedicated solutions could exceed €1,000 (€1,300 for Sony’s first Blu-ray player). For fans of innovation, the PS3 was therefore an excellent deal. But in the eyes of the general public, it represented far too much money to invest, especially against an Xbox 360 at 299 or 399 € depending on the version.
It only took a few months for Sony to make its PS3 much more affordable. As this Wiki page shows, the console had a very fluctuating commercial destiny, the first months, in Europe.
- March 2007: launch of the 60 GB model at €599;
- October 2007: price reduction of the 60 GB model, which goes to €499 (until its disappearance), and launch of the 40 GB model at €399;
- August 2008 : launch of the 80 GB model at €399 (which replaces the 40 GB model);
- October 2008: launch of the 160 GB model at €499.
The lesson learned from the chaotic release of the PS3 is this: when a console approaches €600, demand is dampened. It will also be recalled that Sony has skillfully used this argument with the PS4, surprisingly launched at 399 € (for the immense success that we know).
Is the PS5 worth €550?
The answer to this question is much more complex than one might think. Nevertheless, it is difficult to hear Sony’s arguments to justify this inflation when the financial results for the fiscal year 2021/2022 rhymed with record for the gaming branch. Between April 1, 2021 and March 31, 2022, it generated a net profit of 2.5 billion euros, from a turnover that tickles 20 billion euros. Suffice to say that Sony is doing quite well despite the crisis and that this sudden increase in the price of the PS5 is, at best, gluttony to maintain margins – and please shareholders.
Is Sony taking a risk with this €50 increase? A priori not, in view of the strong demand for the PS5. It has not escaped your notice that the console has been very hard to find since November 2022, a situation that is only just beginning to improve. The installed base already exceeds 20 million units, a figure that would certainly be higher without the inventory problems. The risk is mainly for the image, people who really want a PS5 are probably not close to 50 €.
It is rather Microsoft who has a small card to play with the Xbox Series X, for the moment maintained at 499 €. History has shown that the cheapest console logically has the fervor of the public (Xbox 360 > PS3, PS4 > Xbox One). But Sony, sure of its strengths and in a position of trust, seems to want to challenge it.