Analyst Predicts PS5 Price Increase 'Will Have Minimal Impact on Sales of the Console' - News
by William D'Angelo , posted on 25 August 2022 / 7,586 Views
Ampere's research director for games Piers Harding-Rolls has predicted the price increase for the PlayStation 5 in select markets will have a minimal impact on the sales of the console due to how much it has been supply constrained.
"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 this price increase of around 10% across most markets will have minimal impact on sales of the console," said Harding-Rolls. "We expect Sony’s sales forecast for the PS5 to remain unchanged."
He added there is currently no indication the price of the Xbox Series X|S consoles will be going up. He expects Microsoft to take advantage of the price difference to push the value of the Xbox Series X|S.
"At this stage there is no indication that Microsoft will be increasing its prices for the Xbox Series console," he said. "Undoubtedly, Microsoft will take advantage of Sony’s increase to push its ‘value’ message, especially around the Xbox Series S, Game Pass and its All Access offer as we enter the holiday shopping season. As such, this move hands some advantage to Microsoft."
He added, "Given the facts that the PS5 has been severely supply constrained since launch, with many consumers unable to buy Sony’s latest console, and the fact 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."
The price of the PS5 has increased in Europe, UK, Japan, China, Australia, Mexico, and Canada.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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These companies forget how quick the gaming community is to turn their back and switch to the competitor. 360 was winning early on, PS3 fought for it's life, PS4 did an uppercut to the XBOne, now Microsoft is gaining a lot of ground. If Sony keeps acting like it doesn't matter and can do anything, people will turn to Microsoft. They feel really out of touch lately.
PS5 isn't increasing in the US, and in the markets where it is increasing, Sony is heavily dominant. In any event, since both of them are pretty much only available at scalpers' prices for most people, the analyst is right.
Ultimately, the biggest beneficiary to the current market conditions seems to be Nintendo.
Not saying this will reverse the tables, but it feels like every month or so Sony does something that gamers react negatively to. It takes a little to convince some, but eventually they can lose a lot of consumers acting that way again and again.
As for Nintendo, it's crazy how lucky they got for this whole thing. They got the Covid boost with their new system of 2-3 years so they were able to produce a lot. MS and Sony got the boost right before releasing the next gen, so their consoles on the market at that time weren't produced in mass and were less interesting since they were heading out. And now, price are getting up, but Nintendo managed to not cut the price this whole time so they can just keep it that way now cause they are def doing profits even without raising it.
Ps3 outsold xbox 360 despite releasing a year later and being significantly more expensive
Ps3 outsold 360 by a whopping 0.5% and only when the generation have already ended, 360 was in the lead when the gen was current. Also only the fat PS3 was more expensive, by the time the Slim models dropped they costed roughly the same. The generation was a tie, with MS winning the first half, and Sony the second.
Ps3 was outselling globally when the gen ended, and was still selling exlusives while 360 had given up. Go and see when the slim launched after the original. When you factor in the price and timing of launch, and the initial dismay of the cell processor , the fact that ps3 sold as well as it did shows how powerful the name is globally. Far from a tie. Microsoft could never do that . It would have been the end of xbox.
A ps5 increase is nothing compared to what happened with ps3 and will do nothing to market share. The fact that ps5 is in high demand , they can up the price significantly and still won't cause affect.
In the immediate future? Yes. I mean, people are still buying them for 150% above MSRP. However, in the long term it may be a problem.
In the short to medium term I would agree, but a prolonged economic crisis in PlayStations’s most important market (the EU) coupled with sky high energy prices and this price increase I think will have to do some amount of damage. There are just too many headwinds the PS5 is sailing into that competitors have other ways of mitigating.
I think the chances the PS5 outsells the PS4 lifetime dropped to 0. It was already low before but this probably seals it
Well, supply and demand. PS5 can probably still sell out sales wise. They know the demand is ridiculous. Even consoles double the price sell fast on Amazon. Not saying I agree that they should have done it, even with the economy as it is, but I don't think they are worried.
This all seems very reasonable. Like they write here Microsoft is unlikely to follow suit, and yet I still think the actual effect on sales will be minimal. For the foreseeable future this won't stop PS5s from selling out as soon as they show up, and if demand does become a problem somwehere down the line, it's not like they can't change things up then. They could always cut the price later on, or more likely, do some favorable bundles then.
The problem is the reputation hit that Sony may take. And also, they want to keep demand as high as possible for as long as possible, and this will reduce demand by reducing the number of people who are trying to find a PS5.
Sony see this inflationary cycle as a golden opportunity since it gives them the excuse to increase the PS5's price and profit at the very time they have a product that sells out all its production and it is obvious that Sony believe the cycle will be relatively short term so they want to maximise their profits while the window is open.
If this does turn out to be a short term spike like most analysts are predicting they also would feel that having used the situation to maximise their profits when the supply issue eventually improves a similar price reduction should be enough for them to pick back up most of those that this increase turns away.
Sales-wise, I agree with you. Reputation-wise, I think they're taking a longer-term hit than they realize. It would be one thing if it were an isolated moment, but it's coming on the heels of other PR disasters such as the GT7 microtransactions and downtime issues, the Horizon 2 pricing backpedalling, and more. This is part of a series of bad PR issues. If they want to hit 100+ million units sold like PS4 did, they have to keep their momentum going for many years to come, and that will be hard if they keep taking PR hit after PR hit.
Jim's power play has meant a lot of good people have left and we have some one who may have been good at running a division and corporate politics but isn't up to the top job , so we essentially had a coup that left a hawk in charge without any doves for counterbalance, so when a mistake occurs at the top their is no internal critique only public and the later occurs after the fact so we get these mistakes after mistake it seems to me that Jim should look at the Kaz Hurai playbook to see how you run a company.
At most it would be less sold out =p
I agree that this will have no affect on Sony's unit sales. But I think it will on Microsoft's. Some people who were looking for a PS5 will stop doing so and get an Xbox instead. Maybe that's a small number, maybe that's a big number, but there will be some chunk of consumers who do so. Time will tell how it all plays out.
Series X is also sold out mostly of time so it won't affect that much, and whoever was considering Series S I don't think this hike is what will make the difference as well.
But Series X was just on the verge of being broadly available in a lot of the markets in question, and this may increase demand for Microsoft just as they were started to have spare capacity.
And Microsoft has the option of redirecting stock to those markets, if that makes sense for their goals.
Well if they can make more consoles available certainly they would sell, not sure if PS5 price hike would change much on that, but sure I can't deny the possibility.
Consoles are already on life support in Japan. A price increase is not going to help the situation there.
For the uneducated none business worker drone class folks. Also MS is not in a position to raise price, they would get their clocked cleaned.
I could understand why the X1 was $100 more due to the Kinect Bundle but the PS5 being a lesser machine in terms of hardware, Example: Slower GPU, CPU and Storage Space yet they want to raise it higher than their competitors?
the demand is still too high for a price increase to matter
higher price PS5 next to a cheaper Series X may still drive people to the PS5 because of the perceived worth. Its like putting two cars next to each other and one being more expensive tends to make people think it has to be worth it even though the other is cheaper.
I feel no matter what the price of the PS5 is, its still going to sell as its the one most people want... its a PlayStation.
I don’t think that dynamic is actually applicable to the console market and the example of the PS3 is instructive. Unlike the PS5 vs the Series X, the PS3 on launch actually did have a significantly more premium feature set than the Xbox 360 (blu-ray player, onboard wifi, much larger HDD) and the market responded by punishing Sony, not rewarding them
Well... you have to remember that it was about the games and how they looked and played, not just the extras that many may or may not take advantage of. And from the games perspective, early PS3 titles were no better (if at all) than 360 titles. In many cases they were worse. So naturally people asked 'why am I paying a premium for something that isnt noticable better than the competition?'
XBO was a premium price for an inferior product (thanks kinect) and MS paid dearly throughout the gen for their miscalculation. PS5 and Series X are on par, for the most part. And those who want performance/price... they go with X. If they want exclusives they go with 5... or wait for those games to come to PC.
But just as "early PS3 titles were no better (if at all) than 360 titles... In many cases they were worse," so too is the average PS5 title no better (if at all) than the average Series X game (and in some cases worse). So how will the PS5 justify this premium feel you describe?
Considering an up to 200 price difference, and launching later, when aligned PS3 was always ahead of X360.
More people want PlayStation, but a higher price certainly isn't going to drive people to them.
