Sony Scaling Back PlayStation 5 Production Over Price, Not Coronavirus

Sony may be reducing the number of PlayStation 5s that it intends to sell this year, thanks to a mixture of price concerns and COVID-19. The PlayStation 5 is widely expected to cost more than its predecessor, with estimates of $499 to $549 not being uncommon. It's worth noting that the PlayStation 4's $400 launch price in 2013 is ~$442 in 2020 when accounting for inflation. A $500 PS5 wouldn't actually be all that much more expensive than the launch price of the PS4. For comparison, the PlayStation 3 launched at $640 and $767 in 2020 dollars ($499 and $599 in 2006 dollars). Sony expects the PS5's price to be higher at launch thanks to expensive internal components, Bloomberg reports(Opens in a new window), and as a result, the company will produce "far fewer" units than with the PS4.

Why Are Manufacturers Moving Back Towards More Expensive Hardware?

One of the big differences between this generation and the last is the way both Sony and Microsoft are approaching their hardware loadouts. While we don't know how much either console will cost, both companies have aggressively pushed the envelope in terms of CPU and GPU performance.

The PS4 and Xbox One used a capable but ultimately lower-end CPU core intended for modest laptops and paired it with an already in-market GPU core in what was, at most, a midrange PC GPU configuration. One of the most common complaints about both systems, however, was that they didn't offer as much of an improvement compared with previous consoles as expected. The Xbox One X and PS4 Pro were mid-cycle refreshes intended to solve this problem. But, having introduced them, the two companies will need to both demonstrate a significant-enough performance improvement with the PS5 and XSX to make them worthwhile upgrades.

Much will depend on whether Sony and Microsoft were willing to start shipping console hardware at a loss again, but I suspect part of the argument for selling more expensive hardware this generation is that the hardware itself is far more capable. Day One backward compatibility is a fairly rare feature. Sony offered it with the PS2 and the initial run of PS3 systems, but neither the Xbox One nor the PS4 were immediately compatible with their predecessors. This time, that's going to be different. The Xbox One and PlayStation 5 will both play their predecessors' games, which means the two companies may feel more comfortable asking gamers to pony up for new hardware.

This is a subtle point, but an important one. If I built a new gaming PC tomorrow, it would still run every game I already own, presumably at better detail levels and resolutions than I could previously achieve. Previous console launches have not offered this kind of compatibility regularly enough for gamers to expect it as a baked-in feature, but console players may feel more comfortable shucking out higher prices for hardware if they know it's compatible with the library of software they already own.

I don't envy Sony or Microsoft the difficulty of planning a console launch this year. While it's true that gaming is one of the only markets seeing robust engagement right now, it's not at all clear what the global economy will be doing in the back half of the year. But pushing back launches is also fraught with peril, because the software developers who are building launch titles for the PS5 and Xbox Series X need to recoup those investments in order to stay in business. Pushing the launches back 6-12 months might be fine from Sony and Microsoft's perspective, but their various studio partners might not be able to absorb the financial hit. Plenty of game studios have gone out of business when they couldn't ship a game on time for reasons that had nothing to do with a global pandemic.

We don't know how large these production cuts would be, but the PS4 sold 4.2 million units by the end of 2013 and 5.3 million as of February 8, 2014.

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