Rise in the price of the PS5: Sony’s opportunism (decryption)

Rise in the price of the PS5: Sony’s opportunism (decryption)


VIDEO // A look back at the announcement of the €50 increase in Sony’s flagship game console, the PlayStation 5 (PS5), with Oscar Lemaire, journalist specializing in economic issues in the world of video games.

A new hunts the other in the universe of the gaming. On Friday August 26, 2022, the video game microcosm was in turmoil after the rumor about the possible takeover of Electronic Arts by Amazon. A news that follows another piece of information that also had the effect of a bomb the day before, and which this time concerned Sony’s announcement of the price increase of its latest video game console, the PlayStation 5 (PS5), released just two years ago. Concretely, European consumers in particular will now have to pay €450 for the digital version of the PS5 and €550 for the version with Blu-ray player.

This revelation had the effect of a bomb in more ways than one. This is a first in the history of large game consoles, the movement being generally downwards from the labels. We remember the episode of the PS3, sold at its launch very expensive (600 €), before seeing its price revised downwards. For Oscar Lemaire, a journalist specializing in particular on economic issues in the video game industry, and the guest of La Quotidienne de Lâm Hua on Twitch, there was indeed the case of the Nintendo Wii in the late 2000s. , but this only related to the English market and was then linked to exchange rate issues.

The increase announced by Sony also affects a console which is still very difficult to find by consumers, and this since its launch at the end of 2020, the fault of shortages of raw materials and components in particular. The console is still not found despite the organization of distributors to meet demand and make customers wait.

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Increase for Sony, status quo for Microsoft and Nintendo

Jim Ryan, the boss of Sony Interactive Entertainment, justified this increase by “high global inflation rates, as well as unfavorable currency trends, which are impacting consumers and creating pressure on many industries”. But for Oscar Lemaire, “Sony has never made as much money as it does today. Over the last fiscal year, the brand made 2.5 billion euros in profit on the video game activity alone. And it forecasts a drop in profit to 1.8 billion in 2022”. According to him, the group can very easily withstand the current vagaries of the market while earning money.

Historically, console manufacturers tend to say that the important thing in the video game industry is the software. They could sell the consoles at a loss with an economic model that is based above all on the sale of games, services and subscriptions, the idea being to have an installed base of machines strong enough to sell the rest. This period seems to be over.

For Oscar Lemaire, the general context of inflation serves more as a pretext. He clearly sees “opportunism” from the Japanese giant. “There is an opportunity for Sony to make more money” by increasing the selling price of his console when everyone else is doing the same in tech and elsewhere. Opportunism also noted by Marc Touati, president of the consulting firm ACDéfi interviewed by our comrade Tanguy Toussaint. “Console makers and others have an interest in maintaining some scarcity to create the need, and that scarcity makes it easier to raise prices”explains the economist in the video below.

But beware of the brand image: the risk is obviously to be frowned upon for Sony in the face of a Microsoft which, since the catastrophic management of the launch of the Xbox One in 2013, shows its credentials with the gamers. The American giant remains the outsider in the game of this new generation of consoles, and it could very well do well in this new battle. There is one fact that does not deceive: Sony has not increased the price of its machines in the United States, territory in which the skirmishes with Microsoft’s Xbox Series X and S are more bitter.

nintendo and Microsoft have also confirmed that they did not touch the prices of their consoles, the Switch and Xbox Series S and X. The good guys facing the bad guy!