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[Elysium44]

Taken from the lens of inflation, I guess economies of scale haven't balanced that out 3+ years in. Irrespective of that, eventually you're going to price out a large number of people who typically buy-in at lower price points. I'm betting the majority of PS4s sold at $299, not $399 ( just a guess of course). Of course, the economy is different post 2020 but it is what it is. It feels like $100 leaves my wallet every-time I leave my house nowadays.

With everything going on in the world right now, we're lucky these things haven't doubled in price, honestly. In Europe, imports from the far east like consoles which used to come via the Red Sea are now making a 3500 mile longer trip. Oil costs 50% more than it did in 2016 as well. Sony is not making much money selling at these prices, if they make anything at all.

 

[devilNprada]

That's what businesstoday is claiming based on information from suppliers.

Machine translation:
Not only laptops, but also consumer electronics, the demand is extremely bleak. It is understood that the two major game console manufacturers, Sony PlayStation and Microsoft Xbox, both faced the challenge of lower-than-expected sales and excessive inventory during the Christmas season last year. In order to clear inventory, Sony has notified its supply chain, including assembly plant Hon Hai, and power supply manufacturers Delta Electronics and Lite-On, that PlayStation orders will be cut in half in the first quarter of this year, from about one million units per month. , lowered to 500,000 units, and Microsoft also informed assembly plants Pegatron and Hon Hai, and power supply manufacturers Qundian and Lite-On that "Xbox production will be completely suspended in the first quarter."

Source:
https://www.businesstoday.com.tw/article/category/183015/post/202401240002/

Most seasonal manufactures do this... Then start ramping up production about July-November for the holidays.

 

[DosGamer]

Where there is smoke... there is fire.
MS was giving xbox's away like crazy to phone suppliers and even furniture stores if I remember. The gamepass model is failing them and the consoles are not moving.
The only thing I dont buy about the article is the news about Sony. Playstations are still selling well, though, they could use a small price drop.

 

[Negotiator101]

Time for a price drop Mr Sony.
PS1, PS2, PS3 had plenty price drops, especially when the slim came.
Maybe they are waiting till the Pro

Still selling at a loss that's why, previous generations had seen bigger drops in manufacturing costs.

 

[HeWhoWalks]

Still selling at a loss that's why

Receipts please. I thought they were breaking even at this point?

 

[TGO]

Still selling at a loss that's why, previous generations had seen bigger drops in manufacturing costs.

Sony’s $499 PS5 is no longer selling at a loss

The PS5 won’t be costly like the PS3.

www.theverge.com

That was in 2021
At that time, only the digital version was selling at loss.
Things have clearly changed since then with the launch of the new models.

 

[dragonyeuw]

With everything going on in the world right now, we're lucky these things haven't doubled in price, honestly. In Europe, imports from the far east like consoles which used to come via the Red Sea are now making a 3500 mile longer trip. Oil costs 50% more than it did in 2016 as well. Sony is not making much money selling at these prices, if they make anything at all.

Yeah, we're all hurting.

 

[Killjoy-NL]

With everything going on in the world right now, we're lucky these things haven't doubled in price, honestly. In Europe, imports from the far east like consoles which used to come via the Red Sea are now making a 3500 mile longer trip. Oil costs 50% more than it did in 2016 as well. Sony is not making much money selling at these prices, if they make anything at all.

I thought ships coming from China can freely go through the Red Sea, depending on which company is behind it?

Afaik Russian and Chinese ships aren't being targeted by the Houthis.

 

[thicc_girls_are_teh_best]

This all sounds very plausible. Also, it sounds like Sony will fall short of their 25M FY shipment target by around 2M+.

Kinda mind of mind-boggling that by its third year PS5 has just not had a price drop, but even got more expensive. I hope the testing the limits of the price elasticity experiment has ended. I would really like to see what a $300 PS5 would do in the market. Or let's make it fair and say a $350 PS5 being that XSX flirted with that price point (or are they still doing that?).

The new digital model should've kept the $399 pricing; I don't see any reason for it to have jumped to $449 other than to test exactly what you mentioned. The new digital model at $399 would've probably also hit Xbox sales even harder than they did during the holiday period; we could've been talking about an Xbox Series that barely got north 6.5 million for the entire 3rd calendar year (barely better than OG Xbox's 3rd calendar year), instead of one that got slightly north of 7 million (still abysmal, but better than what the forecast looked to be trending the whole year).

Like someone said earlier, I wonder if it's normal to maybe reduce production volumes in a CY Q1 for hardware when that's typically the slowest period of the year. If not, then I would have to wonder to some extent what relative lack of new 1P AAA and AA traditional game reveals from Sony (1P can also include 3P games they're co-funding/co-developing and publishing), combined with the PC porting strategy for current-gen traditional titles, are starting to show negative effects on console sales trajectory going forward.

I personally don't quite think that's the case yet and any slow down in sales would probably mainly be caused by the $50 price increase for the new model, but that doesn't mean those points of concern can't or won't eventually have negative effects for future hardware sales and revenue. Not unless there's been some serious restructuring of the strategy on Sony's part internally, and I'm hoping there has. FWIW they did reveal PHYSINT with Kojima Productions, but that's practically a PS6 title. So it has little bearing on PS5 software release calendar whatsoever.

Nothing to really say WRT Xbox; we already know the dire situation going on there hardware-wise. PS5 is nowhere near that obviously, and is doing very well, and this rumor regarding PS5 production cut for the quarter could very well be false or exaggerating the amount of production being scaled back. But, I don't want people to think those three concern points (price, port devaluing, little new 1P exclusive reveals) can't become bigger problems going forward for new hardware sales and overall gaming revenue if Sony/SIE aren't on top of things, regardless of whatever's happening with platforms like Xbox. PlayStation still has to compete with Nintendo, Steam, and even mobile.

If Sony/SIE want to expand the ecosystem that's perfectly fine, I just don't want them to ever forget about prioritizing the console through action, not mere words.

 

[Dr. Wilkinson]

If this is true, it's time for a permanent price cut of at least $50 for PS5.

They'll just continue to cut production costs by making it smaller and more efficient. Price cuts nowadays are likely a thing of the past.

 

[Tarnpanzer]

Thats inflation.

What we need is higher salaries for the lower classes.

 

[thicc_girls_are_teh_best]

Thats inflation.

What we need is higher salaries for the lower classes.

I mean yeah but that's outside of the scope of console production

Spoiler

Microsoft could stop firing so many of its gaming staff tho

 

[Heimdall_Xtreme]

I never imagined that Xbox would be the new Dreamcast.

 

[StereoVsn]

The prices are reasonable as far as I'm concerned. We've had inflation since 2016. The slim PS4 released at $299 which is $380 in today's dollars. It had a 512GB 5400rpm hard drive. The PS5 slim has a 1TB SSD, not to mention a much more powerful CPU and GPU. It is very cheap for what it is.

Inflation is not something that got invented in 2020. There was inflation to be mindful of for other console cycles.

Sony cut costs in production for new PS5 models. Reportedly TSMC cut costs on older 7nm and 6nm lines as well.

 

[thicc_girls_are_teh_best]

Inflation is not something that got invented in 2020. There was inflation to be mindful of for other console cycles.

Sony cut costs in production for new PS5 models. Reportedly TSMC cut costs on older 7nm and 6nm lines as well.

True but prices for other components might've gone up, like the RAM for example. Or the copper used for the cooling pipes. Hell even the Blu-Ray drive component pricing might've gone up, all due to inflation.

That was actually the reason for the initial price increase as far as I understand.

 

[apocaliptic]

Prices will drop eventually. Waiting on Xbox series X to go fo $99. This console is almost dead

 

[Neilg]

Not sure what to make of this without context... Do consoles usually ramp down production after a Q4?

yeah. you want to overproduce for Christmas. you have to make sure everyone who wants one gets one. If you did that properly, you will have a surplus.
MS halting production for 3 full months is more newsworthy, but sony dropping it to 50% is not imo.

 

[Punished Miku]

Prices will drop eventually. Waiting on Xbox series X to go fo $99. This console is almost dead

It's worth grabbing one just to get Ninja Gaiden Black, and the real version of Ninja Gaiden 2.

 

[Elysium44]

Inflation is not something that got invented in 2020. There was inflation to be mindful of for other console cycles.

Sony cut costs in production for new PS5 models. Reportedly TSMC cut costs on older 7nm and 6nm lines as well.

Inflation has been low for a very long time until recently, so it has more of an effect now than it did on previous generations, that's all I mean. It's why people complaining about $70 games are silly when in real terms the price is the same as it was a few years ago.

 

[StreetsofBeige]

They'll just continue to cut production costs by making it smaller and more efficient. Price cuts nowadays are likely a thing of the past.

Pretty much. The last time there were giant price cuts was the 2000s gens where systems would eventually get dumped for $99 or $129. I remember PS2 slims at the end being sold at Canadian Tire for I think $79. Who knows, maybe at that price and manufacturing they are still making money off that, but it doesn't seem like console makers are interested in big price drops for share or unloading anymore. They'd rather cut the cord at less console sales at higher prices. I see the same thing for 4k players. If this was the DVD/BR gen, we'd already have tons of players at $99. Now the cheapest one I see is still stubbornly at $250 CDN and go up to like $500. Most are holding at $300-400 for years.

Kind of like TV makers. That new $2000 TV eventually drops to maybe $1000-1500, but when it gets to that point they just stop making it and launch new $2000 TVs again. Regardless of manufacturing efficiencies, they dont keep it around for 7 years and end up selling it for $500.

 

[Allandor]

Pretty much. The last time there were giant price cuts was the 2000s gens where systems would eventually get dumped for $99 or $129. I remember PS2 slims at the end being sold at Canadian Tire for I think $79. Who knows, maybe at that price and manufacturing they are still making money off that, but it doesn't seem like console makers are interested in big price drops for share or unloading anymore. They'd rather cut the cord at less console sales at higher prices. I see the same thing for 4k players. If this was the DVD/BR gen, we'd already have tons of players at $99. Now the cheapest one I see is still stubbornly at $250 CDN and go up to like $500. Most are holding at $300-400 for years.

Kind of like TV makers. That new $2000 TV eventually drops to maybe $1000-1500, but when it gets to that point they just stop making it and launch new $2000 TVs again. Regardless of manufacturing efficiencies, they dont keep it around for 7 years and end up selling it for $500.

That was the time of new production structure shrinks every few month. If you had a chip back than it could be shrinked to the half a year later and costs per chip sank, power consumption dropped and this also resulted in lower cost for other parts. Nowadays this is much more complicated and expensive. And even than you can't make it half the chip size and the price is still the same (best case). And this counts not only for the APU, but for the other parts (memory) too.

 

[SneakersSO]

Catching up to back-orders by halving the production?

Not sure how that tracks.

I'm also not sure that Sony wouldn't be entering new production on Pro models. They'll have to start production on it, at the very latest, in Q2.

At this point, who knows what the fuck MS is gonna do with XS though.

 

[StereoVsn]

True but prices for other components might've gone up, like the RAM for example. Or the copper used for the cooling pipes. Hell even the Blu-Ray drive component pricing might've gone up, all due to inflation.

That was actually the reason for the initial price increase as far as I understand.

RAM dropped quite significantly over last few years. Same as SSD pricing. Just now started to go up again once vendors cut production.

IMO this is mostly on Sony. We will see if they are going to be willing to cut pricing to meet their 25mil projection or at least come close.

 

[Killjoy-NL]

Catching up to back-orders by halving the production?

Not sure how that tracks.

Just realized what you said.

Halving production because they already caught up with back-orders and meeting demand, obviously.

 

[StereoVsn]

Inflation has been low for a very long time until recently, so it has more of an effect now than it did on previous generations, that's all I mean. It's why people complaining about $70 games are silly when in real terms the price is the same as it was a few years ago.

$70 are not really $70 though. Add in MTX, special editions, regional differences ($100 in CA dollars) and so on.

For some games it may make sense, for others like P3 Reload it’s bullshit.

For hardware components it’s a lot more nuanced. For example neither China nor Japan had high inflation. Heck, China is in deflation.

Hardware components like flash memory for both RAM and SSD went down in price. TSMC improved production lines and Sony’s 6nm line should be also lower cost.

Sony redesigned the “slim” versions to cut costs including mostly same manufacturing line now.

Basically inflation shouldn’t be thrown around as an excuse for these large corpos. Yes, sometimes it is inflationary costs but a lot of times it’s Corporate greed.

 

[DaGwaphics]

Pretty much. The last time there were giant price cuts was the 2000s gens where systems would eventually get dumped for $99 or $129. I remember PS2 slims at the end being sold at Canadian Tire for I think $79. Who knows, maybe at that price and manufacturing they are still making money off that, but it doesn't seem like console makers are interested in big price drops for share or unloading anymore. They'd rather cut the cord at less console sales at higher prices. I see the same thing for 4k players. If this was the DVD/BR gen, we'd already have tons of players at $99. Now the cheapest one I see is still stubbornly at $250 CDN and go up to like $500. Most are holding at $300-400 for years.

Kind of like TV makers. That new $2000 TV eventually drops to maybe $1000-1500, but when it gets to that point they just stop making it and launch new $2000 TVs again. Regardless of manufacturing efficiencies, they dont keep it around for 7 years and end up selling it for $500.

That choice, about not continuing to push the price down on the consoles as best they can, is an interesting one to me. Maybe it doesn't make a difference, but on the flip side maybe it is. Is this one of the things that is stagnating the overall console player base? The PS4 did phenomenal, but how much better could it have done if it somehow got down to $149 or $99? Does that put it in 200m + units sold territory? Does that double the service revenues etc.? Do those changes make it worth it?

 

[Rat Rage]

The age of powerful graphics is over. Microsoft and Sony both are going to start to feel it very badly. Now, their plan to bank their whole success on cinematic games (which are no longer sustainable, because they are too expensive to make) will backfire on them harshly.
If you think the transition from PS4 to PS5 was underwhelming, then just you wait for transition from PS5 to PS6. PS6 will suffer the most from diminishing returns. In fact, you won't even see many 3rd party publishers anymore who are a) even capable of 500 million dollar photo realistic video game development nor b) are willing to attempt it, but most importantly c) the average customer won't give a shit about 4K, 8K, 240 fps and such.

Next generation the most affordable console is gonna win with the best exclusive games, not the most powerful. Mark my words.

 

[ChuckeRearmed]

For Xbox I presume is that the stock is not moving much but PS results are surprising. The earnings call will be interesting.

 

[devilNprada]

What we need is higher salaries for the lower classes.

They tried that in California all it did was lower the standard of living for the middle class, and now they all want to leave...
Laisse-faire my friend...

 

[Unrivaledx88]

Makes sense games have not been the best these holiday season . On both sides. Less and less games good games this holiday season

 

[thicc_girls_are_teh_best]

RAM dropped quite significantly over last few years. Same as SSD pricing. Just now started to go up again once vendors cut production.

IMO this is mostly on Sony. We will see if they are going to be willing to cut pricing to meet their 25mil projection or at least come close.

Well as-is they should do ~ 22 - 23 million for the FY, so that's definitely close. Still though, they could fall short 2-3 million if sales don't pick up. 25 million was probably never a realistic sales target, just their top-end if it could be reached.

Had they set 20 million for the FY not only would it have been more realistic, they'd surpass it.

The age of powerful graphics is over. Microsoft and Sony both are going to start to feel it very badly. Now, their plan to bank their whole success on cinematic games (which are no longer sustainable, because they are too expensive to make) will backfire on them harshly.
If you think the transition from PS4 to PS5 was underwhelming, then just you wait for transition from PS5 to PS6. PS6 will suffer the most from diminishing returns. In fact, you won't even see many 3rd party publishers anymore who are a) even capable of 500 million dollar photo realistic video game development nor b) are willing to attempt it, but most importantly c) the average customer won't give a shit about 4K, 8K, 240 fps and such.

Next generation the most affordable console is gonna win with the best exclusive games, not the most powerful. Mark my words.

I think you're right to some extent. Which is why I've been saying (and hoping) that for PS6 Sony have more planned for immersion and innovation rather than just chasing more power. Sure, PS6 will be a noticeable improvement over PS5, but it doesn't need to be some 100 TF monster. That's just power for power's sake. It doesn't "need" 64 GB or 128 GB of RAM, either.

If anything, I want them to make VR/AR a standardized part of the platform, if they can get it to scale production-wise to where a cheap headset included with every box wouldn't bump up production costs too much. If that means a system with 32 GB of RAM instead of 64 GB, so be it. If it means cutting down the storage for a lower SKU to a smaller amount, so be it. People can always buy larger storage and a launch SKU with small storage didn't hurt the 360 back in its day. There's so much for QOL UI and gameplay innovation that devs could be assured is worth pursuing with a cheap VR headset included with every system, and Sony are in the best position out of anyone to make it happen. It's where I think developments with the PS Portal, and refinements for Remote Play with PS.Link, could be very useful.

Even with Xbox, this is a reason why I've been saying, if they do continue hardware, they should shift to a PC gaming model and make consolized gaming PC NUCs, or laptops etc. running Windows and having support for regular Windows environment and a default Xbox "Big Picture Mode" UI gaming-centric frontend. If they can't chase power just for power's sake going forward, and knowing their particular problems with the Xbox console business hardware-wise this gen and last, why not change the business model to something that combines the strengths of two branches (Xbox and Windows/Surface) into one? Nintendo had to do it, Sony had to do it as well (though in a different sense). It's time for Microsoft to do it for their own gaming brand's hardware.

And again, we could still see meaningful power increases for the next Sony console or Microsoft system(s), but this way they'd be offering more things aside just that, which can keep a lot of people interested in buying the hardware and attract new people to buy the hardware.

 

[StreetsofBeige]

Thats inflation.

What we need is higher salaries for the lower classes.

Whats needed is lower interest rates like since the 2008 global crisis. Interest and inflation rates were rock bottom until 2021-22 when things all jacked up together. When rates were low for like 13-14 years, prices and rents were all steady and low. Landlords dont need to raise rents when mortgage rates are 2%. They do when it's 4%... 5%... 6%.

Low rates doesn't mean everything zooms up because people have more money to spend. Thats an economics book theory that doesn't always hold up in real life.

 

[HeWhoWalks]

The age of powerful graphics is over. Microsoft and Sony both are going to start to feel it very badly. Now, their plan to bank their whole success on cinematic games (which are no longer sustainable, because they are too expensive to make) will backfire on them harshly.
If you think the transition from PS4 to PS5 was underwhelming, then just you wait for transition from PS5 to PS6. PS6 will suffer the most from diminishing returns. In fact, you won't even see many 3rd party publishers anymore who are a) even capable of 500 million dollar photo realistic video game development nor b) are willing to attempt it, but most importantly c) the average customer won't give a shit about 4K, 8K, 240 fps and such.

Next generation the most affordable console is gonna win with the best exclusive games, not the most powerful. Mark my words.

The problem here is a. Most of their games are not cinematic experiences and b. One company is struggling while the other is not. So, a blanketed solution like you are suggesting (through wild speculation at that) won't be the serum. Sony has carved out a success with their franchises and will adjust accordingly if that's to dry up (let's not act like they are in some form of trouble here). Microsoft also will (and is going to) adjust accordingly. The market is largely rejecting their offering, hence the leaks/rumors.

 

[LiquidMetal14]

Prepping for the Pro

 

[onQ123]

Now maybe Sony can produce a decent amount of Portals

 

[Shadowstar39]

Time for a price drop Mr Sony.
PS1, PS2, PS3 had plenty price drops, especially when the slim came.
Maybe they are waiting till the Pro

Yet they won't. I remember when price drops were the norm. PS1 went down from $299 in 95' down to $99 in 1999 (and even down to $50 by 2002). PS2 same thing just from 2000-2009 (299-99) , PS3: $499/599 down to $229 at the end.
PS4, hahah... started at $399, now 299 (and during covid until last year it was launch price or more). In fact this is the first generation we seen price increases, for all three companies.

 

[LordBlodgett]

The Covid boost in gaming is over, and unfortunately I think both console manufacturers probably assumed it would keep going and made forecasts with that in mind. I also think supply has caught up with demand, especially with Starfield not hitting like Microsoft expected.

Now seems to be the time for price cuts on these systems. Juice the demand a little.

 

[JackMcGunns]

Receipts please. I thought they were breaking even at this point?

Right? going on the 4th year without a single official price drop is bonkers.

 

[mckmas8808]

Thats inflation.

What we need is higher salaries for the lower classes.

We have higher salaries for the lower classes. Salaries have been going up for a few years actually.

 

[LavitzSlambert]

Price drops needed.

Crazy to think some regions in the world are still paying more for these consoles then at launch.

I can't wait to go back to the normal word where price drops and sales are necessary to move product. Tired of people literally competing to overpay for consoles and games, and keyboard warriors bragging about how buying something at the same price 3 years later is "actually on sale because inflation". Technology in particular is naturally deflationary. Improvements to efficiency means you can get better tech at lower prices as time goes on. Yes, Moore's law is dead. That does not mean there aren't still improvements to economies of scale.

 

[Mr.Phoenix]

Like someone said earlier, I wonder if it's normal to maybe reduce production volumes in a CY Q1 for hardware when that's typically the slowest period of the year. If not, then I would have to wonder to some extent what relative lack of new 1P AAA and AA traditional game reveals from Sony (1P can also include 3P games they're co-funding/co-developing and publishing), combined with the PC porting strategy for current-gen traditional titles, are starting to show negative effects on console sales trajectory going forward.

I personally don't quite think that's the case yet and any slow down in sales would probably mainly be caused by the $50 price increase for the new model, but that doesn't mean those points of concern can't or won't eventually have negative effects for future hardware sales and revenue. Not unless there's been some serious restructuring of the strategy on Sony's part internally, and I'm hoping there has. FWIW they did reveal PHYSINT with Kojima Productions, but that's practically a PS6 title. So it has little bearing on PS5 software release calendar whatsoever.

Naaa that's definitely not the case. Two things to consider, first of, even if in the 2023-2024 FY they fall short of their target of 25M and end up at 23M? That's still 2M+ more than the best FY they had with the PS4, and that was even in the PS4s peak year. And the Ps4 is not in its peak year yet because its not even had its first official price drop. So I think its easy to take just how well the PS5 did last year for granted. It did unnaturally well to be honest. Probably a carryover from the shortages of the year before.

The second thing to consider is what I already touched on, the PS5 still has not received an official price drop yet. Not only has the PS5 been selling at an all-around higher average price compared to the PS4, by this time in the PS4s life you could get a PS4 for $299. I believe next year will be the PS5s peak year.. this year they would mask not really dropping the price from $399 by introducing a $499+ PS5pro. But next year is when I expect them to start slashing prices as if they are trying to give them away. At best this year we get $399 PS5 with a bundled game and of course no disc drive.

 

[clintar]

Damn, they both going third party.

 

[DenchDeckard]

I never imagined that Xbox would be the new Dreamcast.

Series consoles have already sold more or less triple what the dreamcast sold lifetime and its not losing software like dreamcast. Its no where near comparable to the dreamcast, don't worry

 

[Kokoloko85]

Yet they won't. I remember when price drops were the norm. PS1 went down from $299 in 95' down to $99 in 1999 (and even down to $50 by 2002). PS2 same thing just from 2000-2009 (299-99) , PS3: $499/599 down to $229 at the end.
PS4, hahah... started at $399, now 299 (and during covid until last year it was launch price or more). In fact this is the first generation we seen price increases, for all three companies.

yep
Didnt the PS4 get a price cut when the PS4 Pro came out?
They will have to change anyway and consider price drops again.

 

[Gambit2483]

Meanwhile....at Nintendo....

Nintendo has the best situation possible. Not only are their game budgets modest in comparison but they're selling 2-3x the amount of software as the others. Pretty sure they are also not selling a loss on hardware.

Their profits are extremely healthy.

 

[StereoVsn]

We have higher salaries for the lower classes. Salaries have been going up for a few years actually.

Yes and no. They have grown decent amount post COVID, it if you look at salaries between say 2019 and now vs cost of living increase due to inflation, rent/housing, insurance and so on, it’s not even close.

And especially at lower end of salary spectrum a lot of these hit harder.

 

[Ansphn]

Completely stop is crazy

 

[S0ULZB0URNE]

Price drops needed.

Crazy to think some regions in the world are still paying more for these consoles then at launch.

They happened for the Christmas shopping window.

 

[OrtizTwelve]

I've seen PS5 and XBOX Series X units more readily stocked in stores since Holiday 2023 and in some instances, a lot of my local Best Buy and Target locations have too many consoles in stock, more than what I am used to seeing during the PS4 and XBOX ONE era.

 

[Chittagong]

Speed running the GameCube playbook. Next stop, $99.