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[Sosokrates]

Yup. They should have lowered the price of the ps4 to $199 already. Get a loss in hardware, but make up for it by selling more software and subscriptions (PS+ and PSnow).

PS4@$199
every publisher sells more titles, sony gets more subs for ps+ or psnow

PS4@$299
only EA keeps selling million copies of FiFO, few more getting ps+ ...

Negative, PS4 has been at a more affordable price since the beginning, $499 is a different circumstance.

 

[Sota4077]

$399 is the sweet spot. It's a price that is affordable to many and would be great value for 8core zen 2, 8-10tflop, 16gb gddry and 1tb SSD.

If the aim is to sell as many consoles as possible, then a $399 console is the better way to do it, the most expensive and most powerful have never been the "winner" of a gen.

So if a $399 machine would mean greater prosperity for Sony why would they decide on a more powerful $499 console? It makes no sense!

Here is something you and many others seem to not grasp. Sony and Microsoft and Nintendo and every other gaming company do not give a single fuck what you personally are willing to pay at launch. If you are debating buying the console but one price makes you say no and the other makes you say yes all those companies have already written you off for launch hardware. They have more than enough consumers for the holiday season and initial launch window that you do not matter to them one bit. They are perfectly content with you keeping your PS4 and buying games on that. Hell they likely do not even care if you upgrade at all so long as you continue buying their games.

 

[Sosokrates]

Let's look back. It's early 2017. Sony is designing the next Playstation. They are outselling Xbox by more than 2:1 and Wii U is dying a slow death, Switch is about to launch. With basically Android mobile specs. Do you try to repeat your success? Of course you do. And that 399 price point was how you got there. You decide to keep it. You know that Microsoft plans to release their "Pro" console later in the year. That makes it highly unlikely that they can do a next gen launch just two years later. And you promised already that this generation won't take as long as the last one did, when it was seven years for PS3. So six years it is. A launch in late 2019 is planned and despite trying to hold that 399 price point, Cerny goes all-in. By using the RDNA architecure that is supposed to launch in early 2019 you make sure that you have state of the art AMD hardware. An 8 TF APU is basically top tier, you bundle it with a Zen 2 CPU. All is good. Then in 2018 it becomes obvious that RDNA is delayed. Will you be able to get enough chips for a console launch? Things get ugly. But you keep your focus, it will work out.

Then in March Microsoft shows DXR. Raytracing. No hardware exists yet. But could they be planning to use raytracing in their next Xbox? That would put PS5 at a huge disadvantage. You are worried. Then the RTX cards come out and they are prohibitively expensive. You exhale. 2019 it is. Enter 2019. A leak comes out and nails what you have. And it talks about raytracing in Microsofts console. And not only that, it talks about a more powerful SKU and a cheaper SKU. You are scared. The core gamers are very profitable and the mass market is equally important. Microsoft seems to eat away at your install base from both sides. And they have raytracing.

It is then decided to delay the 2019 launch to 2020, to spend the time on creating your own raytracing solution and to narrow the gap to Xbox while doing so. In mid 2019 you test your first iteration of this upraded APU. It needs to run hot, because there simply isn't enough time for a full redesign. And you don't want to go from a one year lead over Microsoft to trailing them by one year. You remember how that worked in the PS3 generation. It has to be 2020, no matter what. You join forces with a tech startup called LocalRay that specializes in software based raytracing by running on GPU hardware shaders. It's not a one way relationship, you give them access to your IP and they show of Spider-Man with their technology at Siggraph 2019.



But things don't go according to plan. The device runs too hot and the raytracing co-processor that is based on a repurposed PS4 Pro GPU requires several iterations of the APU. And then a spike in DRAM and NAND pricing because of issues at your provider Samsung in November 2019 and January 2020 leads to a sharp increase in cost. You can't hold your 399 price point anymore. You have to launch a weaker console at 499 while you know that Microsoft will do a 180 and launch for 399. You are screwed.

That would be the worst case scenarios, and with Ray tracing being hardware based I would of thought it would of been designed from the beginning of next gen development.
Your post does arise the question of when Ray tracing came into the next gen development, I wonder if it was in AMDs roadmap from the beginning. Nvidia came out of nowhere with there Ray tracing stuff, but it must of been in the AMD roadmap otherwise I don't think it would of made it into next gen consoles.

 

[Birdo]

You don't undersell yourself when your brand is popular. You strike while the iron is hot.

 

[Sosokrates]

Here is something you and many others seem to not grasp. Sony and Microsoft and Nintendo and every other gaming company do not give a single fuck what you personally are willing to pay at launch. If you are debating buying the console but one price makes you say no and the other makes you say yes all those companies have already written you off for launch hardware. They have more than enough consumers for the holiday season and initial launch window that you do not matter to them one bit. They are perfectly content with you keeping your PS4 and buying games on that. Hell they likely do not even care if you upgrade at all so long as you continue buying their games.

Not true at all, Sony's very own Andrew house even said that it was extremely important that the PS4 has tremendous value and momentum straight out the gate.

 

[Azelover]

I believe the price will be higher. And really it's okay.

In the time leading up to the PS3 we were used to cheaper consoles. The PS2 was selling for $130, the systems were usually around $300 at launch. Some even came out at $200. Things are different now.

I personally don't think they can make it work for only $400. Even if they lose money. It's most likely gonna be higher. But let's see..

 

[Sota4077]

Not true at all, Sony's very own Andrew house even said that it was extremely important that the PS4 has tremendous value and momentum straight out the gate.

You're taking something that is essentially a capitalistic throwaway line and using it as though it is more than that. Of course value matters, but supply and demand are simple. I if Sony can manufacture 5 million consoles in the first month they're going to sell out almost regardless of price so long as it is not an obscene slap in the face to consumers. $499 is not that by any stretch if it is competitive in specs to the Series X. When someone is telling you about value of their product they're trying to sell you on it. Consumers determine what the true value of something is. We're paying for it. If Microsft and Sony are both at $499 that price point is fair for the specs they are selling you. The value analysis though shows that Microsoft have done a better job if the series x is 12TF and the PS5 9 or 10 or whatever it is rumored to be.

 

[Ten_Fold]

Gotta make money somehow, what's wrong with a $499 price in this day an age?

 

[Sosokrates]

You're taking something that is essentially a capitalistic throwaway line and using it as though it is more than that. Of course value matters, but supply and demand are simple. I if Sony can manufacture 5 million consoles in the first month they're going to sell out almost regardless of price so long as it is not an obscene slap in the face to consumers. $499 is not that by any stretch if it is competitive in specs to the Series X. When someone is telling you about value of their product they're trying to sell you on it. Consumers determine what the true value of something is. We're paying for it. If Microsft and Sony are both at $499 that price point is fair for the specs they are selling you. The value analysis though shows that Microsoft have done a better job if the series x is 12TF and the PS5 9 or 10 or whatever it is rumored to be.

I think the PS3 at $599 sold out at launch, of course at launch the hardcore will lap it up.
But if $499 is so good why didn't Sony make the PS4 that price and given Devs what they wanted?
And yes xsx specs would be amazing at $499 but a 8-10tf @ $399 would sell faster because price has always been more important then performance.

 

[Barakov]

It will cost 599 at launch and you will buy it!

 

[Sosokrates]

Gotta make money somehow, what's wrong with a $499 price in this day an age?

The thing that's wrong with it is that they can make more money selling a $399 console.

 

[daemissary]

They will probably make a loss or break even @ $499, so with a lower initial price they can get to a higher install base quicker and thus have higher game sales and subscriptions for a longer period of time.

I think you’re vastly underestimating the number of subscriptions and the attach rate that would be needed to make up for a ~$100 loss per console.

If Sony wants to take a huge upfront loss, they would do it to try and kneecap the competition...not because it would actually be more profitable for them.

 

[Sota4077]

The thing that's wrong with it is that they can make more money selling a $399 console.

How do you figure that is true? If they are having trouble getting the console price below $450 that means they're not even factoring shipping, packaging and everything else. They are only going to sell so many consoles in the beginning because they will be supply chain restricted like Microsoft and Sony have been for almost every generation. So if they sell it for $399 they're actually losing more money on each console. They could easily sell fewer consoles at $499 and make more money because they're not losing $50-100 on each system sold and still making profit on game sales. Sales does not work as you seem to think it does.

 

[darkinstinct]

I think you’re vastly underestimating the number of subscriptions and the attach rate that would be needed to make up for a ~$100 loss per console.

If Sony wants to take a huge upfront loss, they would do it to try and kneecap the competition...not because it would actually be more profitable for them.

Based on PS4 numbers they sell 10 third party games and 1 first party game per console. Going from a 50 % digital share that's roughly (numbers are skewed because they include $60 games as well as $5 indie titles, I am only counting full price games). $150 from third party royalties and $45 from the first party game. They also sell 1 PS+ sub for every three consoles. Let's assume on a $60 yearly price they make a profit of $10, so after six years $60. So $20 per console. That's $215 profit per console without even counting all the DLC revenue. Sony can easily eat a $100 loss at the beginning of the generation, as it progresses that loss will be reduced, so the actual profit per console over lifetime would be higher than $115. 100 million consoles mean 11.5 billion in pure profits (well, you have to deduct the cost for Sony Worldwide Studios from that).

 

[Vawn]

The thing that's wrong with it is that they can make more money selling a $399 console.

You aren't getting it. You won't get it. Best to just let it go.

I'll personally be pissed if it's $399, because I don't want another marginal upgraded generation.

 

[Leonidas]

A $399 next-gen console would sell a lot but it wouldn't be powerful.

Seems MS made a great decision with multiple consoles, hopefully Sony does the same.

 

[Vawn]

A $399 next-gen console would sell a lot but it wouldn't be powerful.

Seems MS made a great decision with multiple consoles, hopefully Sony does the same.

Too late for that.

 

[daemissary]

Based on PS4 numbers they sell 10 third party games and 1 first party game per console. Going from a 50 % digital share that's roughly (numbers are skewed because they include $60 games as well as $5 indie titles, I am only counting full price games). $150 from third party royalties and $45 from the first party game. They also sell 1 PS+ sub for every three consoles. Let's assume on a $60 yearly price they make a profit of $10, so after six years $60. So $20 per console. That's $215 profit per console without even counting all the DLC revenue. Sony can easily eat a $100 loss at the beginning of the generation, as it progresses that loss will be reduced, so the actual profit per console over lifetime would be higher than $115. 100 million consoles mean 11.5 billion in pure profits (well, you have to deduct the cost for Sony Worldwide Studios from that).

Yes, but you need to compare that to what they would sell at the higher price...you haven’t factored in price elasticity.

If they would make $115 per console and sell 100M units net lifetime like you’re suggesting at a lower cost...but they would make $215 per console and sell 80M units net lifetime at a higher cost, well guess which one of those they are gonna pick?

 

[quest]

I think the PS3 at $599 sold out at launch, of course at launch the hardcore will lap it up.
But if $499 is so good why didn't Sony make the PS4 that price and given Devs what they wanted?
And yes xsx specs would be amazing at $499 but a 8-10tf @ $399 would sell faster because price has always been more important then performance.

Sure put a crappy netbook CPU and other cutbacks to get to 399,99. Last generation was the gimped generation thanks to 399.99 no thanks again. 499.99 and much more powerful devices that are used for 7 years. That extra 99 dollars over 7 years is easily worth it.

 

[Jtibh]

$399 is the sweet spot. It's a price that is affordable to many and would be great value for 8core zen 2, 8-10tflop, 16gb gddry and 1tb SSD.

If the aim is to sell as many consoles as possible, then a $399 console is the better way to do it, the most expensive and most powerful have never been the "winner" of a gen.

So if a $399 machine would mean greater prosperity for Sony why would they decide on a more powerful $499 console? It makes no sense!

Your sweet spot might be another mans toes.
Come on son i dont care how sony can make more friends , i care that sony puts out a powerful console.
And thats where i respect xbox. They dont give a shit about your sweetspot.
They care about MORE POWER. WE NEED MORE POWER!!!!!

 

[TheGreatYosh]

I want a 400 dollar 12 TF PlayStation too.

 

[Sosokrates]

You aren't getting it. You won't get it. Best to just let it go.

I'll personally be pissed if it's $399, because I don't want another marginal upgraded generation.

No, ppl who think $499 is more profitable overall are just plain wrong.

 

[Drewpee]

$399 is the sweet spot. It's a price that is affordable to many and would be great value for 8core zen 2, 8-10tflop, 16gb gddry and 1tb SSD.

If the aim is to sell as many consoles as possible, then a $399 console is the better way to do it, the most expensive and most powerful have never been the "winner" of a gen.

So if a $399 machine would mean greater prosperity for Sony why would they decide on a more powerful $499 console? It makes no sense!

You keep the sweet spot, I'll take the X Beast

 

[Sosokrates]

You keep the sweet spot, I'll take the X Beast

So will I, but individual tastes is not what this thread is about, it's about what is the most successful and effective way for how playstation will achieve there main goals.

 

[Vawn]

No, ppl who think $499 is more profitable overall are just plain wrong.

It's okay to be wrong.

 

[TERRORIFFIC]

It should be $450 at a minimum and probably $500. The inflation adjustment between 2013-2020 is almost $50 and the last 2 gens have gotten stale towards the end. Id rather pay a little more upfront for hardware that is gonna feel less dated down the line.

Having a PS4 that takes 30 minutes to copy the install of a 200mb update in 2020 is fucking terrible

 

[Aion002]

It should be $450 at a minimum and probably $500. The inflation adjustment between 2013-2020 is almost $50 and the last 2 gens have gotten stale towards the end. Id rather pay a little more upfront for hardware that is gonna feel less dated down the line.

Having a PS4 that takes 30 minutes to copy the install of a 200mb update in 2020 is fucking terrible

There is something wrong with that ps4 or with the game... I just updated 10 gb on The Division 2 on a PS4 slim and it took less than 5 minutes....

Some weird games do that, like Smite..... however.... that's the games fault, not the PS4.

 

[Gargus]

They will target the most reasonable price they can. True 400 would be the sweet spot and probably what they will aim for.

Sony doesn't sell playstations for a profit. The point is to get as many in people's hands as they can, the real money is after they sell the console. Playstation plus subscriptions, game sales, digital product sales from games to themes to dlc, selling accessories, etc.

A game console to sony is what a car is to a dealership. Yes they make money on that initial sale but the real money is made on service, extras, service plans and so on. It's about getting customers coming back for other things over a long period of time.

 

[SoulChamber]

Sony will bleed a lot of money if they were to sell it at $400. They're not trying to go back to PS3 level losses.

The thing that's wrong with it is that they can make more money selling a $399 console.

I doubt it. They're already going to be taking a small loss as it is by selling at $500 given the components that's inside such as an SSD, plus factoring, shipping, packaging & selling them through retail stores, etc.

 

[Aion002]

They will target the most reasonable price they can. True 400 would be the sweet spot and probably what they will aim for.

Sony doesn't sell playstations for a profit. The point is to get as many in people's hands as they can, the real money is after they sell the console. Playstation plus subscriptions, game sales, digital product sales from games to themes to dlc, selling accessories, etc.

A game console to sony is what a car is to a dealership. Yes they make money on that initial sale but the real money is made on service, extras, service plans and so on. It's about getting customers coming back for other things over a long period of time.

Yep.

But that doesn't fit the narrative of some. They need the ps5 to be expensive, delayed or weaker than the series X.... Also, that it won't have exclusive games, so MS can finally win a generation.

The doom and gloom around Sony is sky high again....

Almost every single thread these days revolves around that the ps5 will be a expensive piece of garbage and that Sony is scared as fuck... So weird...


Every single generation, the cheaper console always won.

 

[SoulChamber]

Every single generation, the cheaper console always won.

Tell that to Sega Genesis, TurboGrafx-16, N64, Dreamcast & GameCube.

 

[quest]

Yep.

But that doesn't fit the narrative of some. They need the ps5 to be expensive, delayed or weaker than the series X.... Also, that it won't have exclusive games, so MS can finally win a generation.

The doom and gloom around Sony is sky high again....

Almost every single thread these days revolves around that the ps5 will be a expensive piece of garbage and that Sony is scared as fuck... So weird...


Every single generation, the cheaper console always won.

Not quite RIP dreamcast 199.99 best money spent on launch day ever for me with 10 games arcade sticks 2 extra controllers and several VMUs.

 

[Aion002]

Tell that to platforms like N64, Dreamcast & GameCube.

N64 and GC came one year later.
Dreamcast was never a real competitor... Sega dropped the ball hard.

Not quite RIP dreamcast 199.99 best money spent on launch day ever for me with 10 games arcade sticks 2 extra controllers and several VMUs.

Sega failed at everything else.

 

[AeonGaidenRaiden]

Would people stop pretending like they care what would be best for SONY. Just admit, you are cheap, dont have a job and dont wanna spend too much cash so you can have enough for your weed supply.

 

[_Ex_]

If you start low, it's hard to go lower. If you start high, you can sell to those who will buy high, then lower the price over time to catch the more thrifty buyers.

 

[RayHell]

OP go read an article on price-elasticity. While on the "hunt" for important knowledge also try reading some bits and pieces on giffen goods and on artificial scarcity.
Wanting things you don't want to buy or you can't buy is implicitly improving the demand on the good itself..You would lose so many revenue layers if you position this product at $399 - it would be a travesty from a sales strategy and pricing strategy perspective selling the console at $399....

Short and absolute helicopter view example for you to understand how important is to value your product correctly:
20,000,000 consoles * $599 = ~$11,980 bn
31,000,000 consoles * $399 = ~$11,970 bn
55% more consoles sold for 0% more revenue- how is this calculation looking for you as a executive of a multi-billion-dollar company?
Cost decrease over time, revenue isn't. If you price correctly and exclude price cuts for 1-2 years you profit quite heavily for any advantage you create in production cycles.

If you think that 11 millions more console sold doesn't end up in more revue you really dont get console business model.

Sony main revenue isn't the PS4/PS5 at all. This is just a gate to lock you down in their ecosystem. Then the revenue are generated by game license, paid subscription, accessories, etc.

In that case the more console you put in consumer hands, the more you get revenue from that ecosystem

11 000 000 more console * 5 games a year * 7$ royality = 385M$

Also the bigger the audience the more likely you can attrack dev who will also pay licenses and buy dev kits.

 

[Sosokrates]

Sony will bleed a lot of money if they were to sell it at $400. They're not trying to go back to PS3 level losses.



I doubt it. They're already going to be taking a small loss as it is by selling at $500 given the components that's inside such as an SSD, plus factoring, shipping, packaging & selling them through retail stores, etc.

Yes but it's not like the hardware is static, like I've already said in the OP, a $399 console would be 8-10tflops.

 

[daemissary]

If you think that 11 millions more console sold doesn't end up in more revue you really dont get console business model.

Sony main revenue isn't the PS4/PS5 at all. This is just a gate to lock you down in their ecosystem. Then the revenue are generated by game license, paid subscription, accessories, etc.

In that case the more console you put in consumer hands, the more you get revenue from that ecosystem

11 000 000 more console * 5 games a year * 7$ royality = 385M$

Also the bigger the audience the more likely you can attrack dev who will also pay licenses and buy dev kits.

If you sell 11 million more consoles but you’re losing $100 per console at a $399 price point as opposed to being flat at a $499 price point...you are losing $1.1 billion dollars.

So congrats on your $385M increase in revenue...you just lost $715M net.

 

[Smoke6]

Because a 449-499 dollar PS5 with 2080+ levels of power, a good cpu, decent amount of RAM, ultra fast storage, and UHD-BR player will sell plenty and minimize loss per unit. These things cost money. Plain and simple. Standard SSDs are more affordable than ever but still not dirt cheap and the SSDs in these consoles are supposed to destroy SATA drives

These consoles are purported to be more powerful than single GPU cards that cost 499 or more, unless the PS5 really is just 9 TF, in which case they start the gen gimped to hell, and I doubt that’s gonna be the case. IF the PS5 is a 9 TF machine, then go for 399. I’ll still buy it but that’s gonna be a bummer in my mind

PS3 was 2006. Things have changed.

Sigh!!!

coming from 1.6 tfs or someshit to now maybe having 9tfs is gimped?

anyways it’s simple, sometimes you have to put yourself in the shoes of someone in business! This is not American gangster.

so if said console comes with almost $600 worth of hardware out of YOUR pocket book, would it be feasible for you to sell said console for $399 because it’s the “sweet spot”?

You sell at what makes the most logical financial sense for your business in which case Sony has market and mindshare more than any other platform out there plus a paid to play subscription that’s taking them in a ton of money in which case could mitigate costs on the backend of this and $399 would still hurt them.

$499 is perfect for what we’re about to get and if you don’t think so then something is wrong

 

[Mexen]

$499

 

[Mudit Shwarma]

Launching the PS5 at $399 means they'd launch the console at a loss, meaning that it would take significantly longer to sell any eventual redesigned slim version (with a price reduction) and still be a profit.

Every generation of playstation has had a slim version and in this last generation we saw mid-generational upgrades along with slim versions from both Microsoft and Sony. It isn't about just setting a price bar for a console launch, it's about setting up a pricing strategy for a series of consoles during the generation that would lead to the best overall profitability of that generation.

 

[RayHell]

If you sell 11 million more consoles but you’re losing $100 per console at a $399 price point as opposed to being flat at a $499 price point...you are losing $1.1 billion dollars.

So congrats on your $385M increase in revenue...you just lost $715M net.

Don't be that guy, I made up example numbers to show that most revenue come from other stream than console itself.

But if you want to go that route. 385M is per year * 7 years = 2.695 billions.
50% are PS plus subscribers. 5.5M * 60$ * 7 years = 2.310 billions
That's more than 5 billions generated by those 11 millions over time not counting accessories, PS now, etc.
And the earlier you get them the more revenue you will generate over time.

And PS5 cost is estimated 470$ not 499$ so the lost is 770M$

My whole point is that it's fine to lose money per console the question is will Sony will go as far as losing 70$ per console, we'll see but it's greatly tied on Xbx price point.

 

[captainraincoat]

Nintendo is the proof you don’t need to have the best hardware to be number 1

ps5 comes out 100-200 cheaper and offers the same quality first party or perhaps a game pass like serviceit would go nuts

they could then introduce a pro model later which would overtake the series x...this makes the most sense

 

[TERRORIFFIC]

There is something wrong with that ps4 or with the game... I just updated 10 gb on The Division 2 on a PS4 slim and it took less than 5 minutes....

Some weird games do that, like Smite..... however.... that's the games fault, not the PS4.

Its happened to 2 of my PS4s. Over time it takes longer and longer to copy the updates after downloading them. I have to regularly delete games to make room for other games so its something wrong with how its deleting and then writing new data to the PS4 im pretty sure.

Its a known issue online so it isn't just me

 

[Smoke6]

Nintendo is the proof you don’t need to have the best hardware to be number 1

ps5 comes out 100-200 cheaper and offers the same quality first party or perhaps a game pass like serviceit would go nuts

they could then introduce a pro model later which would overtake the series x...this makes the most sense

Close but Sony could release a 9tf console still $399 and show off its best looking games knowing they’ll only get better down the line as they always have, announce acquisitions and the games that are coming with those and voila!!!

I keep saying people are neglecting the magic that’s been done in Sony’s consoles over the years, they have ninjas and freaking wizards!

theyrr portfolio of games and studios speaks for itself. It’s almost like having a Lamborghini and drive the speed limit it’s entire life (how I see Xbox) Exceot for those few times here and there where you hit the gas to show off for someone or see how fast it goes! Sony’s foot is always on the gas

 

[June]

The console has to be $499 minimum because the PS4 came out at $399 and it had a gimped CPU from the very start. They need more power this time around otherwise they may have a repeat of the PS4 generation and that's the last thing Sony want.

Wait..

 

[Elektro Demon]

It's a good spot but at that price with the current rumored specs they'd be losing a lot of money per unit.

 

[Lionel Richie]

Why doesn't Ferrari sell their F8 Tributo for like $20 000. That would be the sweet spot cause i could then afford to buy one.

Thing is Ferrari won't be around much longer if they do cause they'd go bankrupt.

theyrr portfolio of games and studios speaks for itself. It’s almost like having a Lamborghini and drive the speed limit it’s entire life (how I see Xbox) Exceot for those few times here and there where you hit the gas to show off for someone or see how fast it goes! Sony’s foot is always on the gas

What is it with Sony fans and car metaphors? Could it be some pent up frustration from the lack of racing games on the PS4? Because I feel that too! I wish Forza had more competition.

 

[sunnysideup]

sony needs to match ms offering hardware wise and in price.

If multiplats look worse than xbox they will loose half of the current console market.

 

[Slings and Arrows]

They took a hit with the PS3 and it nearly sunk them, they won't do it again.

The best you can hope for is a thin profit margin, nothing more.

If you lose $100 per console and sell 100 million consoles, you lose a shit load of money.