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Bloomberg - Sony cuts PS5 production by 4 million units, $449 and $399 price

Apr 12, 2013
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I'm not buying the 449 price, I think it'll be $500 because there's just absolutely no reason for them to sell it for that when they will all be bought very quickly at $500...but regardless if they cut production by 4 million this things going to be hard as hell to get at times. It was bad enough with the PS4. In these times the thing is going to absolutely fly off shelves (and online of course).

No doubt in my mind that records will be broken sales wise assuming there are enough available. I just hope I can get one or two of them.
 
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M16

Neo Member
Jul 19, 2020
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They seem to have about $30 billion cash at hand (cash and cash equivalents that can be converted into cash almost immediately).

Even if they sold 10,000,000 units at a $150 loss per unit, that would only be $1.5 billion loss.

.

Also they make $7 per third party title (platform royalties) for a $60 title, or $27 per title if it's first party because it's their game.


Attach rate around launch for PS4 was about 2.3 games, there were suggestions that having digital options actually increased purchases per user, so if that trend continues with PS5, we could bump that up to 3 games per user.

So if we say each user buys 1 first party ($27) and 2 third party titles ($7 x2), that's $41 and we're down to $109 loss per device. PS+ subscriptions are about $60, if we said that Sony spends half of that (I think it's probably less) to pay for their server costs, that's still $30 to offset so we're down to about $85 loss per device.

If we multiply that by 10,000,000 units in 1 year then we get to $850,000,000 loss ... BUT if you factor in the idea that a lot of those people who buy 3 games at launch will have bought more games by March 2021 (because more games will probably be available) - that attach rate may increase to more like 4 or 5. If you also consider that some people will only buy first party titles, netting Sony more of the profit, you get to a situation where they are losing about $50 per device all said and done.

edit: As/if more people buy the PS5 DE, the numbers move more in Sony's favour because there's no retail taking their cut.

This is only for the initial run and as parts get cheaper, their own manufacturing processes improve, as existing users buy more games and pay for more services, they'll quickly turn a profit.

Anyway what I'm trying to say is... if they really wanted to, they could take much more than a $150 hit per device in the short term.

Sony probably think it's worth taking a loss to get the early victory sealed. I would tend to agree.
lol thats almost best case scenario and still posting a big loss, and you're assuming they will sell a certain amount of consoles. large companies dont take that big of risk that can sink the whole company.
you're also assuming alot of people dont only buy used/sale games only where the company makes zero money on.
not gonna happen
 

Dodkrake

Gold Member
Feb 28, 2020
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It just occurred to me, if the bad yield rate happens on either the CPU clock or the GPU CU unit number, perhaps Microsoft is going through the same with the XSS and XSX line of consoles.

But in their case bad yields could be usable. They just have to turn off part of the chip.True, but after the PS5 launches, any PS4 console will be worth $100 anyway, perhaps less.

One way to see it, is you sold your PS4 for that amount and the money went directly for the drive so it's a "free upgrade/tradein" of sorts. For people that keep both, spending extra might not justify the cost.

But worse is what that initial all-digital user base signals for the market. Drive will be useful for back-compat, but useless for current gen. And Back Compact usually doesn't sell consoles.

I loathe BluRays, to be honest, but I would be satisfied with game cards (like the switch or vita), that didn't contain the game, but instead a licence. But I understand, that would mostly only have advantages for us, consumers.
Wrong. The Series S PCB is smaller than the Series X one.
 

thebigmanjosh

Member
May 9, 2013
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Everyone talking about how Sony can’t take losses on hardware as if 50% of their revenue ($12B) doesn’t come from digital sales and services.

If Sony takes a $150-$200 loss on each console that would only be $1.5-$2B per 10M consoles produced. The last thing they’re going to want is for subscribers to jump ship to Xbox.

MS’s approach is slightly different since they’re expanding past the Series consoles, but they’re largely in the same boat.

Bottom line is gamers should benefit from competition and aggressive pricing.
 

supernova8

Member
Jun 2, 2020
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2.23GHz is going on.
So the XSX would've been cheaper to make but they decided to go with much m
lol thats almost best case scenario and still posting a big loss, and you're assuming they will sell a certain amount of consoles. (1) large companies dont take that big of risk that can sink the whole company.
(2) you're also assuming alot of people dont only buy used/sale games only where the company makes zero money on.
not gonna happen
(1) Ohhhhhhhhh yes they do.
(2) as I understand it that attach rate is for new games.
 

ReBurn

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Dec 6, 2008
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Everyone talking about how Sony can’t take losses on hardware as if 50% of their revenue ($12B) doesn’t come from digital sales and services.

If Sony takes a $150-$200 loss on each console that would only be $1.5-$2B per 10M consoles produced. The last thing they’re going to want is for subscribers to jump ship to Xbox.

MS’s approach is slightly different since they’re expanding past the Series consoles, but they’re largely in the same boat.

Bottom line is gamers should benefit from competition and aggressive pricing.
Revenue is the wrong number to look at for whether a company can afford to take losses. You need to be looking at net income and cash on hand. Sony had $5.4b in net income in their 2019 fiscal year and their financial statements look like they have about $12b in cash. So yes, they could support some initial losses.

But it's going to be a hard sell to the board of directors to set aside billions to lose, especially when they know people would buy every single one of those initial 10 million consoles they release. People paid $600 for a 60gb PS3. Many people on this very forum bragged about it and how it was worth it. I guarantee Sony could sell 10 million PS5s at $600 each and people reading this comment would be among the people to buy them. There would be complaining and mocking. But the things would still sell out.

Also, and perhaps just as important, is the fact that if it releases for $500 they're going to be scalped for $750 to $1,000 this holiday. And people will pay it. Aggressive pricing never benefits gamers at console launch. Ever. It benefits opportunists and it will until they are generally available.
 

Investor9872

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Jan 4, 2020
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Everyone talking about how Sony can’t take losses on hardware as if 50% of their revenue ($12B) doesn’t come from digital sales and services.

If Sony takes a $150-$200 loss on each console that would only be $1.5-$2B per 10M consoles produced. The last thing they’re going to want is for subscribers to jump ship to Xbox.
No one is going to jump ship to the XBox, though. What are they going to jump ship to? There are no must own games at the XB launch. Sony doesn't need to be that aggressive in their pricing. Matching the XB's $499 will be more than sufficient for people to stick with Sony. And if they can launch with more AAA games than just Spider-Man Morales (i.e., Demon Souls Remake, GT 7 and others - though I have major doubts about GT7 launching day-1), then you'll see XB gamers jumping ship or picking up the PS5 day-1 as well.
 

lostinblue

Member
Dec 22, 2008
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Wrong. The Series S PCB is smaller than the Series X one.
PCB and die size of a SOC are very different things.

If the die size was the same, (it isn't) but the chip specs were to be halved then PCB and everything else could be different/cheaper. Power draw wouldn't be the same either.
 
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BadBurger

Gold Member
Nov 6, 2019
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Sony denied this, which is unsurprising. If it were true anyone with that level of knowledge and accuracy of production data could be easily sniffed out. I hope Sony learned their lesson and realized there's a lot more money to be made by doing their best to supply demand rather than taking a strategy of trickling for a year before finally doing what they can to fill shelves.

Then again, this an industry which never seems to learn any lesson unless it's several years late and in gleaming hindsight, so who knows.
 
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