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[Thick Thighs Save Lives]

Sony has said a dramatic PlayStation 5 price cut would be “very difficult” as the console enters into the second half of its life cycle.

In an investor call viewed by IGN, Sony Interactive Entertainment boss Hiroki Totoki said it's harder to “shrink” the PS5’s die size and therefore cut console manufacturing costs compared to Sony’s ability to cheapen the PS4. “Therefore cost reduction is very difficult, simply put,” Totoki said.

One issue Sony faces as it considers the price of the PS5 during the fourth year of its life is the relatively high cost to shrink the console’s die size compared to equivalent costs during the previous generation. That leaves little room for maneuver, and suggests storage may be the only area of the console Sony could reasonably look to cut costs. All this at a time when the price of components is rising.

The original PS5 launched at $499, with a cheaper digital-only version priced $399.99. Last year’s PS5 Slim launched at $499.99, again with a cheaper digital-only version but this time priced $449.99.

In the financial call, Totoki said Sony does not want to rely on a PS5 price cut in any case. We want to make sure our business is profitable, as well we want to focus on user engagement, together with sales of units,” he said. “We need to strike a nice balance between all of those components.”

Sustaining user engagement, with the key monthly active users (MAU) metric at its core, is “the most critical thing in our business right now”, Totoki added.

To that end, Sony is doing well indeed. The company said it saw record high MAUs in December, with 123 million people playing PlayStation. Total play hours are up 13% year-on-year.

However, Sony has revised its PS5 sales forecast for the current financial year down, from its lofty target of 25 million consoles sold to 21 million. This despite a year-on-year increase in PS5 sales for the holiday 2023 quarter, from 7.1 million sold to 8.2 million.

Sony Says Big PS5 Price Cut Would Be 'Very Difficult' - IGN

Sony has said a big PlayStation 5 price cut would be “very difficult” as the console enters into the second half of its life cycle.

www.ign.com

 

[Sybrix]

But it's entering it's last life cycle.....

PS5 Entering ‘The Latter Stage of Its Life Cycle’, Sony Says - IGN

After sales of the PlayStation 5 failed to meet expectations, Sony has said the console is entering “the latter stage of its life cycle.”

www.ign.com

 

[Spyxos]

Wow so far into the console generation and it's still not getting any cheaper. At the current price, it is far too expensive for many people.

 

[HeisenbergFX4]

Until the Pro drops anyhow

 

[Elysium44]

Too many gamers are spoiled, expecting real terms price cuts just because they're used to it.

 

[Horseganador]

It is incredible that earning more than 30 billion during 2023 the profit margin is so small, if they cannot sell PS5 this year at $399, sales will suffer too much.

 

[Robb]

Even if it was easy, why would they do it? I imagine that even if they lower their forecast for the next FY it’ll still be in the 15-20M range, i.e. consoles will still be flying off the shelves.

 

[Sanepar]

Until the Pro drops anyhow

If they will keep the plan. At this point we don't know what will be after May in Playstation division.

 

[Little Chicken]

Sustaining user engagement, with the key monthly active users (MAU) metric at its core, is “the most critical thing in our business right now”, Totoki added.

Remember when MAU used to be ridiculed here? It's Sony's top priority...

 

[lh032]

"Sustaining user engagement"

Phil was right all along！！！

 

[Killjoy-NL]

It is incredible that earning more than 30 billion during 2023 the profit margin is so small, if they cannot sell PS5 this year at $399, sales will suffer too much.

Aren't they investing a lot into GaaS to generate more revenue long-term?

 

[Horseganador]

Aren't they investing a lot into GaaS to generate more revenue long-term?

That's what I would like to know, what they are spending that enormous amount of money on.

 

[Elysium44]

Wow so far into the console generation and it's still not getting any cheaper. At the current price, it is far too expensive for many people.

Too expensive for whom really? It's a few hundred dollars which you pay once and then can play the latest games for a whole generation. It's an amount of money which would barely pay a week's rent in big cities throughout the developed world. Are console gamers this hard up? If they are then there's hardly any point Sony pandering to them anyway, they must be too penniless to buy games and generate profits for them.

 

[FireFly]

This is what MS was saying about the price/transistor not coming down significantly in newer processes.

 

[tusharngf]

I think tsmc is still charging more money for wafers. They are putting record revenue year after year.

 

[midnightAI]

Even if it was easy, why would they do it? I imagine that even if they lower their forecast for the next FY it’ll still be in the 15-20M range, i.e. consoles will still be flying off the shelves.

Exactly.

It also states 'dramatic' price cut not that a price cut isnt possible (It'll happen when Pro comes out)

 

[CGNoire]

It is incredible that earning more than 30 billion during 2023 the profit margin is so small, if they cannot sell PS5 this year at $399, sales will suffer too much.

Yep there so full of shit. They never droped the PS4 price reguardless. Just plain excuses.

 

[Mr Reasonable]

Too expensive for whom really? It's a few hundred dollars which you pay once and then can play the latest games for a whole generation. It's an amount of money which would barely pay a week's rent in big cities throughout the developed world. Are console gamers this hard up? If they are then there's hardly any point Sony pandering to them anyway, they must be too penniless to buy games and generate profits for them.

The cost of living has gone through the roof. Mortgage payments shot up. Add that to every single item you have to buy being more expensive thanks to higher inflation than people are used to.

Loads of people have scaled back on luxury purchases.

You'd probably be surprised how much disposable income average people have.

 

[Fake]

Yep there so full of shit. They never droped the PS4 price reguardless. Just plain excuses.

Indeed. PS4 components are right now very very cheap, but still PS4 remains at that price, no only that but Sony is already confirmed long time ago that PS4 already making profit as a console hardware.

 

[skyfinch]

Now that I can play all my Xbox games on PlayStation, I'll pay double for a PS5.

 

[DeepEnigma]

Remember when MAU used to be ridiculed here? It's Sony's top priority...

Wrong. Profit is. Hence the thread title.

 

[Xyphie]

The stagnant transistor cost was known about well before the generation even started, look at this sad 2020 guidance from Marvell for instance. 5nm, 3nm etc is even worse. They're just going to bundle a first-party game or two with the console as those are "free". The Microsoft refresh leak telling us that they basically had/has the intention of selling the same hardware 4 years after release at the same $300 and $500 launch price just with 2x storage tells us how dire it really is. If Sony wanted a cheaper console they should've made a PS5 Series S.

 

[StereoVsn]

Oh no, Sony is talking about user engagement….

Edit: Note that while large due cost cutting is out, Sony did streamline manufacturing with Slim (one decide with add on va two separate lines), cut cooling, simplified motherboard a bit, and in this time frame GDDR and Flash memory prices fell.

So cost of manufacturing should be lower, they are just taking profits.

IMO this is also partially because their game budgets are out of control, hence that separate thread on COO comments.

 

[Little Chicken]

Wrong. Profit is. Hence the thread title.

...which depends on MAU, read the quote babes.

 

[DeepEnigma]

...which depends on MAU, read the quote babes.

Chicken or the egg?

 

[Little Chicken]

Chicken or the egg?

Why not both?

 

[TheGodfather07]

Can sony sell over 100m units without a price cut? I don't think so. Sales will fall off without a price cut. They're already expecting a decline next year, which means less than 21m. If they can still hit 20m, that would be good and then they can cut price in 2025 to keep it steady for another year until a steep decline happens from 2026 onwards.

 

[SportsFan581]

Unfortunate consequence of the technology getting so expensive to produce I guess. It sucks for those that can't afford it. I know I would have never received my Genesis or PS1 under the tree if the prices had been like this.

As much as we take shots at game streaming, that is probably the only realistic way to get the entry price way down.

 

[aclar00]

Too many gamers are spoiled, expecting real terms price cuts just because they're used to it.

Dont most product generally decrease at least a bit in price after years on the market?

Conditions are different, but definitely doesnt change expectations. Im sure many people have been holding off in hopes of a price cut.

But Sony has to do what Sony has to do i guess. Im sure they've calculated the ROI on a price decrease vs the expectations of new software sales.

 

[Elysium44]

Dont most product generally decrease at least a bit in price after years on the market?

Conditions are different, but definitely doesnt change expectations. Im sure many people have been holding off in hopes of a price cut.

But Sony has to do what Sony has to do i guess. Im sure they've calculated the ROI on a price decrease vs the expectations of new software sales.

No most products don't actually, but electronics did for a while. They did it when inflation was low and crucially when there was still low hanging fruit improvement of technological efficiencies available which could slash costs - but you can't keep doing that forever. A segment of the gaming market has become accustomed to something which was only ever going to be temporary, and took for granted that it would inevitably continue forever.

Other industries don't have this burden of expectation that things will always be cheaper in future so it's time to stop expecting electronics to adhere to it.

Even saying all that, the PS5 slim price HAS fallen in real terms. It released in 2020 at $499 and the new slim model is still $499. If it had simply kept up with inflation it would be $588.

 

[winjer]

If we go only by transistor cost, i's not worth it, as prices per transistor have stagnated.
But it might be worth a die shrink to a newer node, to save on power usage. N5 reduces power usage by ~30%. And N3 by another 25-30%.
So using a newer process node could mean a simpler and cheaper power delivery system and a smaller and cheaper cooling solution. And also, a smaller and lighter console, which reduces material and transport costs.

 

[Generic]

Welp, they will release the Pro at $600...

 

[Euler007]

Inflation is cutting the price just by keeping it steady. 399$ in 2020 would be 477$ in 2024.

 

[Crispy Gamer]

Yeah they aren't trying to miss out on any profit the PS5 haven't sold at a loss since 2021 but the margins seem to be slim. This new guy seems to be all about profits I'm starting to see why Jimbo left it's about to get ruthless.

 

[Banjo64]

No reason the digital couldn’t be lowered to something like £329, which will happen when the sales do decline.

Lets hope we see some good games in the second half of its life.

 

[Shubh_C63]

Welp, they will release the Pro at $600...

Not 600$ but definitely would charge a premium price for being the only AAA-exclusive riddled console on the market with Xbox playing third.

Multiple SKUs incoming for PS6

 

[crackajack]

Too expensive for whom really? It's a few hundred dollars which you pay once and then can play the latest games for a whole generation. It's an amount of money which would barely pay a week's rent in big cities throughout the developed world. Are console gamers this hard up? If they are then there's hardly any point Sony pandering to them anyway, they must be too penniless to buy games and generate profits for them.

Expecting 299 (then 249 for discless) or maybe even less is probably a thing of the past, still some people expect it. I bought a PS5 earlier than I usually do in a console cycle, since I don't expect huge cuts and would have tried to get one sooner if I knew the price would even go up.
But I am no great customer anyway. Playing a ton of games via Plus, but buying not many outside of it. So Sony has to make bank on anything I get. Colleague of mine waits for a price cut but he is the type that buys games regularly, not necessarily waiting for bargain bin either. Sony could aim for him by eating the costs. Question naturally is, is he the norm? Can afford it, just doesnt want to. Or are those waiting like you assume in the really-can't-basket. I guess it is a super cheap product but consoles are supposed to be the cheap, easy option and PS3 turned the ship around also only after it got way more affordable. A Pro and an actual Slim kinda need 3nm to really make a splash in price and power as their respective target. Which will inevitably kinda ruin a PS6, if a Pro will already offer almost the same prior. We have yet to see what MS really announce later, but selling hw and getting the 30% platform fee might be an increasingly harder uphill battle from now on, and multiplatform might actually be the way to go.

 

[DForce]

Remember when MAU used to be ridiculed here? It's Sony's top priority...

You're confused. MAU is not the problem. Xbox fans think it's the only important thing while ignoring everything else.

 

[ChorizoPicozo]

once xbox finally dies, the market is going to heal itself

 

[Mibu no ookami]

Can sony sell over 100m units without a price cut? I don't think so. Sales will fall off without a price cut. They're already expecting a decline next year, which means less than 21m. If they can still hit 20m, that would be good and then they can cut price in 2025 to keep it steady for another year until a steep decline happens from 2026 onwards.

You're ignoring the PS5 Pro and GTA6.

Expecting a decline doesn't mean you're expecting to drop to 5 million units. Anything less than 20-21 million units would be a decline even a 5 percent decline.

It's possible that the PS5 Pro launches for 700 at this rate.

The PS5 will also sell for much longer than the PS4 did and will get support for much longer as well.

 

[Mibu no ookami]

once xbox finally dies, the market is going to heal itself

That's something that isn't being taken into consideration.

Their margins are going to improve drastically with increased royalties and probably increased first party sales with xbox consumers buying Playstation products.

 

[AncientOrigin]

Until the Pro drops anyhow

Yes i said this in another thread.Pro will be 499 and the normal PS5 will be 399.If I were Sony I would make Pro 399 and normal 299.Normal costs them probably between 300-380 to make.And they make almost full win with the disc drives.They could sell the consoles at a loss because the disc drive will erase any negative

 

[ChorizoPicozo]

That's something that isn't being taken into consideration.

Their margins are going to improve drastically with increased royalties and probably increased first party sales with xbox consumers buying Playstation products.

i have speculated that this market can't sustain both consoles. It's going to be interesting if PS5 sells better than expected in the upcoming quarters

 

[twilo99]

If it’s impossible how did we get the xsx down to $350 or whatever it was in December…

 

[Jesb]

It’s pretty funny to me that a ps4 pro is being sold for almost $400 here.

 

[Elysium44]

If it’s impossible how did we get the xsx down to $350 or whatever it was in December…

Microsoft can eat the loss, Sony can't?

Microsoft selling the XSX for $350 is just throwing good money after bad anyway, which is why they've put it up again to a more sustainable level, now that the Xbox division seemingly has to start standing on its own two feet and weaning itself off the endless subsidies.

 

[asdasdasdbb]

Microsoft can eat the loss, Sony can't?

I think what you are seeing recently is that Satya put an end to that.

 

[Mibu no ookami]

If it’s impossible how did we get the xsx down to $350 or whatever it was in December…

Microsoft in desperation. That wasn't sustainable which is why the price went back up in January and why Xbox sales have crated even further.

 

[twilo99]

Microsoft in desperation. That wasn't sustainable which is why the price went back up in January and why Xbox sales have crated even further.

The quote is “impossible” not “unsustainable”

 

[Deerock71]

Meanwhile...at Nintendo HQ: