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News hardware & software 14 February 2020, 13:14

author: Adrian Werner

High Manufacturing Costs of PS5 Surprised Sony

There have been reports that production costs of PlayStation 5 are higher than expected due to a shortage of memory chips. The same sources suggest that a new version of PlayStation VR is planned.

It will not be cheap to make a PlayStation 5.
IN A NUTSHELL:
  1. The current cost of producing a PS5 is now $450,
  2. It's more than Sony expected,
  3. The company is waiting for the situation to develop and announce the price of Xbox Series X,
  4. It is possible that PS5 will initially be sold below cost,
  5. There are plans for new PlayStation VR.

We are all looking forward to the reveal of the prices of next-gen consoles. It turns out that Sony could be in a lot of trouble here. According to reports from Bloomberg, the Japanese corporation was surprised by the high production costs of PlayStation 5, which are now around 450 dollars.

Traditionally, the price of a new console was set in February in the year of its debut. But this time Sony decided to wait. This is because of the costs, higher than forecasted due to, among others, shortage of memory chips on the market. The company hopes that the situation will improve and the prices will drop.

Another problem is the very expensive cooling system to ensure that there are no problems with overheating. The situation is not improved by the fact that companies producing desktop GPUs and Microsoft also have a demand for the same type of memory chips.

Sony is also waiting for the price of the new Xbox to be revealed. Some decision makers at Sony tend to sell PlayStation 5 below cost, at least during the initial period of the console's availability in the market. This approach is nothing new in the industry. This was the case with the PS4, which initially cost $381 to produce, but after adding the store margins and other expenses, a copy of the console cost the company more than the market price set at $399. It was only after a few months that Sony started to make money from selling this platform.

So far Sony has not decided what the price of the PS5 will be, nor how many units of the console will go on the market in the first year after its launch.

According to analyst Daniel Ahmad, it could take $460-520 to produce a new Xbox. However, he stresses that both Microsoft and Sony now have more opportunities to make money on consoles by increasing the role of subscriptions and digital distribution. Thus, they may be more willing to sell the device itself below cost. However, it is to be expected that the consoles will take off at prices significantly higher than $399.

Bloomberg magazine also reports that the coronavirus epidemic has not yet affected the preparations for the launch of PlayStation 5, and Sony itself has not yet decided how many consoles will be released in the first year. In addition, a new version of PlayStation VR is planned to be released some time after the PS5 debut.

  1. PlayStation - official website
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