kirby007 said:
i think he is ignoring its actually the 199+ 15x24, just like all access is 25x24 |
Yup. He must have missed that part.
If we take a hypothetical 30M PS5DE consoles that has a MSRP of $399.
To the consumer:
PS5DE: $199 + ($15 x 24 payments) = $560 [the value in this is consumer gets "free" PS+, so what they are paying at the end of those two years is $440]
To Sony:
PS5DE @$420 BOM x 30M = $12.6B
$12.6B - $6B ($200 downpayment x 30M) = $6.6B (initial write off/loss)
$360 ($15 x 24 payments/console) x 30M = $10.8B
That means that for a $6.6B initial loss or loan, (sony can get that kinda money from any number of financial institutions) and even with a 20% interest on that loan, sony still ends up making a profit of around $2B from all that. And we can assume that those 24 payments are completed per console in an average of 36 months.
The math lines up. And the benefit of being able to grow your user base by as much as 30M+ in the first year alone with a digital-only bias is undeniable. And as you pointed out, this is very similar to what MS is doing, just that MS is completely removing the barrier of entry and instead of charging more monthly. And the best part of a write off like this is that sony isn't even losing anything. The banks are the ones making the investment to get 20% profit return on said investment. For sony, every time someone pays them $199 for a console, they get an additional $240 from the bank immediately. They would even be selling the digital SKU at a profit this way as opposed to people just dropping down $399 for the console.
And the overall effect, a consumer can buy into next-gen with as little as $199. And have even more money available to buy games and accessories. And most people will be ok paying $15 a month to be able to use their PS5. And since it's not tied to the account, hey can pay whenever and however, they want.
Last edited by Intrinsic - on 28 August 2020