Bofferbrauer2 said:
That's because electronics had barely any inflation until 2020. Since then, electronics also have become a lot more expensive, as the fabs have constantly raised the prices of wafers and cut price bonuses for big and recurring clients. Add to this the fact that shipping has become much more expensive due to the fuel costs, and that several raw materials for the casings and some parts on the motherboards have become more expensive, too, and I don't see how the current consoles could drop in price anytime soon without dropping way below production price. In the past generations, some part of the lower cost have come from cutting ports, but there ain't much you can really cut out apart from some USB ports, which these days will only save you several pennies each. And you can't really cut down on storage space to make up for it either, as it's already quite small with today's game storage space needs. |
DonFerrari said:
That is a great point, even more when Sony said they are ramping up production and expect to caught up again with PS4 total this year and start outpacing it from there. Perhaps exchange rates have something to do with it or will it really be heavy discount soon? |
Otter said:
They may be predicting price cuts to stay competitive (i.e if Microsoft does so on the X, they'll follow suite) as opposed to being $50 or $100 more expensive than the competition. Also the Switch 2 will be more a direct competitor than the Switch has been. i.e I imagine it'll be able to play a lot of third party titles without much much compromise outside of resolution (DLSS upscaled 720p) and a 30fps cap. |
Inflation is always there, yes, but never really a concern as long as all is going well.
I'm thinking more along the lines of BB (above). I believe it was about 6 months after launch that Sony said they had broken even on the $500 PS5 SKU. That would've been just about the time that inflation started to rise more than normal and come into play. Only minor though, so Sony obviously didn't take the future outlook into account when it came to announcing that, or they were wrong. I'm guessing the costs of everything has risen due to shortages and inflation to the point where Sony still is breaking even, if not losing money again on every $500 unit sold.
As Kyuu said (above), Sony clearly isn't making bank on consoles and won't be for years. How much is profit from PS4 hardware and some PS5 accessories vs PS5 console losses is another question. I don't believe this is due to an upcoming price reduction soon, but because of all the issues already stated. Now how much the mass production contracts may be saving PS5 losses is another thing to take into account. If Sony has deals laid out for years or more for parts, then they wouldn't be losing as much. I'm not sure how far into the future they can lock parts in and how steady they can lock those prices in over time.
If things turn around and inflation calms down relatively quickly (it usually takes longer to drop than it did to rise) then Sony very well could drop unit pricing to get more consoles out the door asap since production should be up to par by then. That's going to lead to another few years of hardware losses again, and likely overall, since PS4 should be discontinued by then. Their saving grace is that the attach rate for games is very high for PS5, so those console losses should be made up for quickly. Not to mention that by that time, there should be entire clips worth of PS exclusives they can rapid fire, increasing software sales and overall revenue even further.