Forums - Sony Discussion - Pachter has a point: Sony blew it with the PS5 digital edition

So Pachter has come out with critic of PS5 digital edition. He mentions that he thinks it will sell less than the one with disc drive. But his main point is that Sony hurts themselves with the prizing. The physical edition breaks even while the digital is sold at a loss, and there is no way Sony can make up the gap from digital games:

https://gamingbolt.com/sony-blew-it-with-the-ps5-digital-edition-says-analyst-michael-pachter

I actually agree with Pachter on this. Sony is shooting themselves in the foot with this huge prize gap. I'm not sure about where he gets the exact numbers from, but it's not far from my calculations.
Sony saves around 10 dollars by not including a disc drive.

Consoles typically have a software attach ratio of around 10 games sold per system sold. A lot of these will not be full prize, so lets say 40 dollars per game. Sony gets 30 % per digital game and around 12 % for a physical game. That is $12 - $4.8 = $7.2 more they get per digital sale. Which means the consumer would have to buy at least 12.5 games digitally that they would otherwise have bought physically to make up the $90 revenue difference. That's very unlikely, especially since those with the disc drive version will anyway buy some digital games.

A $399 digital edition might be good for the consumer, but it doesn't make sense for Sony.

Thoughts?



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What happens to the profit margins when the BoM for the PS5 is reduced?



The advantage is $7.20 per third party game.... but there's a lot more going on.

1st party games the advantage is a lot higher. $15 from retailer... cost of shipping/producing disk+case... so could be as much as $20 extra from selling digital directly than a physical copy.

Then there's also the advantage that digital only users cannot buy used games, but not just this they also can't add to the used games market by selling their own copies.

So third party +$7.20 each
1st party +$20? each (probably $12-$13 if bought at $40)
and it also reduces the used games market.

Just noticed you used $40 price figure for third party, same figure 1st party games would probably get like idk $12-$13 benefit, still more than third party. Let's also not forget we have 1st party games launching at $70...

Last edited by Barkley - on 02 October 2020

Pachter works for Game Stop confirmed



They'd make back that revenue in about a year or so, and Patcher doesn't take into account the consumer who would otherwise consider a cheaper competitor or delay their purchase til later in the generation



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A 4K driver is around $40/50 not $10.

Rumours suggested that Sony reduced the BOM to less than $450 for the disc version.

Also, they receive around $36 for every first party digital game priced at $60 and around $10 for every third party game.

You also forget the subscriptions like PS Plus.

And just like the PS4, the BOM will be reduced after a year or so.



Also I'm pretty sure the cost of a UHD bluray drive is more than $10...

the UHD drive in Xbox One S was esimated at $33.50. Will it be cheaper than this 4 years later? Yes. Will it be $10? No.

The standard bluray drive was estimated at $18 at the same time...

Last edited by Barkley - on 02 October 2020

People who buy the console day one are likely to be subbed to PS+ for most, if not all the generation and buy considerably more games than your average user.

They'll be fine.



Probably why Sony is all for the higher price market for games. Plus its there way on competing agaisnt the Series S. If the Series S wasnt a thing, the PS5 DE wouldnt be this price, it would be higher.



Just find out what kind of losses both Sony and MS have been happy to take on launch consoles in the past, it's common practice. Has everybody suddenly forgot how this works?