If this recent info about the consoles hardware is accurate, I'd imagine you're still going to see $100 gap between PS5 and XBSX. Whether that's $399 vs $499 or $499 vs $599.

How do you market the speed of the console when it comes to static numbers? People will see 8 cores vs 8 cores, and 9TF vs 12TF. They are going to want to see a reasonable price difference because of that TF gap.

To be fair, even at $499, such a hypothetical PS5 with a 300mm² 7nm APU and NVMe SSD is likely still going to be subsidized to some extent, and Phil's comments in an Eurogamer interview talking about "not sacrificing performance for price" and learning the lesson of "not releasing the weaker console for $100 more" - notice the specific choice of words - does make me believe we're going to see a more expensive launch price for the Series X than the competition.

Of course, Prisoner's dilemma is a thing, and it's not impossible that MS kickstarts a price war even though it would be in their best interests that both the PS5 and the Series X remain at $499 and $599 respectively, and not $399 and $499 with heavier losses.

Basically the more expensive PS5 is, the better it is for XBSX. Not only for comparison, but for tactics. If MS is willing to budge on price, it makes more sense to do so if it's only $100 more. If XBSX is a $599 monster, and PS5 lands at $399, then choices are going to need to be made, if they still can be. Does or can MS just subsidize $100, and is that on top of a subsidy already? Does XBSX drop only $50 or stay put, while 'XBSY' drops at $299 or $399 to corner PS5?

If Lockhart is going to happen, and if it's Pro to XB1X level performance, then they have little reason to compete with PS on the high end. MS would likely want to leave the price high because it's all about bragging rights at that point. 'We have the most powerful console, which also costs the most, because it's so darn powerful, so how do you like that PS?' This would be a worthy marketing tactic in this scenario. The Trump approach if you will. No reason to dumb down your 'monster' console to try and compete with PS5. Let people choose whether they want the cheaper, mid, or expensive console, and hope they choose less and more, which then benefits you, and not PS.

It depends a lot of if Lockhart is real and could happen, and if PS isn't going to follow suit and stick with tradition. Just throwing a third console into the mix muddies the waters enough to where the traditional tactics will no longer be enough. A $599 XBSX is totally doable with a $499 PS5 and $299-$399 'XBSY'.

Then again, what if there's just two consoles, and they're both $599? Than what?

Time to get... 2 new jobs? 

https://www.windowscentral.com/god-war-senior-staff-environment-artist-joins-microsofts-initiative-studio

Next hiring for the Initiative!
Former God of War developer joins Microsoft.

Games have been more expensive than $60 before. I'm not talking about adjusting for inflation, they've been literally $70 or more back with the N64 and other cartridge systems. And they haven't sold particularly less games than the competition back in the day. You can apply the same logic today for Nintendo never selling their games below $60, ever. Maybe a Sekiro or a Control wouldn't sell for $80, but the next GTA, the next Elder Scrolls, even the next Last of Us or Horizon game? I'm sure they would.

Do remember that, yes, $599 led to a backlash against the PS3, but so did $399 for the Saturn at one point and now that's an usual price for consoles, and even at the lower range of what we expect next generation consoles to be. I don't think console gamers are as poor as you depict them to be when 1) PC gaming is at the hundreds of millions of players with higher entry prices and 2) they do spend this much money yearly with games nowadays.

Given the current situation no matter how much more powerful Series X would be than PS5, MS can't afford to sell it at higher price. Even 50$ price gap would be a huge mistake.

The majority of PC crowd is playing on rigs under 1000$ and only buy games when they are on huge discounts. Like $10 for AAA game.

I think consoles would also sell for a higher price but only if MS and Sony would ask for $599 bucks and not only one of both. The PS3 had to compete against the 360 with a lower price and for many people, it offered pretty much the same to not care about the PS3. And the PS3 still sold well while having more problems than the price. Worse online structure, worse multi platform games and so on).

If PS5 and Series X would be $599 and there wouldn't be a lower priced Xbox, we would see really good sales numbers. I really doubt this magical "a gamer will never pay more than 500 bucks for a console while paying 600 isn't harder for him nowadays than 500 some years ago" now. 

It makes no sense that a gamer is a different kind of human who doesn't accept higher prices while everyone else on this planet accepts it for everything else as long as he also earns more. 

And I know that some other stuff even decreased in prices the last 20 years or so (TVs) but that's the industries itself who decided this direction since they could go down and went for lower prices to convince people to replace it faster which in the end still means higher spendings I guess.