It is no secret that gaming is an expensive hobby. What makes it more so is the fact that every six years or so, a new lineup of consoles releases, bringing forth another wave of items for gamers to purchase. With the heralding of a new console, the internet immediately goes into a frenzy, speculating about prices. The PlayStation 4 has already let that particular cat out of the bag, and four hundred dollars is less than what people expected. So what about the PlayStation 5? What can we expect the PS5 Price to be? Should we start saving up now?
There are certainly a number of factors to consider when asking a question like this. We should start by looking at current predictions and the actions of competitors like Microsoft. We’ll also need to look at the history of the PlayStation’s pricing, do some math, (yikes!) and see what inflation rates will have to say on the matter. Without knowing the exact hardware of the PlayStation 5, we can only speculate, and speculate we shall! Let us begin!
How Much is Too Much?
Companies like Sony need to make money, but there's also a maximum amount that people are willing to spend on a game console. It's a careful balance, but if we turn to episode 82 of the Pachter Factor, which you can watch below, Michael Pachter explains that Sony and Microsoft don't make much money at all on console sales.
The real profits come from software sales. Sony takes a percentage of the sales for every game you buy on the PS4 or PS4 Pro. This consistent revenue stream is where they make money. For them, it makes more sense to lose a little on the console and reap the rewards of a larger player base.
This is also why iterative consoles like PS4 Pro and Xbox One X make sense from a business standpoint. As Pachter explains in the video (roughly 2-3 minutes into it), these consoles encourage people to trade in their old systems at stores like GameStop.
GameStop then sells them an upgraded console. After that, they turn around and sell your old used console to someone else. In this way, Microsoft just earned a new Xbox gamer who will purchase games for their Xbox One.
Given this, Sony doesn't need to charge a bunch for the PS5. They simply need to minimize their losses and maximize the number of people who own the console and purchase games for it. For this reason, it woudn't be smart to charge $599 or more for the PS5.
Why that number, you ask?
"I don't think next gen consoles will be $500. The PS3 launched at $600 and it flopped. The Xbox One launched at $500 and it didn't work, they had to drop the Kinect and bring it to under $400 before it sold."
He did go on to say that the sales of the Xbox One X could provide him wrong. If Microsoft's new console does well at the $499 price point, then it could give Sony incentive to charge a little more. Needless to say, it wouldn't be smart to charge $600 for the PS5, given historical reactions to that price point. Check out the full episode below for more:
Gazing into the Crystal Moneyball: The Price of the PlayStation 5
Our current predictions put the PS5's price at $499. The price of the PlayStation five depends primarily on two major factors: The state of the economy, and the availability of hardware.
Our first major factor is the economy and rate of inflation between now and the system’s release in roughly two or three years. If the value of the dollar stays the same, or fluctuates only slightly, I would estimate a price range between five and six hundred dollars. This is taking into account the no doubt cutting edge technology that the system will include.
Let’s assume the value of the dollar goes up, and inflation decreases, then we could see another price like the jump from PS1 to PS2 in which case the system would most likely cost four hundred dollars, just like the PS4. This is less likely though, considering the current state of affairs in our economy and government.
It also depends on how low the price of the PS4 manages to go before the PS5 is released. After all, this would be a clear indicator of both our aforementioned factors. If Sony can sell the PS4 or the PS4 Pro at a lower price, then it stands to reason that the PS5 can afford to be sold at a lower cost than we would expect.
How low will the PS4 go before its successor is released? To answer that, we turn to our favorite analyst, Michael Pachter. His predictions are always interesting and worthy of discussion. His comments on the 1099 Podcast are no different.
During the podcast, he predicted that Sony would wait until the PS4 Pro was the standard system before they would bring out the PS5. Once this is the case, he predicts that Sony will lower the price of the PS4 Pro to $250 if they can afford it. Seeing as how the console sells for $399 at launch, this would be quite the price drop.
While it is low compared to the launch price, it could position the PS5 to sell for $499 as the newest console. By making it twice the price of the current system, it would be a pricing model that Sony's competitors have used before.
Take Microsoft for example. The Xbox One S sells for a standard price of $249 in 2017, while the Xbox One X sells for $499. This pricing model makes sense from a consumer standpoint as it clearly shows, from a pricing standpoint, which system is the older one and which one is the newer one.
It's interesting, because you would expect Sony not to lower the price of the PS4 Pro in this scenario, as they would be losing money, but in reality the lower price could stand to boost sales of the older system even after the PS5 releases.
By releasing a product that is double the price of the current system, Sony effectively makes the PS4 Pro look like a steal, while also introducing the new system at a competitive price point because it's $100 more than the PS4 Pro was when it first released.
This is a tactic called The Contract Effect. It may not be the sole reason for Sony's potential pricing, but it does play a factor, and it supports both Michael Pachter's theory about the PS4 Pro price and our theory about the PS5's ultimate release price.
PlayStation’s price tags
Before we can look at the potential price point for the PS5, we need to look at the pricing trends Sony has used in the past. These trends will help us better understand how Sony plans to price the new console:
|PS1||$299||December 3, 1994|
|PS2||$299||March 4, 2000|
|PS3||$599 + (depending on model)||November 11, 2006|
|PS4||$399||November 15, 2013|
|PS4 Pro||$399||November 10, 2016|
The price of the next console is the question we're here to answer today. It seems like Sony doesn't want to alienate gamers with a massive price tag again. If we look at the PS3 and PS4, it's clear that they learned from their mistake with the third console. That being said, the form that the PS5 takes will drastically change the ultimate price point. Let's look at the possibilities, shall we?
History tends to repeat itself:
When the original PlayStation launched in 1995, it was priced at three hundred dollars. Back then, I would have had to save my allowance for--well, let’s just say I’d probably still be saving. The PlayStation 2 released five years later for the same price. Then of course we have outlier: the PlayStation 3. When that one released, it was a whopping six hundred dollars!
At the time, this seemed like a lot of money for a game system, but what most people didn’t consider was that the PlayStation 3 was also a Blu-Ray player. Many stand alone Blu-Ray players of the time were close to a thousand dollars, so this was quite the deal in that regard.
Eventually, the price came down to compete with the Xbox 360, but the fact of the matter was that Sony was losing money, even with the six hundred dollar price point. The reason? The PlayStation 3 had new technology, something that was fresh, and costly. At the time, Blu-Ray was just beginning to hit the scene.
Now we look at the PlayStation 4 and we see a far different story. This new console is coming out at a four hundred dollar price point. Why the sudden drop? Well, as mentioned earlier, there are a number of factors that contributed to this price point.
One of which is the fact that the PlayStation 4, unlike the PlayStation 3, isn’t utilizing any kind of recently released or overly expensive technology. It is more powerful than the PlayStation 3, ten times more powerful according to Sony, but it uses established technologies that have achieved multiple methods and thus, less expensive methods of manufacturing. When something becomes readily available, it costs less to make.
The PlayStation 4 is the evolution of the PS3, but what about the PlayStation 5? This is where things can become expensive. You see, as mentioned in our other articles, the PlayStation 5 will be arriving in an era of massive technological change.
The next generation console will have a wealth of new and exciting technologies to take advantage of. This is good for the games, because everything will be infinitely more advanced, however this also means that the PlayStation 5 will be jammed packed with expensive hardware to create those experiences.
I am imagining a somewhat significant price jump when it comes time for the PlayStation 5. This is a result of the gargantuan increase in technology that we are anticipating over the next few years. It is difficult, nigh impossible to put a price point on it, so let’s discuss another major factor before we go down that road. Hold on to your butts, this is where the math comes in.
Oh, the Options You'll Have: 2 Versions of the PS5 (Plus VR)
Over the course of a console life cycle, it's not uncommon for the gaming machine to go through several versions. Usually you get a slim version with better cooling and a larger hard drive, but when the PS5 releases, Sony is going to look into providing two versions of the system to reach a wider audience. Our speculations also predict that PlayStation VR will combine with augmented reality to replace a handheld system like the Vita and be offered as an add-on for those who want to take their games on the go with a newer and better versions of Remote Play.
One version of the PS5 will provide all the bells and whistles. We're talking a massive solid state drive (SSD) that will be up to 128 terabytes in size! You'll also get backwards compatibility and a few other exciting features. Then there's going to be a "Core Experience" that will offer the basics that casual gamers will need to enjoy the PlayStation experience. If all of this is sounding amazing or crazy (or both) be sure to check out our full article on the 2 versions of the PS5.
A Lesson in Economics: How Inflation will Affect the PS5 Price
From what I recall, I got a decent grade in economics in high school, once I was out of my general education in college, I left math on the side of the road and never looked back. For the sake of you, my dear readers, I will once more tread that narrow path suspended above a black abyss of confusion and uncertainty.
First thing’s first, a quick lesson on inflation for the benefit of myself and anyone else reading this who’s last brush with economics was in high school. So, the straight vanilla ice definition of inflation is as follows:
A general increase in prices and fall in the purchasing value of money.
Essentially what this means is that inflation occurs when prices go up as a result of high demand and low supply. Take the PlayStation 3 for example. Everybody wanted it, but no one had it in stock. This kind of situation creates inflation over time because manufacturers can charge higher prices for items that are equally high in demand, but low in supply.
The process of inflation also affects how much a single dollar is worth. Of course, a dollar is always a dollar, but the actual value of it changes based on inflation. For example, a dollar today is worth far less than a dollar two decades ago. A dollar from then would be worth over twenty dollars today!
A recent article from IGN discussed the cost of gaming in regards to inflation over the years. Colin Moriarty, the article’s author made an excellent point in regards to the price of game consoles:
“The PlayStation 3 may have seemed expensive when it launched at $599.99 in 2006 – and it was – but it’s not the most expensive mainstream gaming console. That honor goes to the Atari 2600. Launched in September of 1977, the Atari 2600 cost $199.99. When taking into account the 258.9 percent inflation rate between 1977 and 2013, the Atari 2600 cost the equivalent of $771 today.”
I don’t know about you, but that seems like a steep price point for a console whose lasting legacy includes the likes of Pong. As of right now, the rate of inflation is smaller, and more steady. Ten years from now though, the inflation could be different. Better or worse, it’s hard to say, but the fact of the matter is that the value of the dollar is low and the prospects aren’t looking too good for the future.
How much do you think the PS5 will cost? What would you be willing to pay for one? Tell us in the comments!