What you need to know
- Sony’s PlayStation 5 Pro was announced this week, and comes with a remarkable price tag.
- Priced at $699.99, it essentially becomes one of the most expensive home video game consoles in history, especially when you include the disc drive and vertical stand optional add-ons.
- An analysis from Ampere has suggested that a lack of competition from Xbox is partially to blame for the price, as Sony seeks to boost margins for its gaming hardware.
As a seasoned researcher with decades of experience observing the gaming industry, I must admit that I was initially taken aback by the price tag of Sony’s PlayStation 5 Pro. My first console was the original PlayStation, which I bought for a fraction of what the new model costs now. But times have changed, and so has the market dynamics.
In the debate surrounding the PS5 Pro, it’s a playful yet heated discussion where fans take sides, either championing or criticizing Sony’s high price tag of $699.99 for their mid-generation update.
This year will see the release of the upgraded PS5 model, dubbed PS5 Pro, boasting enhanced GPU capabilities and Sony’s debut in frame generation technology, known as PSSR (PlayStation Spectral Super Resolution). This innovation is expected to enhance ray-tracing performance significantly, with Sony striving to eliminate the need for users to compromise between graphical fidelity and performance modes. However, much buzz has been generated about its price, sparking numerous PS5 Pro memes online yesterday.
1) In the U.S., the PS5 Pro retails at $699.99, but in some areas when converted to USD, its price exceeds $1000 due to regional pricing differences. In Europe, the PS5 Pro is priced at €799.99, making it too expensive for many consumers. Nevertheless, Sony might produce enough stock to match projected demand, which could account for about 11% of total PS5 sales by its end-of-life, similar to the PS4 Pro’s performance in previous years.
Regarding the analysis, Ampere (via IGN) provided insights as to why Sony priced this model so highly. According to Ampere, the primary reason was a “lack of direct competition from mid-cycle upgrades compared to the previous generation,” implying that Xbox did not have an equivalent offering.
Back then, I was thrilled by the intense competition between the PS4 Pro and the Xbox One X – both of them daring to delve into the realm of 4K resolution for the first time. This round, Microsoft seems to be without a mid-gen refresh console equivalent, as rumors suggest that their supposed effort, Project Scarlett (formerly known as Xbox Brooklin), may have been scrapped if it ever left the conceptual stage.
A different way of expressing this could be: Amperes observation indicates that Sony aims to counteract inflation in their supply chain and increase their own profits through the PS5 Pro launch. However, information provided by Sony directly to investors reveals challenges for PlayStation in boosting margins, due to a tough economic climate, reduced gaming hours and expenditure, as well as broader supply chain difficulties affecting numerous hardware producers.
According to Midia Research, their findings align with others’ thoughts that the rumored PS5 Pro may not significantly expand the PlayStation user base, but instead primarily caters to devoted, long-time PlayStation enthusiasts.
Media analyst Rhys Elliot points out that dedicated fans are willing to invest in this premium product, which is less expensive than a top-tier graphics card for PCs. He notes that PlayStation’s most devoted users are eager to spend more to enhance their core PS5 experience, as demonstrated by the popularity of the DualSense Edge and PlayStation Portal accessories (each priced at $200). Moreover, visual quality matters greatly to console gamers, with 40% indicating that graphics motivate them to play new games. However, the release of a PS5 Pro might not persuade many individuals to purchase a PS5 if they haven’t already done so. Instead, the Pro serves as an opportunity for PlayStation superfans to maximize their enjoyment of current and future games.
Meanwhile, what’s Xbox up to in the background?
Over the last year, Xbox has faced some challenges in growing and maturing, similar to what one might experience during adolescence. While fans may be teasing Sony about the price of the PS5 Pro, Xbox has had its fair share of criticism due to their strategy of releasing more of their exclusive games on PlayStation as well.
The common perception is that PlayStation has effectively eliminated Xbox as real competition, with the PS5 outselling Xbox Series X|S at a ratio of 3:1 or even higher in some markets. Some estimates pin the ratio as high as 5:1 globally. But as the PS5 Pro margin-focused price point suggests, selling consoles isn’t the full battle. Selling software and microtransactions is — and Microsoft’s dominance in this space, across Candy Crush Saga, Diablo 4, World of Warcraft, Call of Duty, and other massive service games gives it a much healthier long-term outlook from a business organizational perspective.
As an analyst, I must acknowledge that Sony undeniably reaps substantial profits from selling third-party titles like Call of Duty by Microsoft. However, it has faced challenges in creating its own service games, as evidenced by the premature closure of Concord after only a week. In contrast, Microsoft appears to be more dedicated towards establishing an Xbox cloud gaming platform, with some analysts anticipating this sector could potentially balloon into a $40 billion industry within the next decade.
Initially, when I shared it yesterday evening, the PS5 Pro unveiling video had approximately 101,000 thumbs down. Currently, that number has increased to 143,000 dislikes. The hefty $700 price tag continues to be a significant concern for many. [Link] September 11, 2024
I think Ampere’s analysis is short sighted to the fact that console install bases are essentially fixed now. The PS5 Pro has no competition because there’s not a single PlayStation fan on earth, who would under any circumstances, buy an Xbox Series X Pro over a PS5 Pro. They’re locked into their preferred ecosystem. There’s very little swapping of audiences right now. Players may potentially buy additional consoles here and there to experience exclusive games or services, but they will spend the majority of their time on a single preferred platform. I don’t think there’s a universe where the PS5 Pro would ever have cost anything other than $699.99, even if there was a direct Xbox Series X Pro competitor lined up to match it.
Essentially, there’s no need for Xbox to introduce a direct competitor right now because even if a PlayStation 5 Pro offers superior resolution, it likely won’t persuade existing Xbox console users to switch due to this feature alone, especially since it’s not yet fully proven. Instead, Microsoft is preparing its most significant technological advancement for the next generation of consoles, rumored to include an Xbox handheld device. Personally, I prefer waiting for that upcoming Xbox release.
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2024-09-11 20:09