Sony PlayStation shocked everyone by announcing that it will raise the PS5. It’s 50 euros more on both versions of the current generation console. Therefore, the Standard version will cost €549.99 instead of €499, and the Digital version will cost €449.99 instead of €399. Responsibility for delivering the dreadful news fell on Sony’s president, Jim Ryan, who, by intervening in the first person, put the weight of the election on himself and tried to more decisively perceive the gravity of the situation. this is due to profound changes in the world economic situation.
For the first time in history, after two years of existence on the market, the price of a console is increasing, unless you take into account extreme cases such as the SEGA Master System in Italy (the version distributed by NBC in 1986 cost less). Thanks to Damiano Gerli for the info, distributed by Giochi Precious in 1988). However, Sony’s choice was not based on steadfast marketing choices, but on objective changes in global economic conditions.
But What are the reasons for the PS5’s price increase?? Let’s try to understand it.
Reasons for the increase: global table
in his article Jim Ryan talking about”high global inflation rates“and”negative trend of currencies“. If you’ve gone shopping recently or talked to someone who is a regular shopper, you’ve certainly perceived a general increase in prices. Just to tell you how these problems are in everyday life, without having to look for Who knows where.
In the words of Sony’s CEO, it is, in other words, a cross between inflation (that is, a prolonged increase in the overall average level of prices of goods and services over a period of time, which in turn causes a decrease in the purchase of electrical energy). coin, thanks Wikipedia) and a less favorable exchange rate. Especially the euro. If the dollar, the currency in which Sony does business, has always been worth a dollar, the euro has lost a lot of value in recent months, rising from $1.12 recorded in February to today’s key parity. If it seems like a small thing in a single exchange, imagine you’re talking about billions of dollars and consider that there’s a huge difference of more or less 10%.
In short, there are two reasons for what is happening globally: war in ukraine (to a lesser extent) however, resource and raw material scarcity. These are closely related phenomena that cause large increases first in energy and logistics costs and then in procurement costs. Raw material sourcing and production costs have become more difficult as reaching various global markets has become more difficult and expensive. For example, the long-term scarcity of some raw materials, which has already caused the semiconductor crisis, has caused many companies to increase their prices (high demand, low supply), creating a chain that includes the entire supply chain of the tech sector and beyond. . . .
Some increases are really significant, as you can judge by your home electricity bill, which grew 87.5% last year, according to the National Consumer Association. Increases were in double digits for almost all goods and services, including oil, gas, food and especially flights, with flights experiencing a devastating rise in fuel prices (we’re talking 139% of prices).
However, it must be said that the war highlights a phenomenon that has only been present for months, as the Italian public accounts Observatory noted in a very detailed report on the subject. The sharpest rise in prices began in early 2021, when the conflict has not yet begun. For example, the cost of natural gas, as it is commonly called in informal language, increased by 80% before the conflict, the latter causing the conflict to escalate, but then returning to previous levels, but affecting only 20. % of current price. The same was true for oil, which grew 79% before Russia invaded Ukraine, and grains, metals and timber, which grew an average of 75% pre-conflict. Nickel in particular suffered from the effects of the war and accounted for about 50% of the price increase. In short, as stated in the report, “Even if the end of hostilities caused commodity prices to return to pre-war levels, these prices would remain much higher than what was observed a few years ago.“.
Of course, it was inevitable that such a picture would also affect our industry, especially the console makers who could not meet the demand and kept production costs under control.
Issues for generation confirmation, advantage for Xbox
Clearly, the price hike presents more problems for the industry.affirmation of the new generation. In these cases, the market is governed by very clear laws and a major or minor contraction in demand is inevitable, it’s too early to tell. Sony knows it can probably cope with this as it has never been able to fully meet the demands of the console since its launch in fall 2020, not fearing a drop in sales. The decrease in this sense may not be perceived even from 2022 and 2023 data.
In any case, for a potential user group of the most indecisive and we don’t know how large, the new price can be a deterrent, which can take advantage of it. competition, but only if the latter does not apply the same increments (the hypothesis should not be discarded). We don’t think much of the Nintendo Switch, which doesn’t compete directly with the PS5 and has been on the market for many years. same level.
Microsoft may move in that direction and consider offerings for the next few months to make it even more desirable, but it’s not always without the challenges it inevitably faces. As a result world economic picture gray for all, not just for Sony. Sure, the rear of the Redmond house is definitely more guarded and he may decide to take the losses to make up for it, but that’s what remains to be seen. Even the Xbox Series S has suddenly become more attractive given its highly competitive price, which puts it in an even more exclusive position in the market.
The problem is that this way it can also slow down propagation of the new generationYou may have noticed from a large number of cross-gen titles, that in the first two years they are already in trouble. Increased production costs for individual games require as large an installed base as possible to try and break even. Twenty million consoles sold are no longer enough to guarantee adequate sales of games that typically need between five and ten million copies to be hits. A slower growing installed base is therefore a problem for the entire industry, at least for the console industry.
Source: Multiplayer
