Report: The PS5’s Manufacturing Cost Is Enormous

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Report: The PS5’s Manufacturing Cost Is Enormous

Hoping that the PS5 might hit the $499 mark or something nice and affordable in Australia? You might want to park those hopes, with a new Bloomberg report revealing that the cost of materials for the PS5 has skyrocketed.

Sources have told Bloomberg’s technology vertical that the manufacturing cost for the PlayStation 5 have risen to “around $US450 per unit”, which is $669 in local currency. That puts Sony in an enormous world of pain, considering the PS4’s estimated manufacturing cost was $US381, compared to its original launch price of $US399.

If Sony were to make a profit on each console sold, the cost of the PS5 would be enormous – $699 in Australian terms, or even higher factoring in expenses from shipping and distribution. The other alternative for Sony is to book a loss on each console sold, recouping the money through services, like the PlayStation Plus subscription that is effectively mandatory these days given the online-only nature of most games.

One of the biggest problems is supply, with NAND flash memory and DRAM becoming supremely difficult to come by.

The Bloomberg report also includes the nice nugget that a “new version of the PlayStation VR” headset would be released “after the PlayStation 5” was released. Given the PS5 wouldn’t launch until the Christmas holidays, likely in November, that means it’d be likely that a PSVR follow up would be released in 2021.

You can read more details over at Bloomberg Technology.

Comments

  • Didn’t the PS2 launch at $800 or something? Memory is hazy but I recall that and something about it being used to launch cruise missiles.

    • From memory it was about $700 at launch here.

      I seem to remember the missile thing being to do with China’s laws around who is allowed to own a supercomputer. It was a really old law that actually had things like clock speeds and stuff mentioned. So once consoles hit a certain point, they were technically supercomputers by Chinese legal standards.

      • There was also a (completely bogus) rumour that Saddam Hussein was stockpiling thousands of PS2s to build a supercomputer to power weapons of mass destruction.

        • Cheap DVD players were like $700+ at the time, so I guess getting a DVD player and a console for that price seemed like a bargain.

          i know a hell of a lot of PS2 consoles ended up being bought for the DVD capability.

    • Ps1 launched in Australia for $1000.

      I think both Sony and Microsoft will sell the consoles at a loss we’d be stupid to think they won’t cost a fair amount. Everyone’s wants more powerful consoles so everyone’s gonna have to pay up

      • PS1 was $699 at launch. Although that was in 1994 so with 25 years of inflation it might be the equivalent of $1000 today.

        PS3 was $999 at launch and did not sell well at that price.

        • Cheers, I knew one of them was.

          I swear I heard the Ps1 was as well though…. Maybe my 11 year old brain thought it was more expensive than it was

        • PS3 had a few other factors in play. like a direct competitor with more features than it did at launch and a cheaper price tag.

        • Yep, 699 at first, but it didn’t launch here until around November 1995. However, by 1997, the price from memory had settled to around 399 or so. By the time the N64 had hit, they were trying to undercut it in the market, always making sure the PS1 came in around 50-100 under it’s general price. There was also the fact that at the time, a lot of N64 games were up around 119.95 price range (Conker and a few others were up around here at first… furst?), a price that a lot of Xbox 360 games actually started off at (no idea why…), but quickly dropped back to the standard 89.95/99.95 price range.

          • Oh also, a lot of grey importers were bringing in Ps1’s into Australia and charging HUUUUGE prices on them to begin with, I remember this way back when. They’d tack on massive profit margins onto them. It was bloody absurd. This led people to having memories of PS1’s being ‘released at prices of 1200 bucks’ and ‘1500 bucks’ etc when the reality was, they’d bought them from places like Metrosoft in Brisbane city who had released them after importing them and tacking on huge ass prices.

        • Didn’t the cost behind the PS3’s pricey launch come from the blu-ray player? They were pretty new tech and were also expensive by themselves. Add on the backwards comparability and all the other parts and it makes sense why it hit such a high price.

          • Yeah, there were reasons for it, but the end result was a price tag that consumers weren’t willing to pay. I doubt the PS5 will be $999 like PS3 was, but nor would I expect it to be as (relatively) cheap as PS4, which I think was only $499. My gut feel is that it’ll split the difference and end up at $749, or maybe $799 if they’re feeling brave.

          • Yep it did. It’s why the 360 was able to launch cheap. It separated it’s HD-DVD (remember those? Nope? Most people don’t…) drive into a separate component, ensuring it didn’t have to jack up the price of the main console at first, launching around, I think it was, 2 – 300 cheaper than the PS3 at the time?

        • Although in 1994 stores weren’t as hyper competitive when it came to this stuff. Anything in the vague electronics/computers/home stereo category got marked up. I wouldn’t be shocked to find out Myer was charging $999 for a PS1 at launch.

    • Pretty sure they said they’ll be pricing at-a-loss anyway considering they don’t start cutting profits until they get into the 000’s sold (and they have Game Pass AND Live Gold to supplement) but whether Nadella and everyone else in the boardroom can stomach ‘more’ loss on hardware is the question I guess.

    • The other thing is that not only are Scarlets being manufactured for retail, but also as blades for the Azure server farms, so there’ll a lot more units being manufactured. This will be different to the One’s launch, when only retail units were being made.

  • It’s normal for console makers to lose money on the physical hardware sales at least for the first couple of years until the price of the components comes down. They’ll make that money back on software sales, so it’s not a concern for them. Sony’s done it consistently with the PlayStation brand, Microsoft’s done it consistently with the Xbox brand, even Nintendo’s done it most recently with products like the Switch and 3DS and others throughout their history. So this is news isn’t surprising.

  • I remember the ps3 coming out at like $800, they dropped the price very soon after and apparently took a loss on every unit. Hurt them short term but seemed to of paid off in the end

  • People are more than happy to spend $2500 on the latest Apple-personal-pocket-facebook-viewer, so a complete, highly powerful home entertainment system should be able to retail for even more right?

  • I wonder if they’ll launch it similar to the PS4 Pro? Not a replacement for the original PS4, but a higher priced option for enthusiasts that plays the same games but with benefits. If the rumours of them maintaining backwards compatibility, this could be an option.

    They could even do something like drop the PS4 slim, and release a new revision of the Pro as “PS5 lite” or something.

    • I’m pretty sure they have stated that it is a proper new generation, where there will be exclusive PS5 games, where as Microsoft have said there wont be any first party exclusive XSX games at launch, as they will be all cross gen.

      I can appreciate both approaches, but for me, it is a push to buy a PS5 at launch (probably trading my PRO), and holding onto my One X until there are games exclusive to the XSX that I want to play.

  • It’s silly to even think they’d sell them at launch for profit. They took a loss for both the PS3 and PS4 consoles at launch, the only difference was by how much. The PS3 was around $200 iirc, but the PS4 was only around $80 iirc. They learnt from their mistake with the PS3 and that’s why they didn’t take as much of a loss for the PS4, but they’re back on top again, so they’ll probably be willing to take more of a loss on the PS5, but not a similar loss to the PS3, so maybe $100-$120 at a guess.

  • Nothing out of the ordinary to see here production-wise. I still expect the PS5 to cost between $600-$700 at launch. All I know is I have about $1000 saved up that was originally going to go to a new GPU, but I’m holding it out for a PS5.

  • Given the specs I’d imagine you’d have to pay $1500+ for an equivalent gaming pc?

    Not saying I’d buy one at launch for $800+ but it doesn’t sound unreasonable to me.

  • I can remember seeing PS1s selling for $700+ and thinking, “Who in their right mind would pay that much for a console? Sony is doomed in this industry before they’ve even started!”

    Well, I sure showed THEM, amiright? -_-

  • I doubt they will ever repeat the $599 US or $999 AUS launch prices of the PS3 again, that really put them on the back foot. With the XSX launching the same year we will see both companies competing on price, I’m expecting maybe $750 AUS being the upper limit of the launch prices for either of the new consoles, even then I’m still in at launch.

  • I’m not seeing an issue..expecting it like many of you to be around the $750 -$800 Australian, and I’m ok with that. There are people who spend more on their phones every year, yet a console generally has a 10 year life span. I’ve brought all mine at launch anyway. And I’d expect to pay more for a gaming PC, from memory I think $599 for the PS1, $799 for the PS2, Most was the PS3 which I think retailed for $999 here on launch. And $549 for the PS4, (which I upgraded to the pro anyway). If PS5 is kept under $1000 I don’t see the issue considering some of the specs etc

  • PS2 was the cheapest DVD player at launch. Justified the pricetag
    PS3 was supposed to follow the same strategy but BluRay didn’t take off thanks to exorbitant disc pricing and the lack of a decent back catalogue. Add to that the fact the original 60GB PS3 (the George Foreman Grill) was the only backwards compatible PS3, Sony thought PS2 owners would upgrade fast. . Within a year a 40GB and 80GB version was releases with 2 less USB ports and no backwards compatibility. People bought them and kept their Ps2s for the back cat of games. Sony escaped a disaster by the skin of their teeth because Ms hadn’t solved the Red Ring of Death problem with the 360. People bought the PS3s because they were considered reliable relative to 360s, and by that time BluRay was picking up in terms of releasing back cat movies and reducing price.

    PS4 was the first time both major players were releasing consoles at the same time (month) so Sony knew price was key. They dominanted the Xbone in presales to the point 2Nd and 3rd shipments post Xmas were sold out. Why? Because Ms fucked up again- (lthis time by including a Kinect in every launch box, so they had to be $150 more than Ps4 at launch. (and also the “you can’t share your game discs debacle pre launch that they dumped too late). They bet the farm on the “Wii customer” wanting Kinect. Unfortunately the avg Wii customer got a handful of free games at launch and most only every played the killer app that sold the machine to the masses – Wii sports. Or more specifically, Wii tennis on the wiisport disc. The Kinect had no such Killer App. Months later the Kinect was unbundled so Ms could compete with Ps4 on price, but it was too late. Sony won that generation within the first 6 months. Why? Because little Johnny gets the same machine his friend Billy has so they can play together or share games.

    So that’s 2 generations of hardware Sony have won through Ms incompetence (leave Nintendo to be Nintendo- not the same customers, whereas Ps v Xb is like the old Holden/Ford- same shit, different company)

    Will they win the next one? Only if Ms fuck it up again. All signs point towards Yes.

  • Eh, I brought a PS3 for something between 700~800 AUD. And that was when I was a student (I saved up for it – I don’t have many hobbies aside from gaming). Now that I work full time, I can afford to pay 800~900. Would I like to? No. Can I? Yes.

    Having said that, I also don’t have a family or a mortgage, so my expenses are comparatively low compared to others. If you have a family of 4, a mortgage and a car loan, a 700~800 dollar price point may dissuade you from buying even if you have a very high paying job.

  • The PS5 will retail at $499 USD. I don’t think they will go above that price, even though with inflation it would be reasonable to expect a $599 USD price tag (how much are iPhones these days?). The problem for us aussies is that it will equate to around $750 AUD with our current exchange rates and GST. That will be a hard sell in the current climate.

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