It is a historical period particular, for the video game industry. The new consoles they arrived at the end of 2020but they have experienced moments of great tribulation ever since.
Xbox Series S was, in fact, the only one easy to find, while the older sisters Xbox Series X (its situation is improving in recent weeks) and especially PlayStation 5 have been complicated to find and are finished prey of touts.
The fact that the consoles were nowhere to be found, moreover in the midst of a pandemic, had its impact on game releases as well: if you have an installed base like that of PS4, it’s hard to think of abandoning it to launch next-gen only games, destined for a console that no one can buy.
Result: 2023 should be the year in which we will see the first high-end Sony production, Marvel’s Spider-Man 2, arrive as a next-gen only product. Potentially, about three years after the console’s debut.
It is in this context that Sony has announced a PS5 price increase in some markets, including Italy. Not an impossible figure (50 euros in our case), but which leads the console to break through the “psychological threshold” of 500 euros. The standard now stands at 549 euros, the digital at 449 euros.
“It’s just a matter of time”many have said. “A couple of weeks and Microsoft will do the same”. Instead, Microsoft scored an empty goalwith the assist provided by Sony itself: with a press release, he made it known that he did not have in mind no price increase.
Because? Because, at least as the situation is right now, Xbox and PlayStation continue to think about different realities (we already talked about it here). And the profit margin on the machines per se, for Microsoft, is almost negligible. Which is not for Sony.
The Sony framework and the Microsoft framework
To the surprise of few, a giant like Microsoft who has decided to go shopping by taking Activision Blizzard and ZeniMax Media does not believe that changing the Xbox price of 50 euros is the right way to deal with it. inflation that we are experiencing, especially in markets such as the European one.
First of all, because the Xbox reference market always remains the US onewhere not even Sony has decided to intervene – the dollar is quite healthy and we have also seen its unthinkable pair up with the value of the euro just around this time.
Secondly, why Xbox’s focus is not on selling consoles to you, but on subscription. And, from this point of view, for her it is not a problem that really affects the core businessreduce the profit margin per unit in some markets, or have none.
The speech is different for Sony and PlayStation, which has always embraced an opposite approach. If Xbox is trying to take its games everywhere, that is, it is you who comes to you, Sony is doing the opposite: it wants to have games that are so glamorous that the consumer comes to it and buys his console. The one that cannot be found and that is very popular in markets where the euro is in force.
As noted also by analyst Daniel AhmadSony “He has always sold PS5 Digital at a loss”, from the beginning. In return, “PS5 Standard was being sold for profit on the single unit”. What does the increase mean?
The analyst explains it very well:
“In other words, Sony wants to keep profitability stable and is putting higher costs on consumers. He expects a higher demand for the console that can lead to meeting the fiscal year targets.
Since the US dollar is very strong, there is no need to raise the price there, which is the main market (above 30%) ».
In other words, Sony wants to keep hardware profitability stable, is passing on increased costs to consumers, and expects high demand for the console will allow it to hit FY targets.
Strong US dollar means no need to increase prices in the US, its largest market (> 30% IB)
– Daniel Ahmad (@ZhugeEX) August 25, 2022
It is, you will remember, a maneuver also launched by Half some time ago, when he had decided to increase the price of his Quest 2 precisely because of the higher costs compared to a long time ago – given today’s geopolitical situation.
That of Sony, in this sense, is not a completely isolated case, but it is for now a unicum among the platform holder of consoles.
On the shoulders of the consumer
Let’s make one thing clear: we can embellish these speeches with all the bows and vocations we want, when these giants tell us they love the video game and want the best for the video game as a medium. Their primary goal, of course, remains that of go positive in terms of business.
The point is, there are different ways of telling this thing. To understand, some time ago Nintendo even had its own story – shareable or not – on why it never makes the price of its products fall. From this point of view, it almost seems that Sony has decided not to try any sweetened: with the inflation on the currency, it needs to bring its profit margin back to the expected level and, to do so, it puts a higher price on the final consumer. . In a context in which, when currencies have fluctuated in the past, there have been no consequent sudden price changes: neither when the margin decreased, nor when it increased.
In fact, this he needs an empty net assist to his competitors, on a communicative level. Microsoft who is quick to say that it has no plans for price increases and Nintendo that has made it known that it has evaluated the thing for the home market and have discarded it, make the figure of the company. attentive to the consumer without the need to move even a finger.
They just do what i have always done platform holder: don’t raise the price of their consoles two years after launch. Sony did it all by itself and provided them with a very easy ball to net, in terms of image.
This, of course, as long as there are no decision changes in the near future: in that case, the empty goal goal would turn into an own goal, but it is difficult to believe that Nintendo and especially Microsoft may want to play the luster of their image by taking back as much as possible. said recently.
Considering, however, that the experts they expect there to be no impact on PS5 sales with this increase (also because people were already overpaying the console from touts, for some reason), let’s talk more than one image speech than anything else – in fact.
In a nutshell (literally), in short, Sony is the only one who felt the need to immediately intervene on the price of its console. Indeed, PlayStation is very popular in the markets where it was decided to increase, but this announcement fits into a framework where PS5 was still unavailable and was sold overpriced by the crafty ones who counted on the desire to have it of many gamers.
The result is that Sony tries so, as Ahmad explained, to don’t lose your edge on hardware salessince so much of his business today passes from the importance of selling hardware.
Having a strategy in which the sale of consoles is secondary, Microsoft is right to hurry to point out that they have no such plansbecause he does not need it and has no anxiety about selling consoles to make cash: indeed, his Xbox Series S often costs even less than the expected list price (for example on Amazon), representing a gateway to the next- gen – and especially in Game Pass – which can be very attractive.
And, in this, for now Nintendo has chosen not to move with a price change even in Japan where it had considered doing it. Sony remains the only one to have decided to expose itself, in a scenario in which recently its communication has often divided and left perplexed. We think of having revealed the launch window of PS VR 2 with a mere tweet and an image – as the gates of Gamescom opened – almost as if to say “here’s our VR, but nothing serious” to its own consumers.
We live in spite of ourselves in a context where during Gamescom gamers find themselves talking about inflation and publisher profit margin. All companies want to make money with their business, we said, but some manage to continue doing so also selling a vision.
With the way in which he communicated this maneuver, on the one hand also appreciably sincere, throwing the weight of economic difficulties on the consumer in a declared manner, Sony however this time he hasn’t even tried.
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