Rebekah Valentine
Guest
It feels like every few months or so, we’re writing about another price hike. Often, we’re talking about subscription services such as Netflix, Hulu, Disney+, PlayStation Plus, or Xbox Game Pass. But we’ve also written about multiple price increases on gaming hardware in recent years. The PS5 pricing jumped everywhere except the United States in 2022, and the Xbox Series X followed suit one year later. Now, we’re watching hardware prices rise yet again – this time on the PS5 in Japan.
Common as it has become to see costs tick up and up this console generation, Sony’s Japanese price hike comes at a surprising time. Rumors have been swirling for months that the company is on the cusp of announcing and releasing an even more expensive console in a PS5 Pro. Assuming those rumors are founded (and they do seem to be), what’s Sony thinking jacking up console prices before releasing something even more expensive? Will ever-increasing sticker prices impact sales of either box?
Once again, I asked professional analysts to explain the situation. Here’s what I learned.
The answer here is a fairly simple one: economics. I spoke to Kantan Games’ Dr. Serkan Toto, Michael Wagner from Newzoo, and Daniel Ahmad from Niko Partners, and all three agreed that the PS5 price increase in Japan isn’t some sort of harbinger of global price increases to come. “Japan is coming out of literally decades of deflation, prices are generally going up for consumer goods over here, and Sony is simply jumping on that bandwagon.“ Toto explained.
Ahmad offered more detail in a lengthy post on X/Twitter. He noted that since launch, the cost of a PS5 with a disc drive has increased by 60% and the cost of the all-digital edition has increased by 82.5% in Japan.
“Sony cites a challenging external environment, including fluctuations in the global economy, for the reason behind the three price increases,” he continued. “Japan is on the extreme end, but other markets have seen 1 or 2 price increases too, which is unique for console hardware.
“The weakened yen against the dollar is certainly one reason. In 2020, the PS5 launched for what was the equivalent of $480. Today, that would be equal to $345, hence price increases to what is essentially $550.”
Ahmad added that crackdowns on exports of Japanese consoles to other markets, especially China, was another likely factor.
As for what this means for everyone else, Toto and Ahmad confirmed that the price increases were likely limited to the Japanese market for the foreseeable future. And while no one was willing to speculate as to whether we’d see a comparable Xbox console price increase in Japan anytime soon (Xbox raised the price on the Xbox in Japan already in early 2023), Toto and Ahmad both acknowledged that both companies were under economic pressure, and would adjust strategy accordingly.
Though there’s been no official announcement yet, there are a lot of good reasons to believe a PS5 Pro upgrade of some sort is imminent. The analysts I spoke to are confident, too. Toto in particular said he has “no doubt” a PS5 Pro is coming. And everyone agreed that a PS5 Pro would obviously be priced higher than the current PS5. As Ahmad said:
"One, production and shipping costs are not declining in-line with previous generations, especially for components such as SSDs. This was especially notable during the early COVID-19 period which severely impacted supply chains and led to shortages for chips, paired with an increase in demand for at-home entertainment, which led to increasing costs. Two, console platform holders are struggling to maintain gross profit margins across the board. This has led to price maintenance (or even price increases in some markets) to ensure hardware remains profitable. Three, the Xbox Series S and PS5 Digital Edition were already sold at a significant loss on day 1. The increased focus on profitability for disc models is to try and offset losses, maintain margins, and weather external factors that may impact spending on games such as cost of living increases."
But the other two analysts differed slightly on how Sony might make the higher PS5 Pro price palatable. Toto doesn’t believe there will be a price cut on the PS5 base model. “We can expect the PS5 Pro to cost $600 to $650 in the US,” he said. “Now, I am curious what Sony will do in the Japanese market where the current model costs 79,980 yen. For that price, you can get two Switches and almost an additional Switch Lite here. Will they dare to offer the PS5 Pro for 100,000 yen or even more?”
I am curious what Sony will do in Japan where the PS5 costs 79,980 yen...Will they dare to offer the PS5 Pro for 100,000 yen?
Wagner has a different take: “While we do not collect revenue on hardware, when the PS4 Pro version came to market, we saw a decrease in the cost of the base model. If a PS5 Pro is on the horizon, we have no reason to believe Sony will change their pricing strategy for this generation.”
Toto and Wagner also differed in their perspectives on how effective a PS5 Pro release would be for Sony. Both analysts pointed out that its projected timing ahead of the release of Grand Theft Auto 6 would certainly help bolster sales. Toto recalled that by the end of the life cycle, the PS4 Pro accounted for 10-15% of overall PS4 hardware sales. He believes a PS5 Pro can reach the same percentage.
But Wagner believes that the PS5 Pro “may not move the needle for this generation in the same way that a price decrease in the base model may,” and while GTA 6 might be a hardware sales driver, it might not be as significant as some would expect.
“We have also shown that many players are playing more mature titles that do not require hardware upgrades (Fortnite, Minecraft, etc.). Due to this, it will be interesting to see how Sony positions a Pro version to drive console sales for players who are not already interested in the base model.”
Ahmad didn’t explicitly take either position, but he did have an interesting addendum on a different console entirely.
“It's also worth noting that [a PS5 Pro release] will likely impact the successor to the Nintendo Switch's price in Japan too. As it's unlikely Nintendo will be able to price it as low as the original Switch was at launch.”
The recent PS5 price increase in Japan may almost certainly be nothing more complex than a reaction to larger economic factors, especially given its limitation to one region and Xbox’s corresponding increase last year. But we’re coming off of a generation of price increase after increase on subscriptions, games, and hardware amid widespread inflation. And with a PS5 Pro seemingly imminent, a Switch successor almost certain to follow, and whatever Xbox is doing, the question of what companies can reasonably ask of consumers for a new game box is becoming an increasingly spicy one.
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to [email protected].
Common as it has become to see costs tick up and up this console generation, Sony’s Japanese price hike comes at a surprising time. Rumors have been swirling for months that the company is on the cusp of announcing and releasing an even more expensive console in a PS5 Pro. Assuming those rumors are founded (and they do seem to be), what’s Sony thinking jacking up console prices before releasing something even more expensive? Will ever-increasing sticker prices impact sales of either box?
Once again, I asked professional analysts to explain the situation. Here’s what I learned.
Why did Sony raise the price of the PS5 in Japan?
The answer here is a fairly simple one: economics. I spoke to Kantan Games’ Dr. Serkan Toto, Michael Wagner from Newzoo, and Daniel Ahmad from Niko Partners, and all three agreed that the PS5 price increase in Japan isn’t some sort of harbinger of global price increases to come. “Japan is coming out of literally decades of deflation, prices are generally going up for consumer goods over here, and Sony is simply jumping on that bandwagon.“ Toto explained.
Ahmad offered more detail in a lengthy post on X/Twitter. He noted that since launch, the cost of a PS5 with a disc drive has increased by 60% and the cost of the all-digital edition has increased by 82.5% in Japan.
“Sony cites a challenging external environment, including fluctuations in the global economy, for the reason behind the three price increases,” he continued. “Japan is on the extreme end, but other markets have seen 1 or 2 price increases too, which is unique for console hardware.
“The weakened yen against the dollar is certainly one reason. In 2020, the PS5 launched for what was the equivalent of $480. Today, that would be equal to $345, hence price increases to what is essentially $550.”
Ahmad added that crackdowns on exports of Japanese consoles to other markets, especially China, was another likely factor.
As for what this means for everyone else, Toto and Ahmad confirmed that the price increases were likely limited to the Japanese market for the foreseeable future. And while no one was willing to speculate as to whether we’d see a comparable Xbox console price increase in Japan anytime soon (Xbox raised the price on the Xbox in Japan already in early 2023), Toto and Ahmad both acknowledged that both companies were under economic pressure, and would adjust strategy accordingly.
What does this mean for the PS5 Pro?
Though there’s been no official announcement yet, there are a lot of good reasons to believe a PS5 Pro upgrade of some sort is imminent. The analysts I spoke to are confident, too. Toto in particular said he has “no doubt” a PS5 Pro is coming. And everyone agreed that a PS5 Pro would obviously be priced higher than the current PS5. As Ahmad said:
"One, production and shipping costs are not declining in-line with previous generations, especially for components such as SSDs. This was especially notable during the early COVID-19 period which severely impacted supply chains and led to shortages for chips, paired with an increase in demand for at-home entertainment, which led to increasing costs. Two, console platform holders are struggling to maintain gross profit margins across the board. This has led to price maintenance (or even price increases in some markets) to ensure hardware remains profitable. Three, the Xbox Series S and PS5 Digital Edition were already sold at a significant loss on day 1. The increased focus on profitability for disc models is to try and offset losses, maintain margins, and weather external factors that may impact spending on games such as cost of living increases."
But the other two analysts differed slightly on how Sony might make the higher PS5 Pro price palatable. Toto doesn’t believe there will be a price cut on the PS5 base model. “We can expect the PS5 Pro to cost $600 to $650 in the US,” he said. “Now, I am curious what Sony will do in the Japanese market where the current model costs 79,980 yen. For that price, you can get two Switches and almost an additional Switch Lite here. Will they dare to offer the PS5 Pro for 100,000 yen or even more?”
I am curious what Sony will do in Japan where the PS5 costs 79,980 yen...Will they dare to offer the PS5 Pro for 100,000 yen?
Wagner has a different take: “While we do not collect revenue on hardware, when the PS4 Pro version came to market, we saw a decrease in the cost of the base model. If a PS5 Pro is on the horizon, we have no reason to believe Sony will change their pricing strategy for this generation.”
Toto and Wagner also differed in their perspectives on how effective a PS5 Pro release would be for Sony. Both analysts pointed out that its projected timing ahead of the release of Grand Theft Auto 6 would certainly help bolster sales. Toto recalled that by the end of the life cycle, the PS4 Pro accounted for 10-15% of overall PS4 hardware sales. He believes a PS5 Pro can reach the same percentage.
But Wagner believes that the PS5 Pro “may not move the needle for this generation in the same way that a price decrease in the base model may,” and while GTA 6 might be a hardware sales driver, it might not be as significant as some would expect.
“We have also shown that many players are playing more mature titles that do not require hardware upgrades (Fortnite, Minecraft, etc.). Due to this, it will be interesting to see how Sony positions a Pro version to drive console sales for players who are not already interested in the base model.”
Ahmad didn’t explicitly take either position, but he did have an interesting addendum on a different console entirely.
“It's also worth noting that [a PS5 Pro release] will likely impact the successor to the Nintendo Switch's price in Japan too. As it's unlikely Nintendo will be able to price it as low as the original Switch was at launch.”
The recent PS5 price increase in Japan may almost certainly be nothing more complex than a reaction to larger economic factors, especially given its limitation to one region and Xbox’s corresponding increase last year. But we’re coming off of a generation of price increase after increase on subscriptions, games, and hardware amid widespread inflation. And with a PS5 Pro seemingly imminent, a Switch successor almost certain to follow, and whatever Xbox is doing, the question of what companies can reasonably ask of consumers for a new game box is becoming an increasingly spicy one.
Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to [email protected].