Digital Foundry: Bloomberg Journalists Mistake Their PS5 and Series X Market Values

On February 14, Bloomberg released a report that PS5 production costs jumped to $ 450. Proceeding from this, the journalists of the publication decided that the market price of the console should be at least $ 470.

As noted by the technical division of Eurogamer, this assessment is only suitable for 2013, when the PS4 went on sale. Bloomberg calculated that the difference between the production cost of PS4 ($ 381) and its retail price ($ 399) was about $ 20 and simply added the same amount to the production cost of PS5.

Digital Foundry’s Richard Leadbetter agrees with the PS5’s production cost estimate, but believes Sony is unlikely to calculate the market price of the console in such an outdated way. According to the journalist,Sony in 2020 is much better prepared to lose money on every console sold than ever.

Due to the high sales of PS4, Sony accumulated enough cash to “buy” a large market share for it in 2020-2021, until the cost of production of PS5 decreases.

Why are new consoles so expensive

According to Leadbetter, Sony and Microsoft themselves “fooled themselves” with the release of the PS4 Pro and Xbox One X. The PS5 is five times more powerful than the PS4, but only 2.2 times more powerful than the PS4 Pro.

Of course, the advantages of the Navi architecture will play a role, but Microsoft and Sony will have to make every effort to make the “leap into generation” feel.

Therefore, companies are forced to invest in such expensive components as:

  • about 16 GB GDDR6 (more than most gaming graphics cards on the market)
  • 1-2 TB SSD (for quick game launches and faster downloads)
  • powerful 7-nanometer processor with a larger working area (it is the area that affects the price)
  • high-quality cooling of the level of the evaporation chamber in the Xbox One X (so that the processor runs at the highest possible frequency)

How Sony will recover possible loss from every PS5

  • PS Plus : by the end of the generation, subscription has become almost mandatory for active players, and they will be the first to buy a PS5
  • PS Store : the share of digital sales for all publishers is basically only growing, and Sony will receive ever-increasing revenue
  • Other services, content forms, and accessories

Why is the Xbox still dangerous?

Despite the fact that Microsoft in recent years is considered almost an outsider of the console race, the company is still ready to take risks and invest in it. Phil Spencer, for example, confirmed thatMicrosoft did not earn on the starting version of the Xbox One X and returned the lost money through the ecosystem.

At the same time, the strategy of the two launch consoles – weak and powerful, according to Leadbetter, looks convincing. The journalist tested the idea on the basis of two configurations of a Navi-based PC with a “console load level”, and he managed to achieve the same performance at 1440p and at 4K.

Microsoft can successfully launch the conditional Series S for unpretentious players who do not see a significant difference between 1440p (or reconstruction to 4K) and native 4K, reducing the price to the coveted 399 dollars or even lower – to 349 dollars.

Thus, Microsoft is able to go against the conventional PS5 for $ 400-450 with two consoles for $ 350-400 and $ 450-500, and grab the attention of both frugal players and enthusiasts. While Sony cannot afford such flexibility.Leadbetter is confident that prices for the Xbox Series X and PS5 cannot be predicted apart from each other. You can not calculate the cost of the PS5, making an estimate based on the situation with the PS4.

It is highly likely that Sony and Microsoft will not give prices to the last, or they will change their strategy during the year – just to “cut” the competitor.

A price war can become so aggressive that both companies can start selling their consoles at a loss – just to capture the maximum market share, and then recoup on long-term sales and services.

One way or another, fierce competition is beneficial to the players: they are likely to get powerful hardware at a price lower than the market.

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