According to Michael Pachter, a well-known gaming industry analyst, Sony “really blew it” with the PlayStation 5 Digital Edition. The analyst recently sat down with Gaming Bolt to discuss both Microsoft’s and Sony’s next-gen strategies, and he didn’t mince words when explaining his thoughts on the Digital Edition.
“I think Sony really blew it with that, because as far as we can tell, the cost of making a PlayStation 5 is $450, so they are breaking even on the $500 version, but losing $40 or so on the digital version,” said Pachter. He continued, “A disc drive isn’t worth that much. So they’re losing $40, but they gain $6 more per digital game than they would gain otherwise. So you would have to buy a lot of games to cover up the loss, and I just think it’s unlikely many will buy that many games.”
Pachter also believes that most players will buy the traditional PS5 with a disc drive. Although we’re increasingly moving towards an all-digital world, the convenience of a disc drive can’t be overstated for large portions of the population. Because of this, Sony will likely manufacture fewer Digital Editions. The company appears to know that the traditional PS5 is where most of its money will be made, and is heavily focused on its production and availability.
This strategy of losing money on console sales isn’t new to Sony. In fact, it had a similar plan with the PS4. According to Eurogamer, Sony planned to lose about $60 per console sale but regained the losses from PS Plus subscriptions and impressive game sales. It sounded like an odd plan at the time, but clearly it all worked out in Sony’s favor .
Just because the strategy worked back then, however, doesn’t mean it will work today. Its competition this time around is – arguably – much more enticing than the Xbox One, and today’s economic climate is increasingly unstable. There’s also the question of Sony’s game lineup, and whether or not it will provide enough compelling titles to recoup its loses.
The PlayStation 5 launches on November 12, but it’ll probably be several years before we know if its pricing strategy pays off.
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