Sony’s PlayStation 5 Made of Expensive Parts

PlayStation 5 Costs $450 Per Unit to Build

Sony is having a hard time managing the cost of PlayStation 5 manufacturing. The cost currently sits at $450 USD. Setting a competitive price for the new console may prove difficult for the company.

PlayStation 5 Backwards Compatibility

Video game consoles are often sold for little to no profit as companies expect to make their money back through video game sales. The PS4 retailed for $399 USD when it launched in 2013. The PS4 Pro launched at the same price in 2016. The PS4 was estimated to cost $381 USD to manufacture according to IHS Markit. If Sony wanted to maintain the same profit margin with the PlayStation 5 then the PS5 would have to retail for $470 USD.

Bloomberg got in touch with Sony employees and execs who are split on the pricing issue. Some believe that it would be best to price match Mircrosoft’s Series X while others would prefer to profit off system sales.

The cost of certain parts is driving up the overall cost. The cooling system is unusually expensive for the PS5 as it costs a few dollars per unit. Sony has chosen more expensive units to minimize chances of overheating issues. The cost of materials and the number of units in the initial product run both play a factor in the pricing.

“We must keep PlayStation 5’s bill of materials under our control and we need to make the correct number of units in the initial production,”  said Hiroki Totoki, Chief Financial Officer for Sony during an earnings briefing earlier this month.

The announcement of the Xbox Series X price is expected to be the key factor in determining how much the PS5 will cost. Microsoft is not expected to unveil their price until E3 2020 which will take place in June.

THe PS5 is expected to launch in time for the 2020 holiday season.

Source: Bloomberg