PlayStation 5: Analyst: Console price increase will have minimal impact on sales

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According to data and analytics company Ampere Analysis, the PlayStation 5 price hike will have minimal impact on console sales.

SONY made the PlayStation 5 price increase official on Thursday. The difficult global economic environment has prompted the company to make the difficult decision to increase the price of the console by 50 euros, it said in a statement.

Of the major gaming markets, only the USA was spared the price increase. Customers in Europe will receive a 10% surcharge and can now pay €549.99 for the Playstation 5 and €449.99 for the PlayStation 5 Digital Edition.

According to Ampere Analysis Research Director for Games, Piers Harding Rolls the price increase will have minimal impact on console sales. Due to pent-up demand, SONY is unlikely to change its PlayStation 5 sales forecast, the analyst said:

“While we think some consumers will be disappointed who have tried unsuccessfully to buy a PS5, or who have saved up to buy the console just in time for the price spike, the high level of pent-up demand for Sony’s device means that this price increase of around 10% will have minimal impact on console sales in most markets. We expect Sony’s sales guidance for the PS5 to remain unchanged.”

“Given that the PS5 has been severely limited since launch, with many consumers unable to purchase Sony’s latest console, and the fact that Microsoft has yet to show any signs of pricing the Xbox series, there’s no doubt about it that this price increase must have been a difficult decision.”

“Because of inflation and price increases being felt in the supply chain for components that are largely paid for in US dollars, as well as persistently high distribution costs, Sony has now had to pass on some of these cost increases in an attempt to meet its hardware profitability goals to maintain.”

“While the PS5 price increases are far-reaching, they are relatively nuanced and are taking place in markets where the impact will be felt most, with an added layer of pressure from US dollar strength.”

“Price increases will happen in at least 45 markets worldwide but not in the US, again due to the strength of the US dollar. The US is the largest console market in the world and that’s where Sony competes most closely with Microsoft for market share.”

In the fiscal first quarter, SONY shipped 2.4 million PS5 units, falling short of expectations. Chief Financial Officer Hiroki Totoki said at the time it was unable to meet consumer demand for the PS5 due to parts and component shortages and supply chain issues.

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Looking ahead, however, Totoki predicted things would improve and SONY maintained its guidance of 18 million console sales for the fiscal year.

While other companies were also reacting to the inflation, Nintendo shrugged off a Switch price hike in Japan earlier this month. Microsoft also rejects a possible price increase.

Harding-Rolls thinks that Microsoft will take advantage of this situation, especially for the Christmas season:

“No doubt Microsoft will use Sony’s raise, especially during the holiday season, to spread its message of value, particularly in relation to the Xbox Series S, Game Pass and its all-access offering. Therefore, this move brings Microsoft some benefits.”

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