Scarce components have caused the manufacturing costs of the PlayStation 5 to rise to around $450 per unit, “forcing a difficult price-setting decision in its battle with Microsoft.”
As reported by Bloomberg, these high costs have caused Sony to take a “wait-and-see approach with PS5’s price,” which is different from past console launches as Sony usually sets the price the February of the release year, with mass production starting in spring.
For comparison, the PlayStation 4 retailed for $399 USD and was estimated by IHS Markit to cost $381 USD to manufacture. If all things were similar with the PlayStation 5, Sony would have to have the PS5’s price “be at least $470″ to reach similar gross margin.
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The biggest problem Sony is facing in regards to the PlayStation 5 is a “reliable supply of DRAM and NAND flash memory.” One of the main reasons for the scarcity is that these parts are also in high-demand for smartphone makers.
It’s not unusual for consoles to be sold at or near a loss, as the games themselves and subscription services more than make up for it. However, sources claim that Sony is split on whether it should sell the console at a loss, if necessary, to match the Xbox Series X or find a way to make the PS5 profitable as it is.
While the price may not be set, most of the PS5’s components have been locked down, including the cooling system which is “unusually expensive at a few dollars per unit.” Most cooling units for consoles cost less than a dollar, but “Sony opted to lavish more on making sure heat dissipation from the powerful chips housed inside the console isn’t an issue.”
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Sony has also said that the ongoing coronavirus outbreak has had no impact on PS5 production, unlike the Animal Crossing Nintendo Switch.
Bloomberg’s report also claims that Sony is planning on releasing a new version of PlayStation VR, which will go on sale at some point after the launch of the PlayStation 5 this Holiday season.
Sony also believes that this console transition will be a more gradual one than previous generations. This is also due to the fact that many PlayStation 5 games will be available on the PlayStation 4.
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Microsoft may very well wait until E3 to reveal the pricing of the Xbox Series X, so it may be a while, if Sony chooses to continue waiting, until pricing is known from the next PlayStation. Sony previously announced that it will once again not be attending E3.
Sony’s patient approach also extends to its plans on how it will fully reveal the PlayStation 5, as all we’ve seen so far is its logo, whereas Microsoft surprised the gaming world by showing off the Xbox Series X hardware at the Game Awards 2019.
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Adam Bankhurst is a news writer for IGN. You can follow him on Twitter @AdamBankhurst and on Twitch.
Source: IGN.com PlayStation 5 Manufacturing Costs Reportedly at 'Around 0 Per Unit'