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Expensive components drive PS5 production costs to $450 per unit

Retail price of Xbox Series X will be deciding factor in PlayStation 5 price tag

The PlayStation 5 will cost around $450 per unit to manufacture, according to inside sources.

Speaking with Bloomberg, people at Sony with knowledge of the matter said the cost of high-end components -- especially around heat dissipation -- had driven up production costs.

Console manufacturing is typically a narrow margin or loss-leading endeavour; the PS4 launched with a price point of $399 in 2013, and market intelligence firm IHS Markit estimates manufacturing costs were around $381 per unit.

Historically, console launch price has proven a delicate topic, as evidenced by the PS3 introductory price of $599, which Sony exec Shawn Layden later described as a "stark moment of hubris" after the record-breaking success of the PS2.

Microsoft made a similar misstep with the Xbox One, launching the console at $499 in 2013.

As Sony one again enters a new generation after having dominated the previous one, the platform holder finds itself in a delicate position when it comes to pricing -- one source said the Xbox retail price will be a deciding factor.

According to Bloomberg, however, Sony executives expect a longer transition into next gen; with over 100 million PS4 units sold, Sony will also be launching many new titles across both the old and new platforms.

This slow transition is complemented by an industry-wide change in attitudes away from a laser focus on unit sales, with platform holders leveraging online services to maintain revenue as seen in both Sony and Microsoft's latest quarterly financials.

Microsoft is expected to reveal the Xbox Series X launch price at E3 this year.

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Latest comments (1)

Roland Austinat roland austinat media productions|consulting, IDG, Computec, Spiegel Online9 months ago
Don't forget the launch price debacle of the original Xbox back in the day.
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