#142: Universal overhead
On the craven PS5 price increase, and the open goal it gifts to Microsoft.
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Yes, yes, I’m on holiday. And it’s Thursday! How wrong this all feels. Sometimes, though, you just have to get something off your chest.
This morning Sony announced that it is increasing the price of both the digital and disc versions of PlayStation 5 in every major territory bar the US. Blaming global inflation, currency fluctuations and supply problems, Sony is adding £30 on to the console in the UK, and €50 across Europe. As far as I am aware, this has never happened before. It should never happen again, either. This is a disaster, and I am honestly quite disgusted.
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Yes, global inflation is rampant, currency markets are in severe flux, and the global tech industry is still trying to claw its way back to pre-pandemic levels of component supply. All of these things have, I am sure, eaten into whatever profit margin Sony designed PS5’s original pricing structure around. But Sony has, like any multinational, had to contend with inflation, currency movements and supply fluctuations since the day it began selling its products across borders. It is the cost of doing business internationally, and t’was ever thus.
Perhaps a situation quite like this is unprecedented, but consumers have their own crosses to bear right now. They are looking at skyrocketing energy bills, at enormous price rises at the petrol pumps and supermarket checkouts. The things we require to live our normal lives are multiplying in cost at a horrifying rate. Feeling the pinch, Sony, at the way your everyday essentials are getting more expensive? Come look at my fucking gas bill, then tell me why I should be the one to shoulder your financial burden.
To the extent that such a burden even exists, anyway. In its most recent financial quarter, Sony made $2.3bn in profit — 10% more than it made in the same period last year. Sure, the gaming division is struggling a bit: profits fell 26% last quarter, to just under $400m. But the PlayStation arm of the business is protected by a successful company that, by the end of March, was sitting on cash reserves of more than $21bn. In this context, I think it is fair to say, Sony can take its £30 price increase and stick it where the sun don’t shine.
The worst thing about all this, I think, is that PS5s are still flying off the shelves as fast as Sony can make them. How much of this price increase is really driven by necessity, and how much of it is about Sony knowing that demand is such that it can charge whatever it wants? The launch price plus £30 is still cheaper than an eBay scalper, eh. So much of Sony’s conduct this generation — the higher price of software, the handling of PS4-to-PS5 game upgrades, the lukewarm overhaul of Nu-PS Plus — has felt designed around what would benefit Sony the most, rather than its users. To hell with the optics! Have you seen how popular we are? They’ll pay it anyway. This is the most egregious, the most craven, the most depressing example yet.
I know one thing for sure: if Phil Spencer and the Microsoft executive team aren’t spending today locked in a meeting room, blinds closed, assessing the financial impact of an immediate, global, 10% price cut for Xbox Series X and S, then they need their heads examined. In business terms — given how obviously Microsoft’s current numerical focus is on Game Pass takeup, rather than Xbox divisional profit — it feels like a no-brainer. In PR terms, it is an absolute slam dunk. It is potentially this generation’s equivalent of Sony’s ‘how you share used games on PS4’ knockout blow last time around. It’s an open goal, this one. I hope they take the shot.
I also hope that anyone reading this who works for Sony has already formally requested an immediate inflationary payrise. Challenging market conditions, surging global inflation, all that. I’m sure the higher-ups will understand! If they don’t, tell them to ask Jim Ryan. He’s already crunched the numbers, and will agree there’s no alternative.
Right, that’s better. I’m going to have a lie down.
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Its not quite unprecedented. Canada in 2014 when the currency tanked. Microsoft hiked the price 8% a couple of months ago on Series X/S and accessories in India. Inflation running at highest since 1981. Sony's hand may have been pushed but terrible decision to not package the price increase with a free 12 months of PSN or other extra to ease the optics.
It might be an unwise business decision but it's ludicrous to blast Sony for being greedy here. The reality is that they're selling each PS5 for less than its manufacturing costs and less than the market-clearing price. That will still be true after the price increase. The fact that PS5s fly off the shelves as fast as Sony can ship them is proof that they're incredible value.
Selling a product for a price people are willing to pay is not unforgiveable greed, and selling it at considerably *less* than the price people would be willing to pay certainly isn't. Frankly, complaining that a private company is not taking enough of a loss subsidising our hardware is the kind of thing that gets gamers labelled as 'entitled'.