PlayStation 5 production costs per unit are high

According to inside sources, the PlayStation 5 will retail for somewhere in the region of $450 when it launches later this year.

Sources spoke with Bloomberg about the matter, explaining that the cost has been pushed up due to the price of high-end components. Apparently the components used for heat dissipation are particularly expensive.

Typically companies like Sony sell consoles either close to cost price, or at a loss in favour of shifting large volumes of the product in order to make more profit on higher-margin products such as games. IHS Markit, a market intelligence firm, estimates that the manufacturing costs for the PlayStation 4 were $381, and the console was sold to the public for just $399.

The price of a console is a major point of contention among gaming fans. When Sony Executive Shawn Layden hinted that the cost of the PlayStation 3 could be around $599, he was met with a huge fan outcry. He later described this as a stark moment of hubris given how well the PlayStation 2 performed and its retail price.

Microsoft made a similar mistake, but they actually launched the Xbox One for $499 in 2013 instead of hinting at the cost. Obviously those who wanted a next-gen console at the time opted for Sony’s cheaper option, which set the tone for that entire generation.

According to Bloomberg a much longer transition between console generations is expected by Sony executives. More than 100 million PlayStation 4 consoles have been sold, which is a lot of players to suddenly stop supporting with brand new games just because a new console version comes along.

Instead, Bloomberg says that Sony’s plan is to launch hundreds of games over both generations for an extended period of time. The company will rely on online services, both their own PlayStation Plus and games-as-a-service, to make the move from one generation to the next easy.

With E3 just around the corner, it’s more than likely that Microsoft will reveal the pricing for the Xbox Series X. While Sony won’t be attending the event, they will be hosting their own showcase at the same time, and will need to do as Microsoft does if they want to stay competitive. This tension is only exacerbated by the mystery of a price point for either console.