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NXGamer: The price of next-generation?
- Thread starter chris 1515
- Start date
I buy more digital now than retail, ease of use and with my nephews my discs end up all over the place, still haven't found my UC4 disc lol, thank goodness for the free digital version thst was available on Plus a few months back. I'm still compelled to buy the Disc version just so the choice is mine to go all digital or not.
Yeah most seem to have accepted it being a digital machine but he did say he's seen the documents so maybe knows more than us!?
Still, I'm more worried about the XSX and PS5DDE being £479/£499. Seriously high pricing going into the worst economic downturn since the 1970's? A bold strategy.....
Sony have made it very clear, again and again, that the PS5 is going to be eye-wateringly expensive. Repeatedly talking about high "value" rather than low price.
Discless PS5 $449, Discful PS5 $549
XSX $499, XSS $299
Discless PS5 $449, Discful PS5 $549
XSX $499, XSS $299
I mean, it does add up.
There's a big difference between just removing a disk drive to save on cost, and having a GPU that's a 1/3 as powerful as the one that's in the Series X. That's going to reduce the bom by a lot. How big of a gap there is between Lockhart and the PS5 digital edition is likely going to depend on how much standard edition PS5 costs because I just can't see a bigger price gap than 50 dollars between the two PS5s.
I love debate and discussion, the only way I just wanted to reply as I know that a 16 min video is always hard to get across extacly what you meant, more so with only discussion points and no script.
The digital profiling will be done based on How much does Digital Library owners buy on average over x months. Then same for majority physical disc owner who is posibly more cost conscious as the lack owning something they paid for is a driving factor, it is for me. The drive to credit cards for example increased impulse purchases within retail, ditto contactless did the same. Then in the current pandemic they raised the floor limit and, hey ho, what do you know, consumers spent more within a transaction or at least increased within some retail areas. The psychology of purchase is a complex one, but not atually parting ways with money is a barrier to raising impulse purchases. The younger generation are more used to paying monthly for things, buying online, changing numbers between systems. This detachment can be a contributing factor in driving the smaller but more frequent purchases online. Disc buyers tend to look and then say, ah, I will check Ebay or Amazon and wait a day.
I think this is where the SUB model comes in, may be even cheaper than $25 p/m
I do state that it may go $299 in the video, maybe less if they go all digital but the sub model is the "cheap" option really IF it is taken up.
This would be a great plan for many.
It made me think the only difference between this and other service is that with Xbox/gaming you do need the specific hardware + a TV. So would it be a stupid idea to consider that MS could at some point just release an Xbox TV that is Gamepass/xCloud capable?
I'd pay to have an LG OLED C# Xbox edition if it makes sense.
Just because they're talking about "value over price" doesn't mean the PS5 is going to be wildly exspensive, especially not more than the Series X lmao. A PS5 at $500 has more value than a $400 PS4.
It'd be weird but they could price both consoles at $500. Bundle 1 or 2 years of PlayStation+ with the digital version, and/or $60 store credit.
They wouldn't need Lockhart if Series X was $399. They would not need it at all.
fair enough, but rumors are series S is digital anyway
imo you have nailed the sony ps5 prices
BUT for microsoft's prices, it really only depends on how thirsty they are
BOMs change dramatically in duration of 2 or 3 years, so they would be selling at a (h/w) loss only for some time, if supposedly they wanted to really rock the boat
and by getting back all that market share they lost, I'm not even sure it will be a loss for them even counting from day 1
Lol at people saying that Series X is 399$. MS doesn't run a charity. That would lose them over 100$ per console sold, and Game Pass is also losing money (in a vacuum, they later recuperate that loss from digital game sales). They would have to sell quite a few games and an XBLG subscription just to break even per console sold.
I think PS5, PS5DE and XSX prediction is on point. Lockhart will probably be 299$, maybe even cheaper if it's digital only.
I think PS5, PS5DE and XSX prediction is on point. Lockhart will probably be 299$, maybe even cheaper if it's digital only.
Some people really do not care at all and just want to play games. I had a friend buy a same exact priced One S instead of an X because it came with an extra controller. He will probably not even use the other controller but he thought that was better value.
when launched, xbox 360 had a total cost of $525 for microsoft.
do you remember how much it was sold for day 1?
just sayin'...
That... is true, but it was 15 years ago. I don't think anyone will sell hardware at such a big loss anymore.
Hmm, pretty interesting. Such behaviours definitely should play a role, yeah. It's way beyond what I could intuitively analyse using a numerical back-of-the-envelope math lol. Will be very interesting to see if we can find this choice of skus reflected in their future financial reports in whichever way it turned out to impact their business.
ask yourself this:
you are a service-oriented company
what is the loss for you?
a) to sell a damn-good h/w for 100 loss at start
b) lose 50% of your clientele for an entire generation
and let me be a little harsh here
since 360 they've tried to sell
1) half-assed h/w for profit (xbone was less tech capable than ps4, they took a big L from a company the size of their pinky)
2) damn-good h/w for profit (scorpio is worth $100 over ps4 pro just for the decibel difference, let alone 2X the pixel count, BUT didn't change the clientele distribution)
imo, that brings us back to (a)
we will see :)
Removing the disc drive doesn't make the console that much cheaper. Maybe $20 cheaper? So it's basically the question of does Sony make closer to $30 or $80 more off giving the people an option to go digital, and thus skip the retailer cost. Considering the people willing to buy a digital-only console are in my estimation almost entirely buying digitally as it is, I say the savings are closer to 30, making $450 likelier than $400.
$100 digital difference is worthless to me. I can sell a couple of games I no longer want, or add up the savings buying physical and make that back without really even thinking about it. And then keep all the positives of physical. I find it so utterly strange that people are going digital on consoles. Do they not care that it ends up costing them WAY more and it's more restrictive and one day their games just will probably disappear.
PS5 Digital was definitely a smart move by Sony, especially if they can hit the 399 price point.
It puts them in a better position than only having 1 expensive SKU, when going up against a likely similar cost Series X and a cheaper Lockhart.
It puts them in a better position than only having 1 expensive SKU, when going up against a likely similar cost Series X and a cheaper Lockhart.
If the PS5 Digital was going to be $399, they'd announce the price point during the unveil. Ain't happening, it'll be a total waste of money for Sony.
Yeah. When the article came out about BOM going up to $420-$460, I assumed that meant $399 was the goal and the slight increase meant $399 might not be doable without a bigger loss. Thinking otherwise would suggest they were probably going for a $80-100 profit per console, which given their history, would be quiet something.
even if that was the case, they can always produce 70-30 bluray-discless at start and carry the entire marketing power of 399 without the (supposed) loss
Yeah, I really think the bigger context of "Sony is struggling to keep price down" is that the target was initially 399, and part of me legitimately wonders if the idea of a diskless SKU even exists, is because they want to hit 399.
Only thing that makes me think otherwise is how Jim Ryan went on about how it's about value and value doesn't necessarily mean having a cheaper box, but I feel like that's a case of Sony wanting to get ahead on messaging, so the 399 PS4 price point doesn't come to haunt them, assuming neither PS5 SKU is 399.
I really do think PS5 price is going to be one of two scenarios. Either 499/450, or 450/399.
Biggest thing he's missing is that he's assuming that "physical-digital split is 80-20, so for each PS5D sold you're getting 100% digital sales on that console so you're converting 80% of that console's games from physical to digital."
But that overlooks that the market for the PS5D is self-selecting. 80-20 (which again is wrong) is just an average. Many people buy 100-0, many buy 0-100, and many somewhere between. But among that range of consumers, the greater a consumer's current mix of digital games versus physical games, the more likely that consumer will be to purchase the PS5D.
That's also the problem with just "taking a loss" on consoles generally. If 10m people will buy your console at $450, you're taking $50 of unnecessary loss on those sales if you sell at $399. So you have to generate $500m of additional net revenue just of offset the loss you took on those consoles, much less any loss you were already taking at $450 as well as loss you're taking on the incremental sales. Pricing is a very tricky game.
Not in a million years. Would probably buy multiple Lockharts at that price lol.
I'm pretty sure this is a joke post but I don't see either the base PS5 or the XsX at anything below 499. I don't see Lockhart below 299 either.
I said the same thing in other threads. The PS4 is 50/50 digital vs. physical already and that model has a disc drive. An all digital edition will only generate revenue on the games sold above and beyond what is already sold digitally anyway.
with a 10 game per average user sold over the lifetime of the console, this is a grand total of 5 extra games sold digitally. Over a 7 year period. It's impossible to make back a $100 loss this way. This also completely ignores the additional retailer margin that will need to be built into the system to convince retail to carry it, since Walmart/Target/Amazon/Gamestop make their money on game sales- console margins for retail are usually $0.
This retailer margin build in was present for the PSP Go, Vita Memory Cards, and the Xbox SAD exactly for that reason.
edit: and finally at least as far as Sony is concerned aggressive cost cutting doesn't make any sense, since the vast majority of playstation consoles (around 70% of them) are sold outside of the US where the Xbox has little to no marketshare and Sony has no competition. They'd be throwing billions away pointlessly.
Thank you.
What these companies don't have to necessarily be related to the competition.
Hell, it also could be in reference to both PS5's. Disc version having more value than the digital one.
Going for that much profit...Arrogant Sony is back, baby!!!!!
I can see them doing 20 over BOM again, just like they did with the PS4. So that BOM will be key.
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Another excellent point. Sony has been signaling in every way they possibly can that the PS5 will be more expensive than the PS4. If the thing was $399 there would be no need for that and we'd have the pricing already.
This was a good video, I liked the breakdown of costs/savings by omitting a disc drive.
Personally I'll be getting a model with a disc drive, so I can play my PS4 games on disc. I also enjoy buying physical special editions.
I'm the kind of guy who like to buy blu-rays as well, and having another UHD BD player could be useful.
Personally I'll be getting a model with a disc drive, so I can play my PS4 games on disc. I also enjoy buying physical special editions.
I'm the kind of guy who like to buy blu-rays as well, and having another UHD BD player could be useful.
Good video but I'd add the following -
If you look at Sony's financials you can calculate the platform holder fee for physical full game software (average) - it is about $8.9/JPY967 per physical title. This lines up with the average $7-8 a platform holder gets per title (higher number reported due to 1P in mix).
From the full game software (excluding download only titles) unit sales of 245m in FY19, 51% of these were digital unit sales. This is a like-for-like (LFL) comparison since this is the basis of their reported digital download ratio KPI. The "80-20" split is some metric based on the aggregate of all PSN Software sales ($9.3bn) vs. Physical software sales ($1.1bn). However this is misleading since the physical software revenue recognition is only the platform holder fee (and 1P of course), whilst the digital number is all revenue from PSN including cost of goods sold.
The relevant number is the gross profit on both - physical is $1.1bn vs. 30% of the Digital Software and add-on revenue which comes to $2.8bn. If you assume an ASP of USD50 for the "full game software" (PSN has many sales) then the LFL vs. physical is $1.1bn vs. 1.9bn - so digital is around 60-40 on gross profit terms. Physical is still huge and likely accounts for c.20% of segment gross profit vs. 33% for LFL digital software.
I don't get where you get the Disc Sale number of $15 and the digital forecast of $33? What's important is ASP and not MSRP, on that basis digital probably has a lower average MSRP which will directly affect platform holder gross profit per title more since they are applying a 30% fee (where as platform fee on physical tends to be fixed/sticky). This is why the likely delta between physical and digital will only be USD10 at most since most games are not sold at MSRP.
With an attach rate of 10 over the life (implying platform is a success) that is USD100, with a present value of ~c.USD50 at Sony's cost of capital. If the DE is sold at USD399 means you forgoe all of the incremental value of the digital only user since you take a large loss upfront - the only way that Sony will find this acceptable is if its a calculation to ensure PS+ income continues (c.25% of segment gross profit) and/or they feel Lockhart will eat into their share of total software sales. If Lockhart does not exist, it is far more likely the DE will be USD449.
I think Sony will really try to "Dreamcast" Lockhart. It has the potential to act as a significant drag to their margins. MS will not be taking a bath on it since its BOM will get it to USD349, where as Sony will have to on the DE to compete on price if Lockhart is positioned well.
If you look at Sony's financials you can calculate the platform holder fee for physical full game software (average) - it is about $8.9/JPY967 per physical title. This lines up with the average $7-8 a platform holder gets per title (higher number reported due to 1P in mix).
From the full game software (excluding download only titles) unit sales of 245m in FY19, 51% of these were digital unit sales. This is a like-for-like (LFL) comparison since this is the basis of their reported digital download ratio KPI. The "80-20" split is some metric based on the aggregate of all PSN Software sales ($9.3bn) vs. Physical software sales ($1.1bn). However this is misleading since the physical software revenue recognition is only the platform holder fee (and 1P of course), whilst the digital number is all revenue from PSN including cost of goods sold.
The relevant number is the gross profit on both - physical is $1.1bn vs. 30% of the Digital Software and add-on revenue which comes to $2.8bn. If you assume an ASP of USD50 for the "full game software" (PSN has many sales) then the LFL vs. physical is $1.1bn vs. 1.9bn - so digital is around 60-40 on gross profit terms. Physical is still huge and likely accounts for c.20% of segment gross profit vs. 33% for LFL digital software.
I don't get where you get the Disc Sale number of $15 and the digital forecast of $33? What's important is ASP and not MSRP, on that basis digital probably has a lower average MSRP which will directly affect platform holder gross profit per title more since they are applying a 30% fee (where as platform fee on physical tends to be fixed/sticky). This is why the likely delta between physical and digital will only be USD10 at most since most games are not sold at MSRP.
With an attach rate of 10 over the life (implying platform is a success) that is USD100, with a present value of ~c.USD50 at Sony's cost of capital. If the DE is sold at USD399 means you forgoe all of the incremental value of the digital only user since you take a large loss upfront - the only way that Sony will find this acceptable is if its a calculation to ensure PS+ income continues (c.25% of segment gross profit) and/or they feel Lockhart will eat into their share of total software sales. If Lockhart does not exist, it is far more likely the DE will be USD449.
I think Sony will really try to "Dreamcast" Lockhart. It has the potential to act as a significant drag to their margins. MS will not be taking a bath on it since its BOM will get it to USD349, where as Sony will have to on the DE to compete on price if Lockhart is positioned well.
The guy likes to talk about technology and gaming on his YouTube channel, like literally millions of other people on YT. Nothing wrong with that, and there's no need to be an asshole to him about it
Yes I agree. People interested in the digital PS5 are the same people that buy mostly digital (or 100% digital) today. The difference in digital sales due to releasing a digital PS5 wouldnt make up for the intial loss due to selling so much cheaper.
Sony have little to fear. Even if the PS5/Digital price is 549/499 as I think, it doesn't matter initially, Sony will do fine in sales and they are no doubt cost reducing the shit out the PS5 as we speak to reduce the price over the next few years like they always do, slight revisions, slim redesign. Yeah, Lockhart might sting but there is sod all they can do about it so why burn your margins, they won't. People will buy the PS5 and subscribe to PSN in droves, there is no need to panic.
XSX will be 499 or whatever the PS5 digital is priced at if lower. Lockhart, 349.
XSX will be 499 or whatever the PS5 digital is priced at if lower. Lockhart, 349.
He saw he can cater to the PS audience with relative success, so he is seizing his opportunity and you can't fault him for that as you have many people like that on the Xbox side such as Dealer, Rand al Thor, and colteastwood. YouTube is about making money after all and as long as you don't fall for the "unbiased" gimmick they try to sell. Trust worthiness and honesty isn't their primary objective, but they can be entertaining in their own way so just enjoy it its free.
Going by previous reports of the PS5 BOM being approx $450 and we take into account reductions (mentioned in NXGamers video) of approx $30 for BR drive and QC manufacture cost then the BOM for PS5DE would be in the region of $420.
Seeing as the PS5DE is forcing digital purchases until all previous models of PS, surely Sony will assume that they would easily recoup any initial loss from selling this model cheaper than what they make it for?
The PS4s BOM was only $18 less than the RRP in shops and was sold initially at a loss for a short period before Sony began recouping their money.
Yes, there is no guarantee that a consumer would buy more digital games compared on PS5DE compare to the full fat PS5. But what is guaranteed is that they will not be buying physical and will not be buying 2nd hand. So if they want to play a game on their PS5DE they need to pay Sony for digital or PS+ or PSNow. So it's win win win for Sony.
I fully expect the PS5DE to release at $399
Seeing as the PS5DE is forcing digital purchases until all previous models of PS, surely Sony will assume that they would easily recoup any initial loss from selling this model cheaper than what they make it for?
The PS4s BOM was only $18 less than the RRP in shops and was sold initially at a loss for a short period before Sony began recouping their money.
Yes, there is no guarantee that a consumer would buy more digital games compared on PS5DE compare to the full fat PS5. But what is guaranteed is that they will not be buying physical and will not be buying 2nd hand. So if they want to play a game on their PS5DE they need to pay Sony for digital or PS+ or PSNow. So it's win win win for Sony.
I fully expect the PS5DE to release at $399
Watch the video when you get a chance. He goes into more detail. Good watch.
User Banned (1 Week): Hostility across multiple posts
Speaking of shit posting. Nice contribution, you fit right in with the forum.
This is exactly what I think they're going to do. I'm guessing $550 and $449 and the diskless is going to be impossible to get. (Again, because I believe if they were willing to go $399 they wouldn't have to have a pricing showdown with MS.)