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The cost of hardware is through the roof, and this isn’t a problem unique to Sony at all.
Earlier this year, the Japanese giant announced insane price hikes to its console family, which has seemingly slowed hardware sales to a crawl. Rival products like the Switch 2, Xbox Series X|S, and even Steam Deck have all been struck by similar issues.
The reason for the disruption is due to an increase in demand for memory components, led by AI. Some manufacturers have signed lucrative deals with data centres, leaving less readily available parts for consumer products, thus pushing the prices up.
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It’s just another hurdle in a turbulent generation for PlayStation, and it sounds like Sony aims to mitigate the impact by, well, selling fewer PS5s.
Buried in a massive business document published earlier this week, it revealed the following:
“In hardware, although Sony expects to be affected by the impact of increased prices and supply shortages of memory semiconductors, it plans to manage the impact on profitability by flexibly adjusting plans for, among other things, unit sales and promotions.”
So in other words, it expects to sell fewer PS5 consoles moving forwards, and it’s unlikely to offer any hardware promotions – particularly during Black Friday and Christmas.
It’s unfortunate because this means that the PS5, which had been selling similarly to the PS4 at a higher price up until this point, is now inevitably going to fall behind. Remember, at this stage in its lifecycle, a PS4 could be purchased for as little as $299 (often with a big game like Marvel’s Spider-Man bundled) – while the cheapest PS5 currently costs $599 on its own.
One thing that’s particularly interesting to me is that, judging by Sony’s statement, selling fewer units will actually improve its profitability. This is likely because the cost of memory has gone up so much, it’s presumably losing money on each console sold right now – despite the huge price hikes.
Sony’s obviously lucky that it has a large install base to sell to already, but this all could potentially be devastating for the PS6. It’s going to be fascinating to see how the format holder navigates all of this disruption when the next-gen arrives.