Sony Hikes PlayStation 5 Price in Nearly All Regions

In an unexpected move, Sony have announced that it will increase the price of its PlayStation 5 game console in nearly all regions due to global economic environment as well as high inflation rates.  

The price increase is set to be approximately 10% in Europe, Middle East, and Africa (EMEA), Canada, Japan, Asia-Pacific (APAC), and Latin America (LATAM). The only market that will not see any PS5 price hikes is the U.S. The U.S. missing this price increase is logical, given the strength of the U.S. dollar over the past couple of quarters. 

"While this price increase is a necessity given the current global economic environment and its impact on SIE’s business, our top priority continues to be improving the PS5 supply situation so that as many players as possible can experience everything that PS5 offers and what’s still to come," a statement by Sony reads.

From now, PlayStation 5 pricing will look as follows:

It is extremely uncommon for console developers to officially hike recommended prices of their consoles since their goal is to ship as many units as possible, often with slim margins. The hardware sales often capitalize on the sale of software and services (e.g., subscriptions). Another reason why platform holders are unwilling to increase prices of their devices is because they are competing not only against other consoles or PCs, but against other forms of entertainment in general, so making its entertainment platforms more expensive naturally drives at least some customers away. 

In fact, just days ago Nintendo told Nikkei that it did not consider hiking the price of its Switch console because it wanted to expand its installed base and because it needed to compete against other forms of entertainment.  

Yet another reason why Sony's decision to raise PS5 price comes as a surprise is because normally console developers tend to lower production costs of their hardware two years after the launch (and indeed Sony has optimized its PS5 digital edition costs). Sony has a history of releasing multiple cost-reduced PlayStation consoles, all the way back to the original PlayStation 1 which saw the removal of ports and component consolidation. 

We live in a world where production of chips gets more expensive at contract makers, so it is getting harder for chip designers to lower their costs and their prices to companies like Sony. Furthermore, since the company still cannot completely meet demand for its latest platform, a price hike could more or less balance supply-demand situation.