Next up on the absurd rumors surrounding the upcoming consoles from Microsoft and Sony, we have the price question on launch – a pretty big question for early adopters and, historically, a factor which can actually set the course for sales rates on a given system compared to another — people are likely to buy the cheaper one just to “get into” the “current gen” of gaming while spending the least money they can, regardless of other details around the console.
Recall how the original PlayStation quickly outsold the Sega Saturn due to being a good bit cheaper as a fine example of this or, alternately, how the PlayStation 3 was $600 at launch and was very quickly outsold by the much cheaper Xbox 360. Price at launch plays a major role in setting the stage for future sales of a console, as people’s friends “buy into” a given ecosystem.
So, it’s a bit of a big point in the community. Right now no prices have been stated. We’re still easily 10 months away from the release of this hardware, so there’s still a while to go where Microsoft and Sony will give more details about their systems, including the MSRP.
This, of course, hasn’t stopped people from speculating and doing what they do best with gaming — starting pointless rumors and touting them as facts rather than waiting patiently, and right now one of the rumors spreading is that these new systems will cost $1000. That’s right, a grand. Over twice what the previous consoles have.
Of course, as you can imagine based on me writing, this is complete bullshit. Interestingly, I recall this rumor being spread back when the PlayStation 4 and Xbox One were about a year from release, and it was just as stupid then as it is now.
I’ll keep this simple — the market can only handle so much. People simply will not pay absurd amounts for gaming systems. Most of them won’t, anyway. As I said before, they will go towards the cheapest product. This means companies must try to produce the best possible hardware for the lowest reasonable cost, and virtually always will sell the system at a loss, and make up the difference in the sales of software for the game system.
If a system cost, let’s say, $750 to make, instead of selling it for $900 and making about $150 for each unit sold, they will sell it for, let’s say, $500 and lose $250 on each unit sold, hoping to sell that many more systems and make it up by the customer buying games for the system. Sell enough games and that difference becomes moot.
When you add in that there is competition between 3 companies for the core gaming market setting a reasonable price becomes a necessity.
What’s more, consumer purchasing history has shown exactly how much people are willing to spend in the first year or so of a systems life to actually own it early on in its life, and that’s at most about $500 for something that truly impresses.
Now, I feel like part of this comes from the fact that so many people think of these machines as some kind of technological marvels, unique supercomputer grade hardware. This simply isn’t the case.
Game consoles always have been, and forever will be, snapshots of a branch of current computer technology. They traditionally always are based on a standard processor design, sometimes customized, or done in house but still something that’s just like everything else on the market at that time. They aren’t anything special beyond the fact they are unique, standardized arrangements of this technology, acting almost like a “snapshot” into what computing was like at that time period.
I feel people don’t realize this and think that because they are so “new” and “advanced” that they have to be super expensive. It doesn’t follow, though, especially for anyone who understands even the most basic facets of gaming technology and the evolution of such.
When you consider that the Xbox Series X and the PlayStation 5 are using processors that are effectively direct upgrades from the processors used in the Xbox One and PlayStation 4 and stem from a processor family which has had several upgrades and improvements made over the past 8 years, if anything these systems should cost less overall to make and thus should either be cheaper than the previous era at launch, or at the very least be that bit more of an improvement for the price being paid.
That leaves us with the question: Just what do I think the Xbox Series X and PlayStation 5 will actually cost at launch?
My guess? $400.
Why? Because that seems like a safe price. $500 is a bit much, and as the Xbox One launch showed, even for a “bonus” like the Kinect (which of course few cared about) it isn’t worth it, especially when the PS4 launched at $400.
$300 would be too little, given today’s buying power, and would mean that much more money lost on each unit sold that a company would have to hope to make up in that many more software units sold to accompany the system.
$400 feels just about right, and given the history of the PS4 and Xbox One launch, I feel both companies will work hard to target that nice $399.99 price point.