The announcement of the PS5 Pro yesterday was no surprise. What was a surprise was the price: at $699.99, it debuts as Sony’s most expensive console to date. It reminded me of the controversial pricing of the PS3, a console that, when adjusted for inflation, is the same $779 price as a PS5 Pro with the extra disc drive. This is a very expensive PlayStation, and I fear it’s a taste of what’s to come with next-gen console pricing.
For years, console gamers have grown accustomed to buying hardware at a significantly reduced price compared to what they could build themselves in the PC gaming space. Yes, you can find components that match those of the PS5 or Xbox Series x on paper, but it’s still difficult to match the prices that consoles are selling for, especially when they’re discounted during promotions. Plus, the easy plug-and-play model, streamlined UI, and hassle-free warranty process are all huge advantages compared to having to build or find a good pre-built PC and then deal with Windows and driver updates. Consoles sell in the millions because they’re so much easier to use than PCs.
However, the divide between console and PC is increasingly blurring. Both Microsoft and Sony pushed this current generation in the direction of having the kind of CPU, storage, and GPU power you’d find inside a gaming PC. The PS5 and Xbox Series x/S have much more capable CPUs for gaming instead of the lower-powered ones found in laptops, and they improve the performance of your existing game library just like a GPU upgrade would on the PC side. That’s why I called the Xbox Series x a next-gen PC when I reviewed it in 2020.
The PS5 Pro demonstrates that trend even more clearly. Sony’s selling point is a $700 upgrade for existing and new games to achieve better frame rates without losing visual quality. That’s been the selling point for GPUs for decades, and now Sony is about to test whether console gamers are willing to upgrade their hardware the same way PC gamers build entirely new rigs.
The big difference this time is that Sony wants you to pay for that upgrade in the same way that PC gamers have grudgingly grown accustomed to skyrocketing GPU prices in recent years. Both Sony and Microsoft typically sell consoles at a loss initially to subsidize the hardware and grow the market for next-gen systems. These initial hardware losses are typically covered by revenue from digital games and in-game purchases.
The PS5 Pro relies on digital sales and ships without a disc drive. Sure, you can buy one separately ($79.99), but if you don’t bother, Sony stands to benefit from this digital sales boost and the 30 percent it takes on most purchases. Both Microsoft and Sony are pushing a disc-less future for consoles, and it seems likely that next-gen systems won’t ship with disc drives as standard. You’ll hopefully still be able to buy one separately, though.
It also seems likely that next-gen consoles will be much more expensive than we're used to. Component costs aren't coming down, the console market isn't growing, and Microsoft's Xbox boss Phil Spencer admitted earlier this year that Subsidizing hardware is now a challenge Because the price of components is not coming down fast enough.
Last year, a Microsoft document revealed that the company had planned to subsidize the Xbox Series x and S to the tune of $1.5 billion in 2021 in order to hit its price targets of $499 and $299, respectively. “That’s our largest hardware subsidy ever” in Microsoft’s P&L for its gaming division, the document revealed. With Xbox Series S/x sales still lagging behind the PS5, it’s unlikely Microsoft will go all-in on heavily subsidized Xbox hardware for its next-gen consoles again.
Sony already appears to be at the point of not subsidizing its PlayStation consoles too much. The lack of a disc drive helps keep console costs down for Sony on both the PS5 Slim and Pro models. The PS5 Pro’s pricing also appears to be designed to be profitable on day one, rather than months or years later. It took Sony nearly a year to stop selling the $499 PS5 at a loss, and the company then raised PS5 prices outside of the US a year later to cover inflation and component costs. In 2022, PS5 prices have increased 10 percent in Europe, 12.5 percent in Japan, and around 6 percent in the UK. Sony has raised PS5 prices in Japan three times since the console launched in 2020.
Crucially, Sony has never raised the price of the PS5 in the US, the only market where it still faces sales competition from Xbox. Microsoft admitted last year which has a 20 percent market share in Europe, compared to Sony's 80 percent. When there is no competition in Europe, Sony can adjust prices by 10 percent or sell a new PS5 Pro for €799.99 (about $884).
The PS5 Pro price in the UK is even worse. The PS5 originally launched at £449 in the UK and $499 in the US, a currency gap given the depreciation of the British pound over the past decade. Following the price increase to £479 in 2022, the UK now faces a £699 price tag for the PS5 Pro compared to the $699 launch price in the US. If you want to buy a PS5 Pro and the disc drive separately in the UK, the cost jumps to $1,045. In the US, it’s as little as $818 with sales tax in many states for the same console and disc drive — a difference of nearly $230.
Sony faces little competition in Europe and the UK for Xbox console sales, and Microsoft’s plans for an Xbox Series x redesign have been put on hold. It appears to be skipping a mid-generation spec bump in favour of an all-digital white version of the Xbox Series x and a limited edition 2TB model. Neither of these offer the upgraded GPU that the PS5 Pro includes, and it leaves room for Sony to price the PS5 Pro worldwide accordingly.
While I'm hopeful that the price of next-gen consoles won't be anywhere near $999, I can't help but think that a $699 price tag wouldn't be all that surprising when next-gen hardware arrives. Maybe we all need to work more hours We're entering uncharted territory for console generations, and the price of Sony's PS5 Pro is about to put to the test the decisions Sony and Microsoft are making right now for their next-gen hardware options. Don't be in a hurry to put away your disc drives and wallets, because consoles are about to get expensive.
