Sony finally makes a profit on $ 499 PS5

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Right after hitting 10 million in PS5 sales, Sony announced that its most expensive version of the console was no longer selling at a loss. Its $ 399 digital edition, however, still has some time to go.

During a financial pulse check with Bloomberg, Hiroki Totoki, chief financial officer of Sony, said the company’s most popular product has started to turn a profit. The $ 499 version of the PS5, which accepts paper-based games through its 4K Blu-ray player, previously cost more to manufacture than it gained in the market, even with its higher price tag. Bloomberg estimated in February of this year that the unit costs $ 450 to manufacture in parts alone, without considering labor and retail delivery costs. This is probably due to the fact that Sony must compete with the smartphone industry for parts that are already scarce, including those for DRAM and NAND flash memory. The $ 499 PS5 and the $ 399 Digital Edition (which doesn’t include a disc drive) also pack an “exceptionally expensive” cooling system to ensure their chips don’t overheat.

But as Sony’s share price gradually rises, the company is also rejoicing that its more expensive PS5 is no longer a financial burden. Rather than having to make up for losses through other hardware sales (as the company will have to continue to do with the digital edition), Sony can sell the PS5 at a profit while still serving as a gateway for sales of hardware. soft and soft software. This is truly a record month for Sony, which also reported their biggest PlayStation sales in the first quarter this week.

(Photo: Kerde Séverin / Unsplash)

Selling gaming consoles at a loss is not a new tactic. This spring Microsoft has confirmed he still sells Xbox consoles at a loss, and he can afford it because Xbox is building an “end-to-end customer experience” that makes more money for the company in the long run. Think about it: if you’re spending half a grand on a gaming console, you’re going to be worth it by buying a ton of games to play on said console as well. Sony and Microsoft need only provide a path to future profits through software sales and individual subscriptions.

Consumers have struggled to acquire either version of the PS5 since its release due to an international chip shortage. Many are hoping that when the chip shortage eventually ends, consoles (and other forms of hardware) will be easier to hook up, but others say don’t hold your breath.

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