Sony Sparks Debate by Pricing New PlayStation Well Above Xbox

(Bloomberg) — Sony Group Corp. priced a faster version of the PlayStation 5 well above its rival Xbox at $700, suggesting the entertainment giant sees a loyal audience willing to pay a premium for top performance.

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The Japanese company unveiled the surprisingly high price tag when it announced the start of sales Nov. 7, which will come just weeks after the latest version of Microsoft Corp.’s competing console hits store shelves. Between them, Sony and Microsoft are moving into rarefied air for consoles, with the new Xbox Series X costing $600 and the upgraded PS5 Pro asking $200 more than the original.

Four years into their respective life cycles, the two most popular home consoles are moving up the value chain. Analysts were divided on whether the pricing would spur sales for Sony, which is trying to expand its entertainment business with original, high-quality content spanning games, anime and film.

“This is about Sony skimming the absolute top end of the market, targeting hardcore PlayStation users only,” industry analyst Serkan Toto said. “It’s not a mass-market device. It seems the entire gaming world is puzzled about Sony’s pricing strategy.”

Others saw the move as an attempt to prop up margins. The pricing decision follows a series of price hikes in Japan, which experts viewed as a response to the growing cost of components such as chips.

The new, high-end console will allow PlayStation 5 games to be played at higher resolutions and faster frame-rates without the need to toggle between different modes, Mark Cerny, lead architect of the console, said in a video presentation. He said the PlayStation 5 Pro will offer 45% faster rendering than the standard PlayStation 5.

“The pricing seems extremely challenging, since there has never been a game console whose successor model was substantially more expensive than the original,” Citi analyst Kota Ezawa wrote. “We surmise that the components responsible for the improved performance of the PS5 Pro are not all that much more expensive than the components in the original PS5, and thus we expect the higher price of the PS5 Pro to boost the gross margin.”

Sony’s PlayStation 5 has sold more than 59 million units since its release in 2020 but has lagged slightly behind its predecessor, the PlayStation 4. The increased cost may limit its audience, in part because it moves the machine closer to the cost of a full gaming PC, perennially the biggest rival to standalone game consoles.

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Many reviewers noted the new device’s higher price tag despite the lack of a disc drive, reflecting an ongoing video-game industry trend that has seen customers switch from physical media to online services. A disc drive will be available for purchase separately.

In a blog post, the company said that the new console will improve the performance of older titles and that “several games will be patched with free software updates for gamers to take advantage of PS5 Pro’s features” including Hogwarts Legacy, Final Fantasy VII Rebirth and Spider-Man 2.

“Simply put, it’s the most powerful console we’ve ever built,” Cerny said.

–With assistance from Vlad Savov.

(Updates with analyst reaction from third paragraph)

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