Later this week, the PlayStation 5 launch version with disc drive will start selling for $650. Make no mistake, this is a lot of money. That may not be the highest price Sony has ever charged for a base console before, but it’s certainly the highest price ever charged for hardware originally released more than five years ago. In fact, it’s not even close.
The price increases are unprecedented, if not completely unexpected. I recently saw people rationalize PS5 price increases recalling the launch prices of previous generations of consoles. After adjusting for inflation, the original PS1 launched at $642. The first PS3 model, which essentially contained an entire PS2, launched at a whopping price of $966 in today’s dollars. But introductory prices don’t tell the most important part of the story.
While purchasing a new gaming console within the year of its release has certainly always been a luxury, aggressive price cuts have also made those same consoles much more affordable after just a few years on the market. Faced with competition from Nintendo, Sega and Xbox, Sony has always acted quickly to reduce the price of its hardware by several hundred dollars.
Halfway through each console cycle, the price of a PlayStation was usually about half of what it was at launch. Here’s a chart that shows what that looked like and how the PS5 price hikes are a complete reversal of a long-standing trend:
My city A PlayStation price curve that sloped to the right now looks more like a horseshoe. The price reduction dynamic began to change in the PS4 era. There have only been two notable price drops of $50 each, and they came in quick succession. Although the console started out cheaper than some others, it also didn’t get as cheap as it did towards the end of its life cycle. Whether due to declining savings from manufacturing improvements, Sony’s growing dominance in the high-end console market, or perhaps both, the company hasn’t been as aggressive in trying to make hardware as affordable at the end of its life cycle as in the past.
The PS5 launched in the middle of a pandemic and a historic supply chain crisis. Record inflation and recently imposed tariffs in one of Sony’s largest gaming markets have also made it difficult to draw analogies to the previous generation. But if Sony had simply kept the PS5 launching at $500 for the entire generation, inflation would have done the job of delivering a few degree of savings for consumers who waited. Instead, the disc version increased by $50 last year and will increase by another $100 this week. These holidays, six years into the PS5’s lifecycleit will technically cost more than the PS1 at launch.
Blame it on the RAM crisis, trade wars, and a possible calculation on Sony’s part that people would pay for what they need to play. Grand Theft Auto 6 this fall. But it doesn’t help that Xbox has almost completely retired from hardware, the Switch 2 competes on the power front, and Valve’s home gaming PC remains, at least for now, MIA.
With less direct competition than ever, Sony has less pressure to deliver a version of the PS5 that more people can afford. A luxury gaming device might be something Sony can continue to make money on, but it’s not something that will help an already stagnant console gaming market.