Expensive components drive PS5 production costs to $450 per unit

Yolanda Curtis
February 14, 2020

Speaking with Bloomberg, people at Sony with knowledge of the matter said the cost of high-end components - especially around heat dissipation - had driven up production costs.

PlayStation 4, which was released in November 2013 for $399, is estimated to have cost $381 to manufacture. The site indicates that the manufacturing costs of the new PlayStation are now around 450 dollars per unit, which puts the Japanese giant in difficulty, which has yet to announce the price of its new console.

"If Sony prices above that, it would likely be to balance a need to offset higher materials cost, against risk to demand".

Samsung Electronics Co just announced its Galaxy S20 product range, each variant of which will have 5G and a minimum of 12GB of RAM in the US. The other alternative for Sony is to book a loss on each console sold, recouping the money through services, like the PlayStation Plus subscription that is effectively mandatory these days given the online-only nature of most games. Sony Chief Executive Officer Kenichiro Yoshida argues that one should judge business by active users over hardware sales. However, sources claim that Sony is split on whether it should sell the console at a loss, if necessary, to match the Xbox Series X or find a way to make the PS5 profitable as it is.

The Nintendo PlayStation prototype is said to be one of 200 units made for Sony's failed partnership with Nintendo in the early 1990s, which was its first major move into video games and eventually led to it entering the market on its own.

Most of the components for the console have been locked down, the people said, including the cooling system, which is unusually expensive at a few dollars per unit.

While the company has yet to decide how many PlayStation 5 units they'll produce in the first year, the source added that we can expect to see the release of a new PlayStation VR headset sometime after the PlayStation 5 launch.

This is also due to the fact that many PlayStation 5 games will be available on the PlayStation 4.

As Sony one again enters a new generation after having dominated the previous one, the platform holder finds itself in a delicate position when it comes to pricing - one source said the Xbox retail price will be a deciding factor.

Microsoft is widely expected to hold that information back until the E3 gaming expo in Los Angeles in June. And it looks like mobile devices, including the Galaxy S20 series that Samsung just unveiled, might be to blame for Sony's PS5 pricing struggles. For instance, a boxed copy of the original Mega Man went for $75,000 last year, and a couple of years ago a copy of Super Mario Bros was sold for $100,000.

Other reports by iNewsToday