The production cost of the PlayStation 5 is too expensive, Sony may suffer losses

The PlayStation 5 is expected to follow the success of the PlayStation 4, but Sony is currently struggling to solve the production cost problem. The cost of DRAM and flash memory is still quite high, making PS5 production costs too expensive.

According to a Bloomberg report, the production cost of a PS5 is $ 450, resulting in the retail price of this console being $ 100 higher than that of the PS4. The report also says that Sony is struggling to have enough supply of DRAM and flash memory, while smartphone manufacturers are in huge demand.

The PS5 cooling system and some other components are also more expensive. If Sony wants to sell PS5 at the same price as the PS4, the Japanese giant will probably suffer a loss. As every year, Sony will set the price of the next generation of consoles in February, and then start mass production in the spring.

With this year’s PS5, Sony is choosing a slow and waiting strategy. Sony seems to be waiting for rival Microsoft to reveal the price of the Xbox Series X first, then determine the price of PS5.

The PS4 released in 2013 has a retail price of $ 399, which is estimated by the IHS Market to produce $ 381. With a production cost of US $ 450 and a similar gross profit margin, the retail price of PS5 must be at least US $ 470. The high price tag will be a major barrier for consumers, currently Sony’s most expensive console, the PS4 Pro, is also priced at $ 399.99.

However, Sony could accept to sell its consoles, in order to profit from selling games and other services. CEO Kenichiro Yoshida once said that a company should be judged by the number of active users, rather than the number of hardware units sold.

Reference: bloomberg