Sony Planning to Limit PS5 Output in First Year

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Sourced from Bloomberg

Entertainment and electronics giant Sony is planning to produce far fewer units of its upcoming PlayStation 5 console in its first year compared to the plans it had for its previous-generation console’s launch, according to Bloomberg.

The Tokyo-based tech is limiting initial production in part because it expects the PS5’s ambitious specs to weigh on demand by leading to a high price launch, say people familiar with the matter that have chosen remain anonymous.

The worldwide COVID-19 pandemic has affected Sony’s promotional plans for the new device but not its production capacity, they add.

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The company has instructed assembly partners of its plans to produce about 5 to 6 million units of the PS5 in the fiscal year ending March 2021. The PlayStation 4 released in November 2013, in comparison, sold shipped 7.5-million units in its first two quarters.

It is believed that the PS5’s loftier retail tag may deter the initial pick-up of the console. Game devs who have been working on titles for the console have been anticipating its price to be around $499 to $549. The PS4 launched at $399. According to Bloomberg‘s Matthew Kanterman, this vast increase in price from the previous generation is due to the PS5’s high production costs. To break even Sony is having to push up the console’s prices.

Sony has been struggling to set a definitive price for the PS5 since February, some analysts believe it could even be sold at a loss.

Comparison of console memory and storage costs from the previous generation for PlayStation and Xbox. Sourced from Bloomberg

Sony’s current strategy seems to be to rely on incumbent PS4 models as a bridge to get new users onto the PlayStation platform’s network subscription service while the PS5 remains in limited supply.

Currently, Sony sells the PS4 for $300 and the higher-end PS4 Pro for $400. The company may cut these prices around the time of the PS5 launch to stimulate new subscribers for the PlayStation Plus membership program and PlayStation Now game-streaming service, according to people close to Sony.

Kenichiro Yoshida, CEO of Sony, says the company will aim to increase recurring revenue rather than one-time hardware purchases.

Bloomberg suggests that the PS5’s production volume could still change depending on the COVID-19 situation. Sony has been asking its employees to work from home to mitigate infectious spread of the virus, and its board has yet to meet in order to approve business plans for the current fiscal year. The meeting was initially supposed to take place in March.

Last month Sony said that it plans to release results for the year ending March on 30 April, but may be forced to push the date further back due to the pandemic.

The virus has been forcing Sony to upend its promotional plans, rushing the reveal of its new DualSense PS5 controller. It has also negatively affected Sony on the software front, with the company warning that game production pipelines may be pushed back as well. Recently, Naughty Dog, one of Sony’s most important game developers, indefinitely delayed their latest project The Last of Us Part II. The game was intended to be one of the earlier titles on the PS5.

Still, Sony remains unlikely to delay the launch of the PS5 from the critical year-end shopping season. So long as archrival Microsoft doesn’t push back the release of its next-generation Xbox, also expected at the end of the year. Sony won’t delay as long as Microsoft doesn’t delay.

Edited by Luis Monzon

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