Sony Won’t Close The Door On Future PS5 Price Increases
Sony was recently asked about the possibility of a price increase for the PS5 during an earnings call to investors. The response was that given current market pressures, the company wants to keep its options open. “About a potential price increase for the PS5, at this point in time there is nothing specific I can share with you about prices,” Executive Deputy President and Chief Financial Officer Hiroki Totoki said.
This comes in the wake of news that Sony has been raising the prices of consumer electronics including cameras, home theaters, and headphones in a variety of different countries, especially Japan. According to the company, these price hikes were the result of an ongoing semiconductor and chip shortage in addition to various other factors which have caused the cost of primary materials, manufacturing, and most notably shipping to steadily increase over the course of this past year.
Vice President and Research Director at Forrester Glenn O’Donnell predicted back in May that semiconductor and chip prices would increase by up to 15 percent this year. “Chipmakers face their own increasing supply issues that are exacerbated by the Ukraine war,” the analyst pointed out. “Demand remains high while supply remains constrained.” O’Donnell went on to say that “energy prices are also on a tear including electricity. Chipmaking requires an enormous amount of electric power.”
The rising price of semiconductors and chips could cause companies to increase the price of cars, consumer electronics, home appliances, and many other products according to O’Donnell. “Margins are already tight on such products, so they have no choice but to raise prices,” he said.
Global Semiconductor Lead at Accenture Syed Alam recently described how “products that use more advanced chips such as GPUs and high end CPUs are likely to go up in price.” These are of course core components in gaming consoles like the PS5.
Sony just published its first quarter earnings report and its Game & Network Services department seems to have experienced a drop in sales, causing its operating income to plummet. The department only managed to move about 2.4 million units of the PS5 between April and June, far less than expected. The company however said there would be no change to its previous prediction of selling 18 million units in the current fiscal year.
“There were two big constraints that we were imposed with,” Totoki said. “One was the parts and components availability, the other was the supply chain. With the parts and components availability, there are a lot of improvements, so we are very hopeful, quite optimistic about that.” The executive added that “for supply chain disruption, we actually took quite a hit in the first quarter. In the first quarter, hardware volume for sales were quite smaller than we expected at the beginning of the year, so supply chain disruption is something that we hope will be completely addressed.”
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