Sony is taking an unprecedented step to combat global economic pressures by raising the price of its flagship PlayStation 5 game console in dozens of major markets, though notably not in the U.S. The company announced the price hike in a blog post published Thursday.
"We’re seeing high global inflation rates, as well as adverse currency trends, impacting consumers and creating pressure on many industries," wrote PlayStation chief Jim Ryan. "Based on these challenging economic conditions, SIE has made the difficult decision to increase the recommended retail price (RRP) of PlayStation 5 in select markets across Europe, Middle East, and Africa (EMEA), Asia-Pacific (APAC), Latin America (LATAM), as well as Canada. There will be no price increase in the United States."
The PS5 launched as both a digital-only console without a disc drive and a slightly more expensive standard edition with a Blu-ray drive. In the U.S., where competition with Microsoft's Xbox is arguably most fierce, the PS5 will still retail for $399 for the digital edition and $499 for the standard. In Europe, however, Sony is raising the price by 10% to 549.99 euros (a nearly equal value in U.S. dollars) for the standard version and 449.99 euros for the digital version. There are similar price hikes in Australia, Canada, China, Japan, Mexico and the U.K.
Sony is estimated to have sold 21 million consoles so far, coming in below the preceding PlayStation 4 at the same time in the two devices' life cycles. That's because of ongoing supply shortages. Though Sony is still leading the current generation of hardware, Microsoft's Xbox is beginning to catch up. As of last month, the Xbox Series X and Series S devices were the best-selling consoles in the U.S. for the past three quarters, and market research firm Ampere Analysis estimates Microsoft has sold close to 14 million units.
Competition with Xbox is likely one reason why Sony is skipping over the U.S. with its price hike. Another reason is, as Ryan noted in his blog post, "adverse currency trends." Much of the consumer electronics supply chain is pegged to the U.S. dollar, and with the economic downturn being felt worldwide, the dollar has grown much stronger in recent months relative to foreign currencies.
"However, with inflation and price increases being felt through the component supply chain, much of that priced in US dollars, alongside continued high costs in distribution, Sony has now had to pass on some of those cost increases to try and maintain its hardware profitability targets," wrote Ampere Analysis researcher Piers Harding-Rolls. "Price increases will take place in at least 45 markets globally, but not in the US, due again to the strength of US dollar currency. The US is the biggest console market globally, and where Sony competes with Microsoft most closely for market share."
Harding-Rolls predicted that Sony won't see a substantial drop in sales given sky-high demand for the PS5 and weak supply since the product launched in the fall of 2020. "[T]he high pent up demand for Sony’s device means that this price increase of around 10% across most markets will have minimal impact on sales of the console," he wrote. "We expect Sony’s sales forecast for the PS5 to remain unchanged."
Sony said in July it still expects to sell 18 million PS5s in the current fiscal year, which would put the console close to 40 million units sold by 2023.