The PlayStation 5 recently joined the Meta Quest 2 in the ignominious category of “game consoles with random price increases”. Earlier this week, Sony announced it would increase the price of the PS5 across Europe, as well as parts of Asia and North America.
The price increase isn’t trivial either, with PS5s in some regions rising as much as 24%. This is a serious blow, especially at a time when inflation is rampant and families are already struggling to buy more important commodities, such as food and gas.
When Meta increased the price of the Meta Quest 2 by $100 last month, I labeled the decision “pure greed,” and I stand by that statement. While Sony isn’t as ridiculously rich as Meta, the same logic applies here. Sony earned approximately $1.5 billion in net revenue in the quarter alone; this is not a company that should advocate poverty and make consumers pay even more for an already expensive product.
To quote Sir Ian Fleming: “Once is a coincidence. Twice is coincidence. The third time it is enemy action.” We’re now in the “coincidence” phase where gaming companies are arbitrarily pushing up hardware prices – and when we get into the “enemy action” phase, things get ugly.
An increasingly expensive hobby
In my piece on Meta Quest 2’s price hike, I argued that the move was in bad taste for the following reasons:
- The price increase is significant
- The product is exactly the same as before
- There is no benefit to offset the new price
- The manufacturer could easily eat the increased production costs
- Consoles are supposed to be loss leaders
- Increasing the entry fee will reduce the player base in the long run
If you replace “Meta” with “Sony”, these points will remain in effect. The PS5 on offer today is no better than last week’s PS5. Sony has billions of dollars at its disposal. The PS5 is expensive at first, and further increasing the price will only make it less accessible to the general public.
In fact, the PS5’s price hike stings a lot more than the Quest 2. Players had no reason to expect this kind of behavior from Sony. While Meta, formerly known as Facebook, has a reputation for being greedy, insensitive, tone-deaf and arrogant, Sony has generally treated PlayStation fans well, with quality games, communicative staff, and reasonably priced hardware. Sony has never before increased the price of a PlayStation console without offering something better in return – say, a redesign or more powerful hardware.
What’s even more damning is that Sony’s biggest gaming competitors, Microsoft and Nintendo, have confirmed they have no intention of following suit. While the Xbox Series X/S and Nintendo Switch appear to have similar supply-side issues, both Microsoft and Nintendo plan to keep their console prices exactly the same, at least for now. Whatever those two companies plan to do in the near future, they’ve almost certainly cultivated some goodwill with consumers this week.
And if you understand it correctly, the goodwill among the consumers counts enormously.
Responsibility to Consumers
To be clear, video game consoles are luxury goods. They may not be diamond necklaces or pleasure yachts, but they are not something the average person needs to survive. Even if you (correctly) claim that the average person does need some leisure time activities, there are much cheaper ways to play games, especially with the advent of mobile gaming and cloud subscriptions. If the PS5’s price hike makes the system unaffordable, the negative impact on your life will be relatively limited.
But that doesn’t excuse Sony’s decision. Sony cites economic challenges as justification for increasing the price of the PS5. However, it’s important to remember that the average consumer would probably prefer Sony’s economic challenges over their own. Sony runs a profitable operation, with net income in the billions. The company provides goods that people always want, and has built a reputation for being able to charge quite a bit of money for those goods. Sony employs more than 100,000 employees and pays many of them enviable salaries.
Compare and contrast with the PS5’s target audience, many of whom are currently struggling to afford basic necessities. In difficult times, a little luxury can go a long way. Facebook and Sony are now taking that luxury out of reach.
Remember that video game consoles are not like smartphones. There aren’t hundreds of different choices out there, and they don’t all do about the same thing. If Samsung were to increase the prices of Galaxy smartphones, you could get another model from Google, Motorola, OnePlus or (ironically) Sony that would work just as well. Gamers can still buy an Xbox Series X, a Switch, or a gaming PC, but they won’t have access to Sony’s lineup of exclusive games or the full PlayStation Plus program.
In short, Sony’s actions, such as Facebook, can be insensitive to everyday consumers, especially those who have financial problems of their own.
The obvious counter-argument here is that Sony’s raison d’être is not to please the consumer; it is to make money. Sony exists to be profitable, especially if it can channel those profits back to its shareholders. Someone has stated somewhere that due to manufacturing costs, selling fewer PS5s at a higher price is more likely to make money than selling more PS5s at a lower price.
However, I have never found this argument particularly convincing. If you take the “companies exist to make money” reasoning to its logical conclusion, then every person on Earth should do whatever makes the most money in the short term, regardless of their skills, interests, or responsibilities. It doesn’t take a hardcore Kantian to figure out why such a system would be ridiculous. Individuals know that making money is only part of a successful business; you also need to consider the effect your job has on other people.
At this point, Sony’s effect on other people can be very negative. We can only hope that the company will change course once costs fall again.
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