PS5 is sold at a loss * Sony is behind the scalpers crisis

PS5 Is Being Sold At A Loss, Sony Confirms

So well, that explains why Sony is not so thrilled to get their stocks numbers fixed as they are not making any money what so ever. They actually lose money the more consoles they sell. It suits Sony to wait as much as possible before fixing the low PS launch numbers. The more they wait, the cheaper manufacturing becomes as components getting more obsolete and cheaper.

For all that launch fiasco, you can blame scalpers and Corona as much as you want, but the truth is most of the crisis is probably manufactured by Sony themselves in order to prevent to sell too many copies at launch LOL

That makes me think isn't it funny that, for legit gamers, is so hard to get a single console copy at MSRP, but suddenly so scalper dude has 50 boxes lying around?

Might it be Sony is secretly supplying those scalper dudes ?

What low numbers are you talking about? They sold 4.5 million units despite being in a pandemic.

how about rtx 3090 sales?

Well. That's really low WORLD numbers when the actual demand is 20+M. Meanwhile Nintendo, a company with less manufacturing capabilities is selling their Switch at dozen of millions a year. Just maybe, it's because Nintendo is making profit on Switch and it suits them to fill in the demand

It actually matched the same number from PS4, and that was with a pandemic.

No it's not.

Sony previously released its PlayStation 4 for $399 USD in November 2013 and it went on to sell 7.5 million units in the first two quarters.

Right. Plus, IMO the logic of the OP is flawed. Yes, in a way the more units they sell the more money they lose - on the hardware specifically. However. Console hardware is usually sold at a loss or at best a razor thin profit, and the money is in software sales and subscriptions and peripherals. The more PS5s Sony sells, the quicker they will recoup their R&D costs and grow their profits in those areas. IMO, Sony is not motivated to withhold stock.

That was the first TWO quarters.

Well, the first quarter was in 2020. The 2nd quarter will be in April, which is only 2 months away. Plus the demand for PS4 was not that high when it was released as the biggest hits were on PS3.

Well it’s no surprise that both Microsoft and Sony are selling their systems at a lose but I don’t think that they want to purposely limit them because of that. They make their money from the software sold so they would want to get as many systems into people’s hands as soon as possible.

Actually PS4 is still their main bread winner, if we judge by subscription and software sales. They CAN withhold PS5 as they are till making money on PS4.

thats not how the loss leader business model works. to get it to work Sony need to get consoles into peoples hands ASAP (and ideally the discless version) and they need those people spending bucks on PS games as much as possible (ideally from the PSN store). oh and subscribing to PSN+ too..that would be great. Thats where the money is.

Selling them to scalpers, who then inflate the price and essentially slow demand, is no good to sony. thats the same as idle inventory sitting on shelves basically. those PS5s are sold. sony have taken the hit. but no one is using them to buy stuff (or the rate has at least slowed down) so its taking longer for sony to recoup the cost of each console.

it makes no sense for sony to supply scalpers.

its the same for MS. no way they are making money on the XSX or XSS themselves. they need those consoles in houses, getting played and with games selling on them and Gamepass subs being bought.

That's kinda weird I kept seeing reports that the PS5 launch surpassed the PS4's, well that ended up being a whole load of BS.

Umm... I'm guessing topic creator doesn't understand that Sony doesn't see a dime of the inflated scalper prices after the $400-$500 mark depending on which model is sold.

Why on Earth would Sony do that when the vast majority of their revenue comes from software and, services?

Also, yes, they sell the PS5's at a loss but, that didn't stop them from having their most profitable quarter ever.

They easily recoup their losses on hardware from software and, services.

The pandemic had nothing to do with it considering the PS5 came out a few months ago when the pandemic is pretty much over.

Sony, MS and even Nintendo have this hard on of under making consoles like they think no one is gonna buy em. If Sony made a flat 10 million more PS5s right now they would all be bought out within weeks.

@ivangrozny: do you honestly believe any of what you're saying?

When they are losing money on each unit then I imagine they hope to make money up in game sale royalties and subscription services. But if scalpers are holding onto them, they take the loss but there is a delay on subsequent consumer spending.

Sony has weathered worse, the PS3 for instance each unit from launch lost them some $350 each, it took a few years just until each unit was sold at a profit, thought they did have to liquidate their assets to afford the drain in money. They have improved their situation much over 8th gen but not so much I don't think they can take it this bad. But I don't think the losses they are taking come close, and the gamingbend is still making money through PS+ and games sales on PS4.

I think cross gen functionaliry will keep revenues coming in to Sony for a while, there is a lot of 8th gen games people have yet to play, publishers trying to squeeze every last drop of profit out of them. Owning new consoles hasn't isolated people to what is on the next gen library the same way previous gens did. And for all those sales they get royalties. They have a userbase paying PS+ fees, and I bet with time they will grow PS Now.

Excuses...

@Telekill: I’m not sure most people understand scalping whatsoever. TC thinks PlayStation benefits from scalping. Others blame scalping more than supply constraints and don’t understand the reason for the secondary market demand is the supply constraints.

This feels like one of those response threads lol

Pandemic is over apparently, come to my country then.

Razor/Blades model. Make money off the games/online/other subscriptions. It's a pandemic, so low(er) numbers at release of a console with high-demand, is what drives these scalper prices way up. Not really that difficult, and much less mental gymnastics.

maybe in US it surpassed ps4 launch, rest of the world being starved made it at best tie with ps4 launch

This makes the PS5 digital the sweetest deal. $100 for Blu-ray?😂

Yes, I'm very sure Sony wants to lose out on potential software sales by supplying to scalpers who'll sit on marked up consoles, for a gray market they won't see a cent on when said scalpers sell them. You really figured out Sony's master plan there, Sherlock.

This is probably a troll thread, but if not, I don't think OP understands the console business at all. There's a reason you can get a PS5 for $399. Lots of software and services sold. Sony makes money on other hardware like tvs etc because they have to.

I would think being in a pandemic would boost sales because people have nothing better to do since a lot of the world is in some sort of lock down. You probably should use the pandemic excuse anymore

Now you're just making shit up lol. The PS3 era ended after 7 years, people were waiting for next gen consoles after playing their old consoles for a while. I know, I was there lol. The fact that Sony sold 4.5 million at a $500 price point and during a pandemic where supply chains were constrained is pretty remarkable. I work in business and I know what the supply chain is like for retail. This is just low grade bait lol.

How are supply chains constrained when it sold better than the PS4 and that wasn't during a pandemic? I don't think you know what you're talking about

@ivangrozny: Please tell us you're trolling cause I'd not...yikes!?!

@lebanese_boy: why do you care?

Probably a modernization of production and supply lines. Are you implying the pandemic had no effect on production?

This is so dumb lmao

I'm saying he should stop using it. Sales were better than previous gens and supply is always constrained during a new launch. I don't see any need to give excuses considering how well the sales have gone.

OP is in full conspiracy theory mode...

@Sagemode87: Listen chicken, I don't usually discuss with my food.

It's not an excuse. It's a verifiable fact. The pandemic has impacted multiple businesses, and I believe both MS and Sony have stated that the pandemic is directly affecting supply. Hell, still waiting on my 5900X due to this shit.

There is already a thread on Sony's financial results, where it is reported that Sony is making enough revenue to cover the PS5 loss from software and subscription sales. I don't think you need this thread.

We have no proof it impacted console manufacturing AND it's sold better than any the extremely popular PS4. It's not an excuse and it probably would have had the same supply problems it's having now since we have 8 other gens to use as the barometer. Hell for all we know the pandemic might be aiding sales because so many of the worlds population is on some sort of lock down it could be boosting it. All I'm saying is not to use it as some crutch which he certainly is.

Lmao, Sony haters are so desperate they're resorting to conspiracy theories instead of common knowledge 😆

It's no conspiracy theory you clown. I don't care about sales I'm just saying stop using the pandemic as some sort of crutch. Best launch sales would say the pandemic didn't have much of an effect. You keep touting the Sony line though, hope you're getting paid for it

Not that I really care either way, but that line of thinking doesn't make any sense. The demand is there and it's obvious at this point something is going on, but SONY nor most any other company want what is essentially pirates screwing up the flow of trade especially when a large amount of those consoles aren't in consumers hands but instead being stockpiled by scalpers to sell for profit. If anything I think they are trying to wait out the scalpers and they want the prices to stabilize so that they can sell more software. Every penny spent paying scalpers is less money going to SONY through software sales. Waiting out the market may be a necessary evil. The prices online are starting to stabilize and in a couple months scalpers will probably give up since they won't be making enough of a profit. I bet it will shock a lot of people how well the consoles sell for both SONY and MS after the scalpers are out of the way.

I just can’t see a company purposely holding back on selling as many systems as they possibly can. Holding back just gives consumers more of an opportunity to purchase a competitor’s system.

Well, Switches are also pretty simple in construction, and use parts that are not the most modern making them easier to source and supply. But yeah, Nintendo doesn't take as much of a financial loss on selling consoles. It would make sense if companies wanted to pace out the production of consoles they sold at a loss but at the same time they're going to want those consoles to be in the hands of people who can actually buy games for them too.

Either way, I think it is hurting Sony more than helping them, and Nintendo, for not selling their hardware at as much of a loss isn't as effected from it financially. Perhaps Sony and M$, trying to compete for the most powerful console jumped the gun a bit and bit off a bit more than they can chew. Consoles will never be a match, or even come close to being a match for PC, and the damage Sony and MIcrosoft have done to themselves trying is kind of funny.

According to analyst, PS+/PSNow brings in revenue of $3.5b last quarter. Its in Sony best interest to make sure people actually buying PS5 and subsribing to the services.

Was thinking that myself. Countries in full lockdown, but according to ballroompirate the pandemic is over. What a moronic comment.

Consoles are always sold at a loss. Sony and Microsoft expect to make their profit in game licensing. I think the only company that sells for a profit is Nintendo, and even then it's a very slim profit margin.