PlayStation owners might have to spend more than expected on the PlayStation 5. Bloomberg reported yesterday that it costs Sony about $450 to manufacture each unit of the next-gen console. The company may have to set the PS5's retail price at nearly $500 to make even a little bit of profit on each unit.
The consoles themselves generally don't bring in much money, if any at all, for the company selling them, at least at launch. Oftentimes consoles will be priced at cost, or even below what it takes to manufacture them, with the actual profits made from things like game licensing and distribution, online services and peripherals. The console hardware itself doesn't necessarily need to be profitable.
Even if they were to take a loss of $50 for each console sold at launch, they immediately make that back with a year subscription to access online multiplayer, which costs them relatively little to host. Over the course of the 7+ years that these launch-buyers may keep the console for, they are likely to spend over $400 for online services alone, and that's before we get to the manufacturer's cut of game sales or things like additional controllers, so it can potentially be worth losing a bit of money on each console to get their foot in the door and make their customers less likely to go with the competition instead.
And even if it does end up being $500, as Insemnia pointed out, that's a relatively normal launch price for a console, especially if we figure in inflation. Here's what launch models of some popular consoles cost in the US, with their approximate prices adjusted for inflation in parenthesis...
PlayStation: $300 ($522)
PlayStation 2: $300 ($450)
PlayStation 3 20GB: $500 ($640)
PlayStation 3 60GB: $600 ($768)
PlayStation 4: $400 ($443)
Xbox: $300 ($437)
Xbox 360 20GB: $400 ($528)
Xbox 360 Core: $300 ($396)
Xbox One: $500 ($554)
NES: $180 ($432)
SNES: $200 ($379)
Nintendo 64: $200 ($329)
Gamecube: $200 ($291)
Wii: $250 ($320)
Wii U 8GB: $300 ($337)
Wii U 32GB: $350 ($393)
Switch: $300 ($316)
If we look at the adjusted prices, we see that all of the primary versions of consoles from Microsoft and Sony have been priced roughly around the $450-$550 range, aside from the PS3, which went well above that. Only the XBox 360 Core was priced around $400 in today's money, and that was the cut-down version with no user-accessible storage, a wired controller, and only a standard definition video cable included, and the buyer was pretty much required to purchase a drive for it down the line. $400 in today's money would work out to be less expensive than any other console Sony has released at the launch of a new generation, so one shouldn't be surprised if the price ends up higher.
Something else worth pointing out about this pricing though, is that the original Xbox cost a lot more to manufacture than its sale price. The Xbox supposedly cost more than $400 to build at launch, yet it sold for just $300, meaning Microsoft lost over $100 on each console sold. Then, they cut the price further to just $200 after only about 6 months on the market, matching a price cut for the PS2. In all, Microsoft lost somewhere around $4 billion on the original Xbox. They did establish themselves in the market though, and the Xbox 360 ended up faring better.
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