News Sony Took a Loss on Each of the 4.5 Million PS5s it Sold in 2020

[Admin]

Sony sold 4.5 million PlayStation 5 units in 2020, and took a loss on every one of them.

Sony Took a Loss on Each of the 4.5 Million PS5s it Sold in 2020 : Read more

 

[Colif]

As did all the people who bought them off scalpers in the same time period.

Not many actual gamers got them for right price.

 

[hotaru.hino]

Not surprising. Sony's strategy has always been sell the hardware at a loss, make it up with software and other services.

 

[Math Geek]

that's not just sony, but every console. there is never any money in the console itself. the money is in everything else that goes with it. mostly licensing and now their cut of store/dlc purchases.

whole new place to cash out with the digital store becoming so big.

 

[Phaaze88]

Yeah, they did it with the intention to make it back through digital sales.
But if scalpers are hoarding them, that's not helping Sony nor Microsoft's digital sales.
Why the companies aren't throwing up pitchforks, I've no idea...

 

[Heat_Fan89]

As did all the people who bought them off scalpers in the same time period.

Not many actual gamers got them for right price.

Correct and all it did was sour gamers on this generation of consoles who otherwise would have bought games to go with their consoles. There were several articles by the gaming press saying that game sales are down. Selling consoles to non-gamers is bad for business. At least Microsoft has Game Pass to soften the lack of game sales. This launch has been a disaster for both companies and I have been buying consoles at launch since the Sega Dreamcast and PS2. This time I have purchased neither because I refuse to encourage/support the black market.

Besides the general consensus amongst gamers has been that the launch lineup is disappointing for both consoles and this was reinforced by a Gamestop employee I spoke to recently.

 

[Heat_Fan89]

Yeah, they did it with the intention to make it back through digital sales.
But if scalpers are hoarding them, that's not helping Sony nor Microsoft's digital sales.
Why the companies aren't throwing up pitchforks, I've no idea...

This problem could have been avoided if retailers had used Captcha or Sony and Microsoft decided to sell their consoles first through their portals i.e. Microsoft Store and PSN Store. They could have required a gamertag or userid and served those with priority based on seniority first. They also could have put in place a system like Apple does when they release a new iPhone i.e. if it's not in stock, you can order it and we'll put you on the waiting list but YOU WILL get one. That would cut down on the impulse buying and going to a scalper.

None of these suggestions would eliminate scalping but it would cutdown on the practice and get more consoles into the hands of legitimate gamers.

 

[Phaaze88]

@Heat_Fan89
Retailers didn't, and so people found out the hard way where most retailer's interests lie. Some of these retailers have been running long outdated security and OSs for years.

Also, some people just plain suck/dumb. Giving in to the scalpers just exacerbates the problem further.
No, "I've got the money, so what", isn't a valid excuse. They've enhanced the livelihood of people doing it, and encouraged more to do it.
Those 2 cons over the 1 pro(I got it now), isn't a 'win'. They've succeeded in screwing themselves and others with more difficult future purchases.

 

[CerianK]

"I'd rather people put more money into Sony's pockets than the scalpers' (and eBay's) wallets."
That is pretty much what I said about AMD and nVidia here.
There seems to be something horribly wrong with how some big-tech manages its marketing.
It could be done in a way that makes more sense, and I think people would accept that.

 

[thepersonwithaface45]

One of my co-workers got one from sony direct, didn't get it by the date they said it would be there, filed a "lost or stolen" ticket and they ended up sending him 2 ps5's.
He sent the 2nd one back, due to fear of sony bricking the "stolen" ones, much to my annoyance because I wanted to buy it haha. I did get one from walmart for my dad, but still wanted one for me.
Eitherway, I don't think the logistics were too good on sony's part.

 

[hotaru.hino]

that's not just sony, but every console. there is never any money in the console itself. the money is in everything else that goes with it. mostly licensing and now their cut of store/dlc purchases.

whole new place to cash out with the digital store becoming so big.

I think Nintendo's the only company who manages to either break even or make a profit on day one on their hardware.

 

[spongiemaster]

that's not just sony, but every console. there is never any money in the console itself. the money is in everything else that goes with it. mostly licensing and now their cut of store/dlc purchases.

whole new place to cash out with the digital store becoming so big.

Nintendo claims they have always sold their consoles for profit. Considering they haven't used bleeding edge performance parts in their consoles for 20 years, the claim seems plausible.

 

[velocityg4]

Yeah, they did it with the intention to make it back through digital sales.
But if scalpers are hoarding them, that's not helping Sony nor Microsoft's digital sales.
Why the companies aren't throwing up pitchforks, I've no idea...

Your post may also reveal the answer.

Looking at it cynically. Someone so willing and able to spend $1000, $1500 or more. By paying scalper prices on a $400 to $500 console. Are the same consumers who likely buy the premium services and lots of games from the console makers digital stores. This would mean a highly concentrated influx of wealthy, high value consumers for MS and Sony.

 

[Phaaze88]

Looking at it cynically. Someone so willing and able to spend $1000, $1500 or more. By paying scalper prices on a $400 to $500 console. Are the same consumers who likely buy the premium services and lots of games from the console makers digital stores. This would mean a highly concentrated influx of wealthy, high value consumers for MS and Sony.

But:
-one doesn't need to be wealthy to do those things
-the ratio of wealthy is still smaller than those 'just well off' or worse.

 

[80-watt Hamster]

Yeah, they did it with the intention to make it back through digital sales.
But if scalpers are hoarding them, that's not helping Sony nor Microsoft's digital sales.
Why the companies aren't throwing up pitchforks, I've no idea...

Scalpers aren't likely hoarding anything; that doesn't make them money unless they correctly bet that average selling price will rise appreciably over current levels. Oversimplified, it's like somebody getting the last unit in a physical line at a store, then turning around to the remaining customers that missed out and saying, "Hey, who here will pay me 2X for this?" The unit ends up in a user's hands either way, so other than some bum PR that only enthusiasts really care about, it probably doesn't matter much to Sony or MS who buys a console.

 

[hotaru.hino]

Scalpers aren't likely hoarding anything; that doesn't make them money unless they correctly bet that average selling price will rise appreciably over current levels. Oversimplified, it's like somebody getting the last unit in a physical line at a store, then turning around to the remaining customers that missed out and saying, "Hey, who here will pay me 2X for this?" The unit ends up in a user's hands either way, so other than some bum PR that only enthusiasts really care about, it probably doesn't matter much to Sony or MS who buys a console.

It does hurt their bottom line if enough people stop buying from scalpers and their strategy of making money off software and subscription sales falls below expectations.

But that's the unfortunate qualifier: if enough people.

 

[thepersonwithaface45]

It does hurt their bottom line if enough people stop buying from scalpers and their strategy of making money off software and subscription sales falls below expectations.

But that's the unfortunate qualifier: if enough people.

Or if they send out replacement consoles to people and they end up getting 2

 

[Endymio]

Not many actual gamers got them for right price.

Actually, every gamer did in fact get them for the right price, if you define "right" in proper economic terms, i.e. the price required to balance supply and demand. Sony screwed up the situation by setting an artificially low price they couldn't meet demand for. Luckily, the market stepped in (as always, unless the government interferes) to balance things out.

"I'd rather people put more money into Sony's pockets than the scalpers' (and eBay's) wallets."
That is pretty much what I said about AMD and nVidia here.
There seems to be something horribly wrong with how some big-tech manages its marketing.

There is something horribly wrong with their pricing models, and their refusal to adjust them upwards. Even though this is the proper move, and would eliminate scalping (not to mention at least slightly increasing overall supply), they don't out of fear of a social-media horde coming for them with pitchforks and screams and accusations of profiteering from Covid.

 

[80-watt Hamster]

It does hurt their bottom line if enough people stop buying from scalpers and their strategy of making money off software and subscription sales falls below expectations.

But that's the unfortunate qualifier: if enough people.

That's a situation that'll resolve itself. If and when people stop paying the inflated prices, the price will drop. A stack of unsold PS5s does a seller, scalper or otherwise, no good.

In any case, a quick look at eBay's Sold listings in the US has a PS5 selling at the rate of about one every two minutes (over a narrow timeband and as of this post). So unless the scalpers are selling to each other, they are getting into consumer hands.

 

[80-watt Hamster]

Actually, every gamer did in fact get them for the right price, if you define "right" in proper economic terms, i.e. the price required to balance supply and demand. Sony screwed up the situation by setting an artificially low price they couldn't meet demand for. Luckily, the market stepped in (as always, unless the government interferes) to balance things out.

There is something horribly wrong with their pricing models, and their refusal to adjust them upwards. Even though this is the proper move, and would eliminate scalping (not to mention at least slightly increasing overall supply), they don't out of fear of a social-media horde coming for them with pitchforks and screams and accusations of profiteering from Covid.

The projections (correct or not) were made and contracts written. Sony has an obligation to supply units to distributors at the agreed cost. What happens after that is basically out of their hands. I don't know the duration or structure of those contracts, so maybe at some point they get renegotiated and the MSRP goes up. Not certain that could happen unless you got ALL distributors to play ball, though. And maybe Sony would rather take they loss they've already accounted for to avoid a PR black eye. Perception is also a market force.