Why Playstation 5 Is So Expensive | Top 8 Reasons
With technological advances and the social-limiting factors of the pandemic, gaming has become a bigger industry than ever over the recent years. It’s not surprising to see the price of each new console rise a bit above the last, but the price of the PlayStation 5 has risen beyond anything we’ve ever seen before.
Why is Playstation 5 so expensive? Playstation 5 is expensive due to a combination of factors, such as increased demand in light of the global pandemic, chip shortages, shipping disruptions, and widespread changes in gaming habits. The increased interest in gaming, along with manufacturers not being able to keep up with demand, has made the PS5 and other gaming consoles prime targets for resellers who are selling them oftentimes for more than twice the MSRP.
Let’s take a look at each of the factors affecting the rising prices, and then you’ll be better able to decide for yourself whether you feel that the PS5 is worth the extra cost to you.
1. Sony’s Marketing Strategy
The buzz around the gaming community is that Sony intentionally made fewer PS5s than they had evidence that they would be able to sell initially. If these reports are true, why in the world would Sony reduce the number of PS5s they were able to sell in their first year?
Reducing Supply to Increase Perceived Value
Since many PlayStation users weren’t able to buy the PS5 before the supply ran out, it is likely that the desire these people feel for the PS5 has increased. The more they see their friends and YouTube gamers and Twitch streamers enjoying their PS5s, the more they grow jealous and wish they had one. Could this be by design from the marketing team at Sony?
This phenomenon could result in a secondary launch in which PS5s could be priced equally to the original launch or even more expensively, and because of FOMO (fear of missing out), everyone who’s been wishing they had one for months will likely be willing to pay the big bucks to finally have their own.
The Pandemic and Production Costs
Because of the pandemic, production costs have increased significantly, since it’s more difficult and dangerous for people to leave their homes and work their production jobs. These increased costs mean that Sony makes less of a percentage from the sales of the PS5 than they would historically on a launch because they have higher production expenses to cover per unit.
They likely built these extra costs into their launch price. But with the high hopes that the effects of the pandemic will be reduced over time, they may be planning to build and release many more units sometime next year, theoretically, once production costs decrease.
2. Changes In Gaming Habits
Since people have been forced to spend more time at home for the last two years due to the pandemic, gaming time has seen an increase. More people play games for longer periods of time. Which means more wear and tear on machinery, leading to consoles and PC parts needing to be replaced more quickly.
Additionally, since people are playing more often and for longer periods of time, they get bored of a game more quickly than they used to. Which means they want to consume more games as well, in addition to more consoles. As new games come out that are only available on PS5, even those who don’t care about getting the newest console first will want to get one so that they can be entertained by the new games.
3. PS5 Scalpers
PS5 scalpers are people who buy up a lot of items that they predict will be in high demand soon, and then resell those items at ridiculously high prices. To aid them in their reselling quest, they usually have some kind of software that will enable them to buy multiple units per second, ensuring that they get a large number of items even if lots of other people are clicking the buy button moments after launch.
An example of this would be the beginning of the global pandemic, when Lysol wipes and face masks were in high demand. Scalpers bought up all they could and then resold them for unbelievable markups. But because people were scared for their safety and their family’s health, they paid those prices and the scalpers walked away with loads of cash in their pockets.
This practice has existed far longer than the last two years. People have been marking up sports games tickets and designer shoes for ages to make a profit off the high demand. But it’s gotten especially bad with video game consoles. The original launch price of the PS5 was $499. But if you try to find out now, prices range from $800 to $1,600+. The people who are selling PS5s at these ridiculous markups are likely scalpers. But individuals who want one bad enough will find a way to cough up the cash so they can feel equal to their gamer friends and find new, entertaining games.
4. PlayStation 5 Extras
One way scalpers compete with each other is by offering package deals. So some of the more expensive prices may include a new controller or some games with it. But because the cost of basically everything has increased during the pandemic, you’ll find that games and controllers aren’t cheap either.
Whether you buy these and other items to go with your PS5 in a package deal or individually, you’ll be spending more money on gaming than ever before.
5. Cryptocurrency Boom and the Chip Shortage
Thanks to the reduced manpower in the plants that build the technology chips needed for many devices to function, the chips have become harder to find and much more expensive. And the cryptocurrency boom has driven this effect even further home.
Those chips that are needed for consoles to function are also needed for graphics cards. Graphics cards, which used to be a few hundred dollars each, have risen well above $1,000 each because of the increased interest in cryptocurrency. With more and more people trying to start their own mining rig, and more and more miners growing their rigs as much as they can, chips that could have been used for PS5s were diverted to graphics cards, which are currently in much higher demand by crypto miners.
6. Increased Quality of Games Requiring Increased Memory
Video game graphics are more beautiful and detailed and realistic than ever before. With those drastically increased details comes a higher requirement for memory to hold them and render them in a timely manner. Not to mention all the other features and capabilities that come along as technology gets better.
One single PS5 game can take more than 50GB of memory to properly install. Because the cost of solid-state memory has also risen over the years, the memory capabilities needed for the PS5 were another factor that increased their costs.
Even with all the memory, the console comes loaded with, there may be a need for more for players who use a lot of the highest-quality games.
7. The Global Shipping Crisis
You’ve probably been hearing people complain every time they see an empty shelf at a store about how everything is stuck on a ship somewhere. Because many products in the USA are shipped in from other countries, having those ships unable to dock and deliver their items has dramatically affected the ability of the masses to buy the things they want. Especially around the holiday season.
It’s the same with PlayStation 5 consoles and many of the physical items that accompany them, such as new controllers. People may be ready to buy them and willing to fork over three times their original asking price, but if the products haven’t made it onto land yet and may not for quite a while, the prices of those that are already available in the US and ready to be shipped right away will continue to skyrocket as people give into their desires and pay whatever it costs to finally have one of their own.
8. Supply and Demand
One of the most basic laws of economics is that of supply and demand. And this is exactly what we are seeing here. When there is a huge number of a certain item available, or there are fewer people interested in buying the item, its price goes down. But if there are very few of those items available, or a lot of people want the item, it drives the price up.
When there aren’t enough and everyone wants one at the same time, prices fly right through the roof.
This is why prices always start out so high during a product’s launch. On a launch date, no one has any idea how many products will be released, so everyone who really wants one will go out to buy it no matter how expensive it is. This group of people is called the early adopters. High prices may annoy them, but they’ll never slow them down because they want to be the first to experience using the new item, and they don’t want to risk missing their chance by showing up the day after launch and finding that all the stores are sold out. Or by waiting a week and finding out that all the distributors are out until more can be made.
The demand for the PS5 was very high right from the start, which reduced the supply very quickly, and ultimately drove the prices to their current extremes. If you’re looking for a PS5 for yourself or for a loved one for Christmas, be aware that it’s going to cost you. We wish you the best of luck in your search for the most affordable option!