Later this week, the launch version of the PlayStation 5 with a disc drive will start selling for $650. Make no mistake, that’s a lot of money. It might not be the most Sony has ever charged for a base console before, but it’s certainly the most it’s ever charged for a piece of hardware that originally came out over five years before. In fact, it’s not even close.
The price increases are unprecedented, if not completely unexpected. I’ve recently seen some people rationalize the PS5 price hikes by pointing to the launch prices for previous console generations. When adjusted for inflation, the original PS1 launched at $642. The first PS3 model, which essentially contained an entire PS2 inside of it, launched at a whopping $966 in today’s dollars. But launch prices don’t tell the most important part of the story.
While buying a new gaming console in the year it came out has certainly always been a luxury, aggressive price cuts also made those same consoles much more affordable after just a few years of being out on the market. In the midst of competition from Nintendo, Sega, and Xbox, Sony has historically moved fast to shave hundreds of dollars off the sticker price of its hardware.
By the mid-point of each console cycle, the price of a PlayStation was typically around half of what it had been at launch. Here’s a graph that shows what that used to look like and how the PS5 price hikes are a complete reversal of a long-standing trend:
A PlayStation price curve that used to go down and to the right now looks more like a horseshoe. The price-cut dynamic first started shifting in the PS4 era. There were only two notable price drops of $50 each, and they happened in quick succession. While the console started out cheaper than some of the others, it also didn’t get as cheap as they had by the end of its lifecycle. Whether because of declining cost savings from manufacturing improvements, Sony’s growing dominance in the high-end console market, or possibly both, the company wasn’t as aggressive in trying to make the hardware as affordable at the end of its lifecycle as it had been in the past.
The PS5 launched in the middle of a pandemic and a historic supply chain crunch. Record inflation and recent tariffs imposed on one of Sony’s biggest markets for gaming have also made it hard to draw analogies to the past generation. But had Sony simply kept the launch PS5 at $500 through the entirety of the generation, inflation would have done the work of delivering some degree of savings to consumers who waited. Instead, the disc-based version went up $50 last year and will go up another $100 this week. This holiday, six years into the PS5 lifecycle, it will technically cost more than the PS1 did at launch.
Blame it on the RAM crisis, trade wars, and a possible calculation on Sony’s end that people will pay what they need to in order to play Grand Theft Auto 6 this fall. But it can’t help that Xbox has almost completely retreated from hardware, the Switch 2 is competing on power, and Valve’s living room gaming PC remains, at least for now, MIA.
With less direct competition than ever, there’s less pressure for Sony to deliver a version of the PS5 more people can afford. A luxury gaming device might be something Sony can continue to make money on, but it’s not something that will help a console gaming market that’s already stagnating.