The Devastating Consequences of Console Pricing | Opinion

The immense success of Monster Hunter Wilds, one of the best-selling games of the year, is overshadowed by the significant barrier posed by the PS5's market position, according to Capcom president Tsujimoto Haruhiro. In a recent interview with Nikkei, Tsujimoto expressed that the high price of the PS5 is a major hurdle for consumers, hindering the growth of mass-market franchises like Monster Hunter. This sentiment is not unique to Tsujimoto, as numerous industry executives have voiced concerns about the rising costs and barriers to entry in the console market in recent years. The fact that Tsujimoto openly criticized Sony's pricing strategy in a media interview is noteworthy, especially considering the interview was with Nikkei, which is likely to be seen by Sony's senior leadership. While gaming hardware has never been cheap, it is possible to argue that launch prices for new consoles are relatively low when adjusted for inflation. The original PlayStation's launch price, for example, would be over $650 in today's dollars, and the PS2's launch price would be around $560. However, within a few years, those consoles became significantly cheaper due to price cuts and the release of lower-cost hardware revisions. The PS2, which launched at $299 in 2000, was priced at $199 just two years later and eventually dropped to $149, half its original price, after only four years on the market. In contrast, the PS5 has become more expensive since its launch. It debuted at $499 in 2020, and its recommended retail price has increased to $549 five years later. A hardware revision to a slimmer version of the console did not come with a price reduction, and the digital edition of the PS5 has seen an even more substantial price increase, rising from $399 at launch to $499 currently. This shift in pricing strategy has not occurred overnight, as the PS4 also did not experience the same level of price cutting as previous console generations. However, the impact is significant, as it fundamentally changes the console ecosystem's promise to developers, publishers, and consumers, making certain types of games commercially unviable on console platforms. Tsujimoto's criticism of Sony's pricing strategy is rooted in his understanding of how Monster Hunter achieved its current status. The game is extremely popular in Japan and has gained popularity worldwide, particularly among teenagers who transitioned from Pokémon to Monster Hunter on the PSP. The affordability and accessibility of the PSP platform in its later years were crucial to Monster Hunter's success, but that advantage is now at risk of being lost. The trend of game consoles maintaining their pricing over the years, sometimes even increasing in price, is alarming for many publishers, as it makes consoles inaccessible to consumers with limited purchasing power, especially children and teenagers. These demographics were never the biggest spenders but were essential to the industry's growth, as they often purchased second-hand software for cheaper, late-lifespan console revisions. This was the industry's on-ramp for developing the next generation of consumers, who would eventually become higher-spending adults with a nostalgia for the games they played in their youth. However, with the current pricing of consoles, kids and teenagers are turning to smartphones for their gaming needs, which could lead to a long-term decline in console engagement. The decreasing ubiquity of televisions is also a factor, as many teenagers no longer have a TV in their bedroom that they can hook up a cheap console to, which has contributed to the success of the Switch. Tsujimoto's praise for the Switch 2 in the same interview highlights Nintendo's commitment to pricing, as the company has made a conscious decision to subsidize the Switch 2's Japanese model to maintain its affordability despite the depreciation of the Yen. Although Nintendo is pushing for higher software prices, it makes commercial sense to keep the console affordable and recoup the subsidy from software profits. The industry as a whole needs to reevaluate its approach to cheaper, older hardware, which is what Nintendo has done with the Switch, and Microsoft has done with the Xbox Series S. Sony's lack of a cost-competitive PS5 edition has not harmed sales in the first half of its lifecycle, but it raises concerns about how the company will reach less engaged consumers in the second half without price cuts. The PC market also offers insights into the value of older hardware, as comments about the Battlefield 6 beta suggest that many players are running the game on PCs below the minimum spec requirements, prompting a reevaluation of minimum specs. As hardware prices soar, the value of making games that run on outdated systems will increase. This could mean focusing on PC games that work well on older hardware or maintaining support for previous generations of console hardware for longer than usual. Ultimately, the solution to this problem lies with the platform holders, and Sony's pricing strategy is an existential threat in the long run. If today's kids and teenagers are not engaging with PlayStation, it is unlikely they will start doing so as adults. The company may need to shift its hardware philosophy to focus on affordability or strike a better balance between pricing and other requirements, as the current strategy is clearly flawed for both PlayStation and many publishers and developers.