The Alarming Consequences of Console Pricing Strategies

The immense success of Monster Hunter Wilds has been somewhat overshadowed by Capcom president Tsujimoto Haruhiro's concerns about the PS5's market position, citing the console's high price as a major obstacle to the game's success. This sentiment is not unique to Tsujimoto, as numerous industry executives have expressed similar worries about the rising costs of console hardware. What's notable, however, is the direct criticism of Sony's pricing strategies in a media interview, particularly one with Nikkei, which is likely to be seen by Sony's senior leadership. Historically, gaming hardware has never been inexpensive, but the launch prices of new consoles, when adjusted for inflation, are relatively low compared to the past. The original PlayStation's launch price, for instance, would be over $650 in today's dollars, while the PS2's would be around $560. However, within a few years, these consoles became significantly more affordable due to price cuts and the release of lower-cost hardware revisions. In contrast, the PS5 has become more expensive since its launch, with its recommended retail price increasing from $499 in 2020 to $549 today. The digital edition of the PS5 has seen an even more dramatic price hike, rising from $399 at launch to $499, with reports suggesting that Sony may reduce the storage capacity of the digital edition in a bid to maintain profitability. This shift in pricing strategy has significant implications for the console ecosystem, affecting developers, publishers, and consumers alike. Tsujimoto's comments on the PS5's pricing are particularly insightful, given his understanding of how Monster Hunter achieved its mass-market success. The game's popularity in Japan, especially among teenagers, was largely due to the affordability and accessibility of the PSP platform. The console's lower price point and the availability of cheaper, late-lifecycle hardware revisions allowed a new generation of gamers to engage with the series, eventually leading to its widespread success. However, the current trend of consoles holding their price or even increasing in cost over time risks making these devices inaccessible to a large segment of the market, particularly children and teenagers. This demographic has traditionally been the entry point for the gaming industry, with many young gamers starting with second-hand software and cheaper hardware before moving on to more expensive consoles and games as they grow older. The shift towards smartphones as the primary gaming device for kids and teens poses a significant threat to the console business, as these individuals may never transition to console gaming. The decline of television ownership among teenagers is another factor contributing to this trend, as many young gamers no longer have access to a TV to connect their consoles to. Nintendo's approach to pricing, as seen with the Switch 2, is a notable exception in the industry. The company has made a conscious decision to subsidize the console's cost in Japan to maintain its affordability, despite the challenges posed by hardware costs, supply and demand, and tariffs. While Nintendo is pushing for higher software prices, its focus on keeping the console affordable is a more sustainable strategy in the long run. For the industry as a whole, rethinking the value of older hardware is crucial in addressing the issue of console pricing. Nintendo's success with the Switch, as well as Microsoft's decision to release the Xbox Series S, demonstrates the importance of offering more affordable options to consumers. Sony's lack of a similarly competitive PS5 edition may not have harmed sales in the short term, but it poses significant questions about the company's ability to reach less engaged consumers in the future. The PC market also offers valuable lessons in this regard, with the popularity of the Steam Deck highlighting the importance of making games that can run on older hardware. As hardware prices continue to rise, the value of developing games that can run on outdated systems will only increase. This may involve focusing on PC games that are optimized for older hardware or maintaining support for previous generations of console hardware for longer periods. Ultimately, the solution to the console pricing issue lies with the platform holders, who must reassess their hardware philosophy to prioritize affordability and balance it with other requirements. The current strategy is clearly flawed, and if left unaddressed, it may have severe consequences for the long-term success of the gaming industry.