The Great Debate Over Next Gen Console Pricing

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With Microsoft putting a slightly more definitive answer on the question of “When” for the new Xbox Series X last week. We’ve known it for sometime in November, but Xbox Series X controller leaks help to further affirm this. With it, we can expect that or Microsoft Sony will make an official announcement any day now, or at the very least, its likely that a “leak” will occur very soon, so the great debate over the pricing of the next-gen consoles is, perhaps, the one last piece of major breaking news that remains. The topic has been hotly debated for months, the world over.

Now, to preface this – we don’t have any special insight on the pricing for these upcoming consoles, and we are essentially going off of our gut feelings and some past experience. We’ve had a great deal of discussion internally about the topic, so we decided we would share our thoughts and debate with you all. We’d love to hear your two cents on it too, so go ahead and comment at the bottom, and share what your guess is on this.

Xbox Series X

PlayStation 5 courtesy Sony PlayStation

Kevin’s Take –

Guys, here is my thought on this, and I’m going to come right out and say it. For one, I think both Microsoft and Sony are keeping the pricing back as long as possible. Its a game of chicken and each is waiting for the other to make the first move. I also recognize that is not really any sort of great revelation. Naturally, both makers are going to want to know whether they are pricing their new system competitively with respect to the other.

Ultimately though, I think the Xbox Series X is going to end up being the cheaper console. It’s not going to be a big pricing difference though. I was discussing this with Jason the other day, and as I pointed out then, as I will now, I’m estimating an entry price for the Series X at around $450. A couple of reasons for this estimation. Since we know that the Series X will have a stripped-down, digital-only edition – the Series S, the pricing needs to take that into account. The Series S is going to likely be priced to compete directly with the Nintendo Switch ($299). Right now, the Xbox One S and the One S digital consoles have a price differential of $70 ($199 vs $269 at Gamestop) for the new system alone. We can probably expect a slightly larger disparity between the Xbox One S All Digital and its Series S next-gen brethren. I suspect, around $100. So a price of $299 for the Series S, a console that is expected to have about half the performance of the Series X, but obviously better performance than the Xbox One S.

So now back to the Series X. If the Series S does land at the $299.00, and as the performance and hardware of the Series X is so much of a leap from the current gen consoles, and the even the Xbox One Enhanced, you’d think that the pricing would also be that much more by comparison. However, as Techradar reminded us this week, Microsoft learned its lesson when it released the Xbox One. Originally released @ $499 back in 2013, Microsoft quickly reduced that initial pricing as its sales were depressed by the high price of that console. While specs wise, the Series X being released today is far and away in a different class, giving even multi-thousand dollar custom built gaming PC’s a significant run for their money, Xbox is likely to run into the same headwinds. Those headwinds only become stronger by the fact that Microsoft will have no 1st-party games ready for launch with the system. With the delay of Halo Infinite into 2021, it gives very little incentive to entice current Xbox owners to shell out several hundred dollars on a new console, if there isn’t going to be any debut titles to play on it.

Despite some of the rumors out there of pricing for the Series X of up to $599, one which we heard about via T3, these rumors to just seem to be unrealistic. That sort of pricing is just higher than I think either the Series X or the PS5 could support strong sales on. I could see $499 as an entry-point for the full console, but I really feel like, given the history of prior gen consoles, both companies risk an exponential decrease in sales for every $50 over that $499 price point. I also think that the $449 pricing is unconventional in the sense that prior console releases landed on a multiple of $100, and a $x50 price might be catching, and Sony’s tendency to come in higher would likely land the PS5 at $499.

Jason’s Take –

I tend to agree that right now the pricing war is a game of chicken right now. You don’t need a business degree to see that both Sony and Microsoft are both in direct competition with each other and a price war may actually push those on the edge to the other side, especially when Microsoft doesn’t have many game exclusives. Console preferences aside, I think both companies coming out with a digital-only system at launch is a smart decision.

Xbox Series X Full Resolution
Xbox Series X courtesy Microsoft Xbox

We’ve seen both companies already do this with the Xbox One and the PlayStation 4. Both companies have released many different models of their current line in order to saturate the market with price points, especially to fight the Nintendo Switch that has been incredibly popular, and remains to be, since launch. Hell, even Nintendo went into competition with itself with the Nintendo Switch Lite! I think Microsoft is poised to price accordingly to compete with both Sony and Nintendo effectively.

The Nintendo Switch and Nintendo Switch Lite are $299 and $199 respectively. I honestly don’t think Microsoft can touch those price points but I think it will come close. The Nintendo Switch is both a home console and a portable whereas the Xbox Series X/S will be home consoles…. or are they? With the release of Project xCloud to Xbox Game Pass Ultimate in September, the Xbox Series X suddenly became a pseudo-mobile console. With game streaming coming directly to a device you already carry, there is a major added convenience to come along with that. That being said, a price point of $350 for the digital-only edition Xbox Series S makes a lot of sense in my eyes. It’s only $50 more than the larger Nintendo Switch making it in reach monetarily if one is already buying a Switch. What’s $50?

Could Microsoft make the Xbox Series S that cheap? We’ve already seen in other consoles that removal of the disc drive usually reduces the price about $50-$100. Now factor in that the Xbox Series S will feature lesser specs than it’s Xbox Series X brother. With both reduced specs and removal of the disc drive, a price point of $350 doesn’t seem out of line.

What about the Xbox Series X? Shot out of a cannon, $450. I don’t believe we will see a price point of $400 given the specs of these machines, even $450 seems too cheap. It’s not unusual for console makers to operate in the red when launching a system either. A $450 price point, in my opinion, maybe difficult for Sony to swallow after releasing a $600 PlayStation 4 but then again who knows?

Kevin: I don’t really think that the Switch and the Switch Lite are really big factors in the pricing of either the PS5 or the Xbox Series X, nor their digital-only versions. Both consoles are entirely in a league of their own by comparison. Besides this, I also feel like xCloud as a service versus the Switch as a portable gaming device is not all that competitive with each other yet. xCloud is hardly a proven technology yet, and its limitations are obvious. Until xCloud is as proven and reliable as having a Switch console, which ultimately doesn’t require a decent internet connection to use, I think gamers that are looking for a portable solution are more likely to keep flocking to the Switch. Since a lot of early buyers of the Series X are likely to be fans of the Xbox already, and Game Pass subscribers as well, I don’t see xCloud actually changing much other than to solidify their hold on fans of the Xbox. It seems xCloud is more of a retention tool for me.

We haven’t spent much time talking about the Playstation 5. Frankly, as I’m not a fan of PlayStation, it hasn’t been something I’ve weighed as heavily. As it is similarly equipped to the Xbox, I expect the pricing to be pretty reflective of the Xbox Series X pricing. Whatever the Xbox Series X pricing is, I think it too will come in at around $450. However, I also think that as it seems that the PlayStation 5 Digital is rumored to be more closely spec’d to the full version, that the digital version won’t be as steeply discounted as the Series S. Where I think the Series S will come in at $299, I think $350 is more likely for the PlayStation 5 Digital.

I’ll defer over to James for his thoughts, since PlayStation is more his realm.

James Take –

So when I look at what we know of both the Xbox Series X as well as the PlayStation 5, I see nothing but dollar signs. Strictly in a hardware sense, we are looking at power comparable to a low/mid range gaming PC. On top of that, you have design and software that all goes towards a price point that is going to be well above what we have become accustomed to these last few generations. The cost of progress is not cheap! That being said, I believe these manufacturers understand the market they are in and are well aware that the money to be made is in the games, not the consoles themselves.

All of this said it’s easy to take the Nintendo Switch out as any indication of what we can expect. Amazing as a handheld/console hybrid is, we are in the big leagues of competitive gaming at 4K resolution where accuracy and tuning in gameplay is going to be everything.

My bet is not unlike my comrades. I would imagine both systems will sit somewhere between $400 and $500 in their first released full feature versions. The thing is, I don’t think either Sony or Microsoft has a price set in stone yet. If we are relying on history to tell the story, we know the Xbox will come marginally less than the PlayStation at launch. The arms-race for keeping this kind of power at a console gamers’ budget point is going to be key here, in my opinion. Both companies have been particularly close lipped, even more than usual. It’s my guess that, in an effort to loose as little as possible in hardware by underselling, they are waiting it out to see what the other one does. They will want to see how low they can go to beat the others’ price point, and are therefore nervous to make the first move. Even more so: where the Xbox is historically a more affordable console at launch, it is pushing more power on paper. This makes me feel like Xbox may make the first move, understanding that for many, even if they cost a little more, you get a little more power in return.

Final thoughts…

It’s likely that neither Xbox nor PlayStation have given a definitive release date yet because a release date will also suggest a date by which they must give a price, especially given its likely for there to be pre-orders starting up to a few weeks before the launch. As long as the release date is a mystery, so too can remain the pricing. We are all pretty well in agreement over a pricing spread between $400-$500 for a new Xbox Series X or PlayStation 5. Conventionally speaking, the PS5 will likely come in slightly higher. In the meantime, we will have to continue to go on rumor and speculation as we try to determine how much cash to set aside to get these new pieces of gaming hardware.

What do you think the future holds for the debut pricing of the Series X and the PS5? Let us know what you think in the comments section below!

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