Why shouldn’t Microsoft follow the PS5 price hike?
Video game consoles are already an expensive purchase. But unfortunately, there is a worrying trend that could make them even more expensive. On August 25, 2022, Sony announced plans to increase the price of PS5 consoles in various markets around the world.
Microsoft has acknowledged this fact, but has assured customers that it has no plans to raise the price of Xbox consoles or games in the near future. This is a relief for many gamers and a very wise decision by Microsoft.
What is the reason for the increase in the price of the PS5?
Considering past trends, customers could expect the price of PlayStation 5 to decrease over time. Three years after the release of the PlayStation 3, its price has dropped by $100. Likewise, the retail price of the PlayStation 4 dropped by $50 just two years after its release.
But just two years after the launch of the PlayStation 5, its price has increased. It’s an unprecedented move and Sony says it’s a direct response to the current economic climate as the world recovers from the COVID-19 pandemic.
On August 25, 2022, Sony announced on the PlayStation Blog that the price of the PS5 will increase in some markets in Europe, the Middle East, Africa, Asia-Pacific, Latin America, and Canada. Fortunately, the North American market has not been affected by this price increase… at least not yet.
Fortunately, Microsoft has assured Xbox gamers that they don’t have to worry about price increases for any of their products. This is a great business move for Microsoft for several reasons.
Keeping the price fixed makes Microsoft consoles more competitive
The console war has been a silent battle between the major players in the video game industry for years. Every company is fighting for the top position in the market. And by keeping the console price low, Xbox consoles become more competitive in this market.
There are many variables to consider when making a big purchase like adding a new video game console to your collection. One of the main variables to consider is price. As the price of the PlayStation 5 increases while the price of the Xbox Series X|S stays the same, suddenly the Xbox console becomes a better deal.
Choosing between Xbox Series X and PS5 is a tough decision. But by keeping the price of the Xbox Series X|S stable, Microsoft is gaining an edge over its rivals.
Price stability increases consumer confidence
Some people don’t like change, especially when it costs them more of their hard-earned money. By keeping the Xbox price stable, customers know exactly what to expect. When customers feel comfortable with their expectations of a brand, trust is built.
Trust is essential in any relationship and it is the same when it comes to the relationship between a brand and its customers. By keeping the Xbox at the same retail price as always, Microsoft can maintain its reputation as a trusted and reliable brand.
If Microsoft raises its price, the Xbox Series S will lose its status as the cheapest console
The astronomical rise in inflation and economic instability caused by the pandemic has affected everyone, not just Sony. Including all Xbox and Sony customers.
In the current context, the three main competitors in the video game market are Sony, Xbox and Nintendo. Compared to Nintendo and Sony’s latest consoles, the PS5 and Nintendo Switch OLED, the Xbox Series S is currently the cheapest gaming console on the market. This is a very profitable position.
The Xbox Series X|S already offers the most advanced features of any game console. The fact that the Xbox Series S is also the cheapest makes it a very attractive purchase.
Trying to decide whether to buy an Xbox Series S or Xbox Series Xi is the hardest decision any Xbox gamer will ever make. But it’s hard to argue with the price of the Xbox Series S.
Companies don’t make money on consoles themselves
Most companies incur losses during the production and sale of these game consoles. This cost is later compensated by the sale of games.
By raising the price of the Xbox Series X|S, it’s highly likely that Microsoft will recoup only a small portion of that price as profit. The company would be better off improving Xbox Game Pass and working on creating console-exclusive titles for customers to purchase.
But don’t panic! This does not mean that Microsoft will increase the price of its games to compensate for inflation and economic difficulties. Microsoft still hasn’t raised the price of its games to $70, and there’s no indication that it plans to.
Microsoft is one step ahead of the competition by not participating in price increases.
The console war is one that will likely last forever. But by refusing to raise the price of the Xbox Series S|X and its games, Microsoft could find itself at the top of the rankings.
Xbox fans can rest assured that the price of their favorite console and games will always remain the same. And thankfully, Xbox wears the crown as the cheapest next-gen console.