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May 11, 2020 2 min read
Next-gen console reveals have been a drawn-out waiting game, as both Sony and Microsoft have spent more than a year giving us an agonizingly slow dripfeed of information. However, when it comes to price, a couple of industry experts expect Microsoft to wait until Sony is forced to make the first move.
Geoff Keighley recently hosted a new mini-episode of his Bonus Round podcast, and two of his guests were industry analyst Michael Pachter and Liverpool FC CEO (and former EA COO) Peter Moore. At about the 10:25 mark in the podcast, they start to discuss Xbox Series X and PlayStation 5 pricing, prompting Pachter to theorize that he believes Microsoft is "waiting Sony out."
"From what I've seen, Sony's gonna have to charge $500 for the PS5 and Microsoft has a big balance sheet," Pachter says. "If they wanna cut the price by $100 -- just price below [the PS5] and subsidize the first 10 million [units] -- they will. So, I think that they're waiting to have Sony blink first and then they’ll reveal the price and the launch date ... Very likely sometime in November and very likely $400."
Moore chimed in "[Pachter's] right. What both companies are going through right now is [asking] 'how much can we afford to lose in the first 12 to 18 months?' 'What is our attach rate of software to hardware?' ... 'What are we willing to do in year one, two and three to hit 10 million [units]?" Moore also added that Microsoft is in a good overall position right now in terms of its stock price, and inferred that CEO Satya Nadella should undercut the PS5 price to take an early lead in next-gen console sales.
However, while Microsoft may have the runway to take an initial loss on Xbox Series X production, Nadella's decision will be informed by whether he thinks he can convince shareholders that launching at a low price point (and higher overall sales) is worth the short-term risk and decreased profits despite setting Xbox up for success in the long-term. It might be a tough sell because shareholders are always cagey about anything that affects the immediate future of stock price.
We'll find out at some point. Microsoft and Sony can't wait forever to give us prices and launch dates. Besides, we're already perfectly accustomed to waiting.
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