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Opinion Business Sony “Blew it With the PS5 Digital Edition,” Says Analyst Michael Pachter

IbizaPocholo

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Speaking to GamingBolt in a recent interview, Pachter said that given the cost of making a PS5, combined with the additional money Sony makes per every digital game sold, they are still taking a loss on each PS5 Digital Edition sold. Pachter says that the average consumer won’t buy the number of games that they’ll need to recoup the losses on a PS5 Digital Edition.

“I think Sony really blew it with that, because as far as we can tell, the cost of making a PlayStation 5 is $450, so they are breaking even on the $500 version, but losing $40 or so on the digital version,” he said. “A disc drive isn’t worth that much. So they’re losing $40, but they gain $6 more per digital game than they would gain otherwise. So you would have to buy a lot of games to cover up the loss, and I just think it’s unlikely many will buy that many games.”

The analyst went on to say that most consumers will still end up purchasing the main PS5 SKU with a disc drive in order to have that option, before adding that Sony will likely make and sell fewer digital consoles.

“I actually don’t think many consumers will want to save the money, I think most would rather have the disc drive on hand so they have the option to take their game to their friend’s house or trade it in or whatever,” Pachter said. “So I think they blew it with the Digital Edition, but it’s hard to tell early numbers, because it’s all sold out anyway, and we don’t know how many of each they made. But I think over the long run, they’ll sell and make fewer digital editions.”
 

MastaKiiLA

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Pachter is more wrong than right more often than not.

PS5DE is shipping in smaller quantities. Probably to control losses. Probably due to reduced demand. It's hard to tell at this point, other than unreliable Twitter polls. As costs shrink, the losses go away, and the benefit of having a lower-cost option remains. If demand for the DE outstrips the disc version at that point, shifting bias towards production of that unit is easy, as it's just a matter of removing a drive, and changing 1 piece of plastic.

Personally, I have no need for a disc system, so I'll wait as long as it takes to get my hands on a DE. I hope there is solid availability of that SKU before year's end.
 

Orky

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Kinda true though. When I preordered my PS5 only the digital version was available. The disc drive was already sold out.
 
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I'm a consumer. Frankly, I don't give a shit about the money they're making. I thought they blew it because they could've really turned people onto the digital version by having a huge hard drive, or maybe adding in a headset or something. Instead, it's just the same thing minus a disc drive. They could've changed the way people buy systems in the future. Instead, I'm ignoring the digital version all together when I would have been willing to seriously debate between the two.
 

skneogaf

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He may be on to something as I will buy a ps5 digital and will obviously only buy the full exclusives and probably only god of war 2 and the the last of us 3 if it comes to it brand new full price.

The rest of the games I'll wait to buy on sale like I always do so the profit from each sale will be much lower than needed I imagine to recoup costs.
 

HAL-01

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I’ve not heard of this guy in years, but knowing how his predictions work this means PS5 digital edition will be an absolute smash hit for Sony
 
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cryptoadam

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Digital edition to sell 200 million confirmed.

I think that Sony just put it out to have something at 399$ like the PS3. Its to combat the Series S and I bet Sony under produces and under ships them. Its probably going to be 80/20 split to drive people towards the extra 100$ and get a PS5.
 

GrayFoxPL

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Pachter says something, the opposite is true. Digital Edition PS5 will be the most bought console and make them the most money.
Digital edition to sell 200 million confirmed.

I think that Sony just put it out to have something at 399$ like the PS3. Its to combat the Series S and I bet Sony under produces and under ships them. Its probably going to be 80/20 split to drive people towards the extra 100$ and get a PS5.

 

quest

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Giving up a $149 advantage to MS wouldnt have been good
Like it would matter a Sony could of been 549.99 and 499.99 and still sold in record time lol. Sony has such mindshare they can get away with a more expensive machine. The Sony buyer is will to spending the extra 100 or 200 for the playstation experience.

What?! It's the best bang for your buck of the next gen consoles.
Until you purchase games on the playstation store that are over priced. The disc versions will save me mucho dinero and some American money to.
 
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ArcaneNLSC

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There could also be a sense of testing the waters and being cautious given how well the Xbox One SAD edition sold to where it only on the market for what a year at best before Microsoft took it to the back of the shed and shot it in the head
 

bitbydeath

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Kinda true though. When I preordered my PS5 only the digital version was available. The disc drive was already sold out.

Was this 5 mins after they went up or 10 mins after they went up?

I managed to preordered two but neither will be arriving at launch.
 

Xaero Gravity

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Until you purchase games on the playstation store that are over priced. The disc versions will save me mucho dinero and some American money to.
I never trade games in, so going digital would actually be a cheaper option for me since there's no tax on PSN purchases. At least in Canada, games would cost $89 instead of $101 with tax at launch.
 

quest

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I never trade games in, so going digital would actually be a cheaper option for me since there's no tax on PSN purchases. At least in Canada, games would cost $89 instead of $101 with tax at launch.
There is tax here and plenty of good deals on physical games to pre order or a month after. Not full priced games years later when I can order on Amazon for 15 bucks.
 

Blood Borne

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Genuine question, why Patcher? Why does the gaming industry pay so much attention to Patcher? Why not other analysts, what makes him so special?
 
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Dargor

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Fuck, we're done! Digital has won guys, we no longer own shit, just renting.

I billion PS5 D edition sold by the end of 2021. Fuck this world!
 

Tschumi

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That's really weak reasoning.. people have been speculating for months that they might take a hit on console prices and recoup it in game sales.

He thinks it's unlikely many will buy that many games? When a single first party is $70? That's more than enough to cover from just one purchase~ and whoever heard of any console owner only buying one game? Jeez~
 
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Hostile_18

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I dont get it.

He's complaining the PS5 digital to too cheap so Sony won't recoup the money lost because the end user would have to buy too many games. But he's also saying the difference in price isn't enough and the end user would rather have the disc option.

So the only option that would sort both of these sentences is the PS5 disc sku should cost more? He seems very confused tbh if presented as in OP quotes.
 

ZywyPL

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He forgot about PS+ and games being 80€ now, all of the pre-ordered discless PS5s will break even before this year ends, and from there it will be nothing but pure profit.
 
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Silentium

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It's pretty clear this is why first party game prices were bumped. Sony is taking a larger loss than expected on console units due to aggressive Xbox pricing and needs to get average CLTV up
 
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Jigsaah

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Pachter has been talking way too got damn much lately.

He's like that one guy on your pick up team whne you're playing basketball. Idiot is like 1 of 13 from the field and all like "Ball, Ball!!! Pass me the rock, I'm Open!"

Here's a hint: You don't give that guy the ball.
 
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JerryinSoCal

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He's ignoring trends where digital sales have grown and also ignoring anyone who'd buy an all digital console is also someone who buys a lot of games. People who buy a console with a disc drive can trade in/buy used games etc so there are all kinds of benefits for Sony when it comes to selling a digital console.
 

Orky

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Was this 5 mins after they went up or 10 mins after they went up?

I managed to preordered two but neither will be arriving at launch.

I also preordered two, but both of them 20 minutes apart. After preordering the first I decided to get a second one for the bedroom.
Anyways, we will see how it turns out in the end.
 
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Duallusion

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"So they’re losing $40, but they gain $6 more per digital game than they would gain otherwise. So you would have to buy a lot of games to cover up the loss, and I just think it’s unlikely many will buy that many games.”

Does an "average consumer" only buy 5 games across the whole generation? And how did he calculate the effect of not being able to buy used games at all for this SKU, exactly?
 
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The_Mike

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Guys, wrap it up - the PS5 digital edition will be the most sold console, and Sony will earn a lot with it.

Everything Pachter predicts usually has the exact vt opposite result.
 
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TheAssist

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So over a console life span of lets say 7 years, people wont be buying 6-7 games o_O. Not even on average? Why do these people have a console then? Where is the data that suggests this?
Even if you are a dude bro who only buys CoD and FIFA each year, thats 14 games usually at launch and full price.
Also he is not factoring in the used game market and probably some other factors (like impulse buys since you look a lot more often at their online store with dam sweet deals, etc.)

edit:

Other factors that I just came up with:

- Higher console base is good for better and cheaper deals with 3rd parties (be it commercials, exclusive content, etc.)
- Higher install base means higher sales of peripherals with high margins (controllers, headset, PSVR)
- Every sale for you is often a sale less for your competitor
- The more people have your console, the more free advertising you can do for your own services like PS Now
 
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Dr.D00p

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I could maybe understand the mindset of the average, toxic Sony fan boy on NG, if Sony were in the fight of their lives for market share against Microsoft, but they're not, Sony has already won Gen 9 before its even begun, So where this all too obvious chip on shoulder, inferiority complex comes from when someone is perceived to be trash talking their beloved Sony, is truly baffling...thread after thread on NG, it's on display for all to see.
 

Lethal01

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"So they’re losing $40, but they gain $6 more per digital game than they would gain otherwise. So you would have to buy a lot of games to cover up the loss, and I just think it’s unlikely many will buy that many games.”

Does an "average consumer" only buy 5 games across the whole generation? And how did he calculate the effect of not being able to buy used games at all for this SKU, exactly?
Average seems to be 10.
 
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D

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I don't understand his math. How can you break-even on the $500 edition, but lose $40 on the DE. There's literally a $100 difference and the disk drive isn't worth much according to him.
 
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Concern

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Michael Pachter ladies and gentlemen 👏👏👏👏👏👏


This moron just loves making assumptions as facts. Is there any actual numbers saying Ps5 production cost is $450 or just guesstimates? "I think" "i dont think"....


Please have a seat and stfu.
 

danielJackson

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Losing 40$, gaining 6$ more = profit per game is old profit + 6$ = should not be that many games.

Add in ps+ = no worries


It always feels weird that average person buys so few games / gen.

I usually get 50-100 physical games + 10-20 digital ones
 

Hunnybun

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That figure of $6 more profit on a digital sale HAS to be wrong, I don't believe it.

I'd say the average digital RETAIL price is at least $6 higher than in a store, and that's BEFORE you account for the retailer's cut and the costs of making the physical units and getting them to market.

You're probably looking at double $6 as extra profit with everything factored in.
 

wd40

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I think the digital edition is kind of a bad option. Like the Series S is:
-way smaller
-£200 cheaper
like I can see that being super popular with people who just wanna play Fortnite and Fifa and stuff, and its so small you could just set it under your TV in your room really easy. It's also good as like a nice entry level, if you don't have much money but want a next-gen machine. And a Series S + Game Pass, that's a killer deal.
The PS5 Digital though is:
-barely noticably smaller
-£90 cheaper
At that point why buy the digital? You'd make £90 back by buying physical games so quickly, especially because Sony's digital games system doesn't have like a Game Pass alternative, so you're still going to be shelling out fucking loads for games.

Series X vs PS5 Disc is pretty tight competition, but Series S vs PS5 Digital for me is just a total sweep on Microsoft's part.