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Next-Gen Consoles to Cost $450-499, Recession to Undermine Sales Mostly in 2021, Says Analyst

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Next-gen consoles might be pricier than we thought. After yesterday's PS5 price rumors cited by a Bloomberg report, a new report issued by entertainment analytics firm Ampere Analysis and penned by veteran game analyst Piers Harding-Rolls (previously at IHS Markit) suggests both the PS5 and Xbox Series X should cost between $450 and $499.

Additionally, the analyst believes the incoming global recession will have an impact on next-gen consoles sales, though it will be mostly felt in 2021. Last but not least, the report points out how the Xbox All Access subscription plan could be important in this economic scenario.

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Back in 2008, the console market continued to perform strongly in the face of a global recession. The console generation at that time included Microsoft’s Xbox 360, Sony’s PlayStation 3 and Nintendo’s Wii. The only platform which under-performed relative to the previous generation of consoles during 2008-2010 was Sony’s PS3, which launched in 2007 at a very high price point compared to the competition. Nintendo’s Wii offered lifestyle and fitness titles which catapulted the platform into the mainstream, was cheaply priced and sold incredibly well over the period. Microsoft reduced the price of its Xbox 360 twice in 2008 to generate sales momentum in what was overall a difficult trading climate.

We expect the new Sony and Microsoft consoles to be launched in November 2020 if they are not delayed due to component supply chain or game development bottlenecks. We also expect them to launch at a price point of $450-$499. We believe it is inevitable that a recession will undermine sales to an extent, but that any impact will be more signicantly
felt later in 2021 once the initial early adopter launch surge ends. As both new consoles will support backwards compatibility and most new third party games over the next 18 months will also support the older generation of consoles, consumers impacted by a downturn may not feel the need to upgrade as early as they may have.

We expect Microsoft's Xbox All Access initiative - spreading the cost of console hardware and bundling it with services for a monthly subscription - to be used from launch of the Xbox Series X in select territories. These sort of exible go-to-market approaches will be important for supporting adoption during a recession.

Indeed, Microsoft's head of gaming Phil Spencer himself recently told IGN there are big plans surrounding Xbox All Access for the Xbox Series X launch. Of course, Sony could come up with a similar offering for its PlayStation 5.

Beyond next-gen consoles, the Ampere Analysis report mentions PC gaming hardware, including graphics cards and Virtual Reality headsets, should be similarly affected. On the other hand, eSports and games live streaming are seeing significant boosts and could become mainstream even sooner.

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