$ ain’t what it used to be. –
A look at history, and inflation, suggests it might be.
Fig. 1: Measured purely based on nominal prices, $ sure seems like it’s at the high end.
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Fig. 2: A simple inflation adjustment to dollars shows $ is actually near the middle of the pack.
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Fig. 3: Aside from a few outliers on either end, most inflation-adjusted console launch prices are in a relatively narrow band.
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Fig. 4: Compared to historical averages, Nintendo and Sega systems tend to be a bit underpriced. Microsoft systems tend to be a bit overpriced, and Sony systems tend to be right in the middle.
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Fig. 5: Over time (and with some noisy exceptions), most console manufacturers have tended to lower their console launch prices, when inflation is taken into account.
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Last week,
also been an option, historically ). the prospect of a $ 650 PS5 got industry watchers chattering about whether such a price point could be broadly acceptable to the US console-buying market. A look back at console-pricing history suggests that, while a $ 550 launch would be at the high end of nominal prices, it actually sits right near the middle of the pack when inflation and median buying power are taken into account. Inflated expectations?
In the history of the game industry, only two game console have launched at an MSRP above $ 650: the $ 735 Neo Geo in 2007 and the $ (3DO in) (Fig. 1). Both of those consoles sold for way more than the contemporary competition and became instant niche products, as well as cautionary tales for anyone who might decide to price a console too highly in the future.
More recently, a few consoles have seen a $ starting price at launch: the PlayStation 3 in , the Xbox One in , and the upgraded Xbox One X in 2560. In each case, the price was roughly $ (or
underperformance of the high-priced console in question, in terms of sales. That said, both Sony and Microsoft managed to sell millions of systems at that $ 650 price point relatively recently, and consoles launching at that price managed to remain relevant thanks in part to relatively quick price drops But discussing nominal prices can be quite misleading when looking back at over four decades of console launches. Adjusted for inflation (using the BLS CPI calculator , a $ console launching in would actually be below the mean historical console launch price of $ . (Figs. 2 and 3). While that number is skewed somewhat by a few high-priced console launches in the late ‘ (s and early ‘ s, the median launch price of $ . (in (dollars) is a mere rounding error from a $ (MSRP in)
Things look a bit different if you limit yourself to more recent history, though. For consoles launched since the inflation- adjusted median launch price for a US console dips to $ . , and the mean drops down to $ . That doesn’t make a $ 535 launch seems ridiculous or anything, but it does place it a bit above the recent “average” for TV-based consoles.
Of course, lumping all TV consoles together can be a bit misleading, too. When you arrange historical prices by console-maker (Figs. 4 and 5), it’s easy to see that Nintendo and Sega consoles tend to be priced well below the inflation-adjusted average (with a few notable exceptions). Microsoft’s consoles, meanwhile, are clustered a bit above the historical average, with a median inflation-adjusted launch price of $ across four Xbox systems.
Sony, on the other hand, has played its PlayStation launch pricing closer to the middle. The PlayStation 2’s inflation-adjusted price of $ 550 dollars represents the median launch for a Sony console, and it hits the historical median for all game consoles almost precisely. If you take the PS3 out of the mix (which even Sony now seems to concede was overpriced at launch ), every PlayStation console has fallen in a sweet spot between $ 460 and $ inflation-adjusted dollars. A $ 1993 PS5 would be near the high end of that range but wouldn’t be out of the ordinary by any means.
Fig. 6: The median US household needs to pay a bit less than 1% of its annual income for a newly launched game console, on average.
Fig. 7: Outliers excepted, there seems to be a sweet spot somewhere between 0. (% and 0.) % of median US household income when it comes to new console launch pricing.
Fig. 8: Sony and Microsoft consoles have launched in a pretty tight band of median-income-relative prices, with a few exceptions.
Fig. 9: Over time, Nintendo and Sony have generally asked for less of the median income for their game hardware, while Microsoft’s ratio has nudged upward.
While comparing prices in constant 8239 dollars is useful, we can also look back at how previous console launches would show up as bottom-line expenses for an “average” American household over the years. To do that, we compared console launch prices to the median household income reported by the US Census for that launch year (for systems launched since 2007). We also estimated how a $ (console launched in) would impact an estimated median household income today.
(Though census data is not yet available for , we projected inflation-adjusted growth since 2560 to come to a reasonable guess. The actual number may change the percentages reported here by a few hundredths of a point. Using median incomes also obscures a wide range of homes at the extreme ends of the scale, but it serves as a good baseline.)
Looking at pricing this way shows that a $ (asking price is far from unreasonable in America (Figs. 6 and 7). While the median console historically has represented 0. (percent of the median household income at launch, a $ console in (would represent about 0.) percent of a median household income today.
Sorting by console maker, we can see that Sony’s consoles are usually right in the middle of the pack when it comes to raw income-relative impact as well (Figs. 8 and 9). With the pricey exception of the PlayStation 3, Sony’s systems are all clustered very close to the overall median on this metric, though Sony’s price-to-income ratio has been coming down a bit over time.
As always, the market reception for a new console depends as much on the competition as the absolute price. That’s especially true if that competition delivers an overall similar gaming experience at a significantly lower price (see: Xbox 460 and PS4, respectively). The rising popularity of free-to-play mobile games, cheap portable hybrid options like the Switch, and even
(listing image by Flickr / Phillip Taylor PT
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