PlayStation Consoles' Price Can Hike Due to Expanded Tariffs

Viswamitra Jayavant - Aug 23, 2019

News of plummeting PS4 sale in anticipation for the PS5 has yet to fully break, Sony is troubled further as expanded tariffs can hike console prices.

A lot of things are going on over at Sony. The departments and teams responsible for its popular gaming console PlayStation have had to deal with not only the sales slump of the PlayStation 4 (PS4) with the new generation PS5 looming over the horizon.

But recently the company’s financial chief Hiroki Totoki has warned the community that the price for PS consoles might see a hike in the future due to the higher tariffs on Chinese products imposed by the U.S. government. Sony is still trying to find a solution for this problem, but passing the extra costs down to consumers is an actual option that the company has to consider.

It is not certain whether the expanded tariffs will be applied in the first place. It still depends on how Trump’s administration negotiates with Beijing in the future.

The Tariff Trouble

All the way back in May, the current administration decided to up the tariffs for roughly $200 billion worth of Chinese goods to 25%. Another expansion in tariffs would cover up the other $300 billion of goods left, which, unfortunately also includes PlayStation consoles.

Sony is caught between a rock and a hard place when it comes to this new problem. Gaming consoles similar to the PS4 don’t tend to have a lot of profit margin, to begin with (Even selling at a loss at the beginning of their life cycles). The company’s expectation is to recoup all of the losses via games and servicing fees (The PS Plus subscription service, for example). With this in mind, Sony probably doesn’t have the resources in place to absorb the losses that the expanded tariffs could cause, nor they can afford to move productions to a new region altogether.

105304112 Gettyimages 1086492488 — Sony is in a very hard place with the threat of expanded tariff over the horizon.

Limited Options

If Sony decided to hike up the pricing of the PS4, the company could witness even more atrocious sales in light of the already plundering sales performance of the PS4 in the last few months. The company could be on a relatively rocky ground up until the launch of the next-generation PS5, many expected to be in late 2020.

Currently, there aren’t a lot of strategies that Sony could use, short of the U.S. backing up on the tariff threats.