It’s no coincidence that details of the PlayStation Neo appeared in the same week that Microsoft announced the death of the Xbox 360.
While for the most part, gaming press focuses on the latest and most advanced console generation – the devices that drive the sales of the newest games – the industry has always seen a healthy stream of revenue from sales on obsolete platforms. In each generation, older consoles will continue to drive significant sales long after their replacements have made it to market – Sony continued production on the PlayStation 2, for example, until six years after the launch of the PlayStation 3.
Since the launch of the PS4 and Xbox One in 2013, both the PS3 and Xbox 360 have continued to bring in healthy sales, which both consoles continuing to sell millions of new units annually. With the passing of time, though, more and more thrifty gamers who were initially uninterested in early adoption of a newer system have been convinced to upgrade to a more modern console, and the sales figures for the 360 have finally dropped to the point that Microsoft feel it’s no longer worth the effort.
This is where Sony’s PlayStation 4 comes in. The clear winner of this generation’s console war, the PS4 has also turned out to be a solid earner for Sony because the cost of manufacturing the device has fallen at a much faster rate than it has done in previous generations. While typically Sony sells its consoles at a loss when they’re initially released with the expectation that costs will level out by the end of a console’s lifespan, advancements in technology have meant that the company has ended up making money on each new console sold for several years now.
This fall in the cost of technology is a two-edged sword, though, as PC hardware costs have also dropped, providing a massive boon to the PlayStation 4’s largest current competition: hence Sony’s decision to release an upgraded version of the PS4 to accommodate those console owners who might be swayed by the technological superiority and relatively low cost of PC gaming hardware.
The Neo makes sense primarily because of the rapid drop in price for equipment: Sony are making so much money on each PS4 sold that the company feels there’s room to add an additional, high-end console to the market without pricing such a system far outside the reach of potential buyers. This also means, though, that Sony are able to corner two sides to the console market, as the company no doubt hopes that the PS4 will take the 360’s place as the de facto console of choice for budget gamers.
In all communications regarding the Neo, Sony have made it clear that the upgraded console will not deliver a unique experience over the PS4 – games developers are required to provide the same experience on both consoles save for the quality of display and detail provided. A game can’t feature content that’s exclusive to either the PS4 or Neo, and if a developer is to support one platform, they must support both.
In providing this mandate, Sony means to give players a choice: those console gamers who have a desperate need for a high resolution, top of the line digital experience are free to pay the required extra for a console that delivers such an experience, while players who prefer a cheaper experience and don’t mind losing screen display quality are also catered for. All PlayStation gamers can play together online, regardless of whether they’ve invested in a high-end console or the cheaper option.
In the next few months, it’s likely that the standard PS4 will see yet another price drop (a common occurrence considering the relatively cheap cost of manufacturing the system), making it easier for low-budget households to get their hands on a modern console. Meanwhile, rumors claim that the Neo is going to retail initially at $399, the same cost as the current price for the standard PS4. Sony will switch their existing console out for the new one, and will likely reduce the price of the original PS4 to make it more affordable for gamers who might otherwise have purchased a cheaper console.
As such, it’s likely that the PS3 isn’t long for this world – the Xbox 360 might have ceased production first, but with the introduction of mid-generation hardware upgrades, it’s likely that the older PlayStation model will soon follow its rival into the annals of history.
Keeping two consoles which run the same games on the market at the same time is smart: as both types of hardware will play new releases, Sony’s able to maximize its games catalogue, while developers can get the biggest possible revenue without having to work too hard to meet the technical limitations of older consoles.
There are some practical downsides to selling two consoles on the market at the same time – as much as Sony is working to make sure that developers don’t prioritize the newer console over the older model, rising development costs will mean that studios will naturally put the bulk of their efforts into developing for the higher spec units and older PS4s will inevitably begin to be treated as an afterthought.
As time goes by, gamers will be increasingly encouraged to upgrade their consoles thanks to the limitations of the system – a move that Sony’s hopeful to see as it’ll mean a constant stream of revenue as gamers periodically bite the bullet and pay for new hardware.
In releasing a high-end PS4 and maintaining their older device, Sony looks set to push against its PC competition whilst simultaneously appealing to a wide demographic of gamers who aren’t comfortable spending $400 on a new system.
The move to release the PlayStation Neo will likely mean that the PS4 will be around for many, many years to come.
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