Why Did Sony Just Increase the PlayStation Price So Much?
- Sony is increasing the price of PlayStation Plus subscriptions by about a third
- This is good for Sony’s bottom line for now, but there’s a chance of customer churn
- The price hike is part of a bigger trend of streaming price increases this year
Starting September 16th, PlayStation subscription plans are increasing globally. Sony says the increase will ensure that the company can “continue bringing high-quality games to the service.”
From a business perspective, companies across the streaming entertainment spectrum are charging more for content. Sony is just the latest to take the leap. Will it work? Let’s explore.
What is happening with PlayStation prices?
PlayStation Plus is Sony’s equivalent of the Xbox Game Pass, which gives you access to a rotating selection of games every month through a subscription with different tiers. With this price increase, every tier will become more expensive: The service’s annual Essential plan will go from $60 to $80, the Extra plan will go from $100 to $135, and the Premium plan from $120 to $160.
The reception to the change has been mixed. Some customers are disgruntled that there wasn’t much notice given, while others are more concerned that Sony hasn’t indicated an increase in value to justify a higher price. Other people are shrugging it off because prices just do occasionally go up in life, and it’s really just a few dollars per month.
As these price hikes go, the people who enjoy the content will probably stick with their subscription. People who feel they aren’t getting their money’s worth, though, might take this opportunity to cancel.
What’s the business play?
If we zoom out, it’s clear that content prices are going up.
Microsoft increased its Xbox Series X prices in most countries in August apart from the US, Japan, Chile, Brazil, and Colombia. It also increased the monthly prices of its Xbox Game Pass and Xbox Game Pass Ultimate subscriptions.
Meanwhile, over in the streaming world, Netflix, Disney+, Hulu and Peacock have all announced price increases in recent months. The Wall Street Journal estimated the average cost of watching a major ad-free streaming service will go up about 25% in a year — ”Streamflation.”
Companies are testing their customers’ loyalty with these incremental increases, betting that they won’t cancel subscriptions if the content is good enough to keep their attention. Sony insists that its yearly plans will still come at a discounted rate as opposed to the one- or three-month subscriptions that it offers.
The bottom line
While PlayStation customers discuss the price hike on Reddit, Wall Street is decidedly feeling positive about it. Sony Group Corp. rose more than it has in a month since the announcement. Investors like the idea of more expensive subscriptions contributing to the bottom line.
The price increase could substantially increase Sony’s annual net sales and operating profit, so for now, Sony stock will benefit from the hike. What remains to be seen is whether customers stick around with the higher prices. To earn that loyalty, Sony will have to deliver compelling content and value to its customers.