PS5 price increase shows Japan is a low priority for Sony | Opinion

In 2016, when the PS4 became a huge sales success, Sony undertook a fairly major organizational shakeup in its gaming-related divisions.

Operationally, the biggest change was the consolidation of everything PlayStation-related under one roof. Until then, there had been a separate business unit called ‘Sony Network Entertainment’ that ran services like PlayStation Plus, as well as powerful and unusually autonomous regional units of Sony Computer Entertainment, all of which were consolidated under a new management structure.

The most striking aspect of the change, however, was where the new management, Sony Interactive Entertainment, would be based: not in Tokyo, but in California’s Bay Area.

In practice, the change didn’t mean much: it was an acknowledgement of PlayStation’s current reality as a major international company with studios around the world and close ties to California’s technology and entertainment industries, not a coup or power grab.

In truth, not all that much changed, with PlayStation now having a home base in San Mateo instead of Shinagawa. Still, it certainly felt like a cultural shift for many fans of the platform – and for those fans in Japan, it was a bitter pill to swallow. Not surprisingly, Japanese gamers had long rued that their days of “first among equals” in PlayStation’s global consumer base were long gone – but it was still a little hard to swallow.

It’s fair to say that the strategic considerations would have been different if Japan had actually been a very important market for Sony.

There’s likely a bit of that bitter taste back in a few mouths in Japan this week, as Sony announced that it’s raising the prices of all of its PS5 hardware – not just the console, but also the controllers and PSVR2 headsets – by a significant amount. The PS5 console itself is going up by ¥13,000 (roughly $90 / €80) to ¥79,980 (roughly $550 / €500) for the disc drive-equipped model. The new pricing goes into effect on September 2.

Unsurprisingly, there’s currently no stock anywhere to sell at the old prices, with many people on social media posting somber photos of sold-out signs outside electronics stores that harken back to the console’s early days of limited stock. Quite a few of these photos are accompanied by laments about Japan’s economic woes, Sony’s lack of respect for the Japanese market, or both – but as before, no one seems particularly surprised by this, just disappointed.

It also appears that quite a few dissatisfied consumers are bracing themselves for even more surprises when the details and pricing of the PS5 Pro are expected to be announced in the coming months.

Sony’s reasoning for the price increase is, it should be noted, entirely economically reasonable (which, like being “technically right”, is one of the worst kinds of reasonableness to be). Several macroeconomic trends have conspired to drive the value of the Japanese yen to its lowest point against the US dollar since the 1980s; most of these have less to do with the “real” economy, as it were, and more to do with the machinations of central bank interest rates and inflation-linked policies.

Things will likely return to the mean over time, at least somewhat. But for now, the yen is cheap, and products like the PS5 have effectively been sold at a deep discount in Japan. Sony has overcorrected quite a bit, but given recent currency fluctuations, the new pricing is roughly in the same range as hardware prices in the US.

That’s fine as an economic argument – ​​but I think it’s fair to say that the strategic considerations might have been a little different if Japan had actually been a very important market for Sony. It’s not always intuitive to people abroad – it even borders on crazy to some people – but the fact is that not only is Japan not a particularly important market for PlayStation; it’s also not a market where PlayStation has performed particularly well.

Of course, you can understand why this is contradictory. After all, Sony is still a Japanese company, even if it has moved PlayStation’s headquarters to the other side of the Pacific. And we all know what a disastrous failure Xbox is in this area (a reputation that is by no means exaggerated), so surely PlayStation must be calling the shots? Even if Japan isn’t a super important territory for Sony commercially, surely PlayStation must be an important platform for Japan culturally?

The reality is quite different though – because Japan is Nintendo territory through and through. In fact, this is probably the only territory where every other platform holder plays a distant second fiddle to Nintendo, although in some European countries it comes pretty close too.

Nintendo’s dominance in Japan in recent years, however, hasn’t been based solely on the strength of its IPs, although they are certainly beloved here. Japan isn’t just Nintendo territory; Japan is handheld territory, and right now Nintendo is the only company with a serious handheld device on the market.

It’s been clear for a while that this is the case. There are various theories as to why handheld gaming is so important to the Japanese market – the importance of playing away from home in a country with long train journeys, small apartments and so on certainly plays a part in it, while it’s also certainly true that younger consumers here are less likely to own a TV, making a console without a screen a tough sell. These are long-term factors, though they’ve only become more influential over time, and Sony hasn’t been unaware of them.

It could be argued that Sony’s persistence in promoting its handheld adventures – the PSP and PS Vita – was largely an attempt to remain relevant in its home country, even if those platforms never really took off elsewhere.

On the PSP, it certainly managed to do so for a while, most notably with Monster Hunter, which was a huge hit there. (The strange, if not unwelcome, situation Capcom finds itself in with the franchise may actually be Sony’s problem in miniature: in Japan, Monster Hunter is primarily seen as a handheld game and thus destined for the Switch, but overseas it’s been such a huge success as a home console game on the PlayStation, leaving the company with no choice but to jump between two successful iterations of the franchise.)

Japan is a handheld territory and right now Nintendo is the only company with a serious handheld device on the market.

You could even argue that the PS Portal, an oddball, thin-client handheld device that’s not really found anywhere else in the gaming hardware world, exists largely as an attempt to regain some of that relevance in Japan. It doesn’t work in an out-of-home environment, but perhaps reflects a sense that PlayStation’s reliance on a big TV as the centerpiece of the experience cuts the company off from a potential market in Japan.

That hypothesis may be correct; PS Portal seems to be largely unheard of overseas, but in Japan the game has been out of stock at most retailers since launch and is currently a favorite among loan sharks.

None of this is to say that Sony is doing particularly badly in Japan, though. In 2023, the company sold around 2.6 million PS5s, its best sales year since the PS2 era. So, relatively speaking, it’s doing just fine in Japan right now, but it essentially means the market here hasn’t grown in decades and is an ever-shrinking slice of a growing global pie.

For comparison, the Switch sold 4 million units in the same period, despite being well into the end of its lifespan. Sony’s second-place finish in Japan isn’t even close, and it’s hard to imagine slapping another slug of cash on the hardware’s price tag is going to help.

Yes, the currency markets probably leave Sony little choice, but that’s only because we accept that expanding and building out the Japanese market is not a high priority for the company.

There were other paths here. For example, it’s entirely plausible that one reason the Switch 2 has been delayed for so long is that Nintendo isn’t happy about launching a new platform under economic circumstances that could put it out of reach of Japanese consumers, who make up a significantly larger slice of the global pie than Sony.

Talking about strong or weak currencies is all well and good, but the weaker yen hasn’t been reflected in wage inflation to any degree in Japan, so PS5s have really surged in terms of purchase price parity. Of course, Sony will also be aware that a really big price difference risks creating a grey market for cheap Japanese hardware in other countries, thus exacerbating stock shortages in Japan.

Presented in those terms, it’s a no-win situation – Japanese gamers could face higher prices or massive supply issues. Sony, unsurprisingly, has gone with the option that makes more money.

The harsh reality remains that the market in Sony’s home country is waiting for the Switch 2; nothing will really change the face of the console competition in this region.

Even in the consumer reaction to the price increase—disappointed social media posts and all—you can see the core of the larger problem. The rumblings of discontent have been muted; consumers in Japan, on the whole, seem fairly ambivalent about the PS5.

After the price increase was announced, there was a run on second-hand PS5 hardware. Most of the comments about hunting in thrift stores or on online sales sites seemed to come from people who were still on the PS4 and felt that now was a good time to upgrade, rather than being driven by any particular enthusiasm.

It’s also telling to see what people are saying about playing on PS4 and wanting to continue playing on PS5, with many of these being free-to-play titles like Apex Legends, Genshin Impact, and Overwatch. This ties in with the observation that PlayStation adoption rates are also lower in Japan than in most other countries, with the primary demographic appearing to be people using the game as a F2P box.

There’s not much on the horizon that’s likely to undercut PS5 sales here. Unlike most territories, Japan also isn’t likely to be hugely excited by the launch of GTA 6 next year; it’ll do fine, sure, but it won’t shift consoles like it is in other countries.

The next Monster Hunter title is likely the biggest game on the horizon and likely to shift PS5 units, but many of that series’ fans in Japan prefer the Switch iterations. The harsh reality remains that the market in Sony’s home country is eagerly awaiting the Switch 2; nothing before then is likely to truly change the face of the console competition in that region.