PS6 and Xbox Project Helix Could Lose Millions of Players If They Cost $1,000

A new Ampere Analysis forecast suggests PS6 and Xbox Project Helix could sell millions fewer units if next-generation consoles launch at $1,000 instead of $700.

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The future generations of consoles might struggle with affordability problems even before their launch. There are rumors that Sony's PlayStation 6 and the next-generation Xbox from Microsoft, codenamed Project Helix, might be released somewhere in this decade, but increasing hardware prices might force both consoles to be too expensive to become a success among players. According to the forecast made by Ampere Analysis, the total install base of the two consoles might be smaller than it would have been had they cost less money.

Affordability of the console has always worked in favor of console gaming, especially when companies have been competing for players. The success of Nintendo Wii showed how a cheaper and more affordable console attracted millions of users back in the days when Xbox 360 and PS3 were dominating. But the situation might go in a completely different way because of the increasing component prices.

"Clearly, the economics of playing games on consoles have altered substantially," Ampere Analysis Senior Research Director Piers Harding-Rolls says. According to Ampere's report on August 18, the number of sales for both Sony and Microsoft may be up to 39 million units lower in the first five years of PS6 and Project Helix if the devices launch at $1,000 rather than $700. It means that the potential customer base will decline by 38 percent.

The cost of the game itself might change if a new console goes up to $1,000 at launch. If there is a significant increase in hardware costs, the company expects the player's spending on consoles and related software to decrease by 12 percent in the first three years after the launch of new consoles. It translates into an estimated loss of about $3.4 billion in player spending.

The rise in the cost of components is one of the most critical factors that might make the price hike inevitable. AI technology will increase the need for advanced memory capacity and other hardware in general, which adds extra pressure on the chain of supplies. Should the components become much more expensive, so that Sony and Microsoft will need them to offer the expected level of performance of the new systems, it will not be easy to keep a $700 price without subsidies.

According to Ampere Analysis, there are three ways Sony and Microsoft can prevent the upcoming generation from becoming too costly niche solutions. The first way is to postpone the release of the PS6 and Project Helix beyond the currently discussed year of 2028.

The second possible solution may lie in Sony and Microsoft absorbing the extra costs related to the manufacturing process themselves. The companies will be able to expand their install base with consoles sold with lower margins or even at a loss. With a wider audience, they will get extra income from selling games, subscription services, downloadable content and other sources. At the same time, the high prices on hardware may prevent the companies from doing that financially.

The third option lies in the field of meaningful innovation. Instead of making the PS6 and Project Helix simple updates of the current consoles in terms of hardware and performance, Sony and Microsoft can introduce some new features or experiences to make people interested in them. The problem is that both Sony and Microsoft most probably spent many years developing their new consoles.

It may be useful for Sony and Microsoft to learn something from Nintendo. The company does not follow the same strategy as Sony and Microsoft do; instead, it focuses on innovation and new gaming experience. As a result, Nintendo has a large install base, and at the same time, its consoles are relatively cheap.

The upcoming Nintendo Switch 2 will only serve to intensify pressure on Sony and Microsoft. Given that the Switch 2 is predicted to cost between $450-$550, consumers can have an alternative which would cost half as much as the projected $1,000 PS6 or Project Helix. If Nintendo keeps up with its current strategy, gamers do not have any reason to double their spending in order to play on a different platform.

It seems that the main challenge for Sony and Microsoft in developing the next generation platform is not only going to be about building the best console in terms of raw performance. The real challenge would be delivering improvements without making consoles unaffordable for the majority of potential customers. Given the $1,000 price tag, PS6 and Project Helix might offer great hardware capabilities but fail to acquire a massive number of users like previous generations.

The price tag on either of the consoles is not known yet, and neither Sony nor Microsoft has confirmed the speculated price tag of $1,000 for their launch. Yet, as Ampere Analysis predicts, the problem of this console might not be only the technological innovation but the inability of many to purchase it.