Gamers aren't the only ones outraged about the high cost of Sony’s (NYSE:SNE) PlayStation 4 in Brazil. Following the announcement last week that the next-generation game console will cost R$ 4,000, $1,850, in Brazil -- more than four times the retail price of the console in the United States ($399) -- Sony took to its blog to break down the cost and share its plan for reducing the cost in the future.
Brazil will get the PS4 on Nov. 29, in line with its release in Europe and just two weeks after the U.S. release, but at a much steeper cost. In Europe, the PS4 will cost 349 pounds in the U.K. and 399 euros elsewhere. The price is a critical factor for gamers deciding between the PS4 and rival Microsoft’s Xbox One. But what explains the pricing in Brazil?
Mark Stanley, Sony’s general manger for Latin America, broke down the pricing in a graph. “We want to emphasize that it isn’t in the interest of Sony Computer Entertainment America to sell the PS4 with a high retail price, since it is not good for our consumers, and it is not good for the PlayStation brand,” said Stanley in the blog posted from Oct. 21.
The PS4 pricing is not out of line as a similar problem was encountered with the launch of the PlayStation 3 in 2011, notes Kotaku. At that time, the PS3 cost R$ 1,999, or $1,130, which was something of a discount as Sony first announced a price of R$ 2,499. Sony’s launch window for each successive generation indicates strong interest in the Latin American market. The PlayStation 2 had a nine-year delay there, whereas the PS3 had a nine-month delay and the PS4’s launch is consistent with the Europe rollout.
According to Stanley, 63 percent of the cost of the PS4 in Brazil is attributable to taxes and other import fees. The base price of the PS4 starts at R$ 858, around $395, with R$ 2,524, $1,155, going to taxes. An additional R$ 878, $401, goes to retailer and distributor margins, and Sony subsidizes R$ 258, $118, leading to the final R$ 3,999 price of the PS4 in Brazil.
Stanley said Sony plans to manufacture the PS4 in Brazil, citing the factory it opened in May to manufacture PS3s, to reduce the cost of the console in the future. “We are committed to the Brazilian players and proud of the strong relationships we have built with you over the years. We are doing everything possible to reduce the price of the PS4 for you,” said Stanley.