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gdc 2016

Sony Will Sell PlayStation VR At A Profit, Not As A Loss Leader

by Mike Futter on Mar 15, 2016 at 02:57 PM

During a conversation with Sony vice president of publisher and developer relations Adam Boyes, our discussion turned to pricing of the PlayStation VR. Sony has managed to undercut Oculus and HTC, bringing virtual reality to consumers this fall for an all-in price of $810 for the console, headset, and sold-separately camera.

Boyes mentioned to us that, while he doesn't know the specifics of how Sony managed to cut that price down, the company didn't sacrifice its bottom line. Sony will not be selling the PSVR as a loss leader (a subsidized piece of hardware that will recuperate losses on companion software sales). Most consoles launch below cost to create an install base, with the difference made up in software sales and licensing. 

"I think for us, we weren't really looking at the other guys," Boyes says. "The same goes for the price point. It wasn't predicated on anyone else's prices. Obviously we need to make money on the unit, but we've been in the consumer electronics business for a long time, so our ability to source great, high quality parts is a big part of it."

We clarified that Boyes wasn't talking about making money from the whole VR ecosystem. He was, in fact, directly referring to the hardware being sold in the black.

"Every device we've sold since PlayStation 4 has been in the black," Boyes confirmed. This also gives Sony room to bundle other components, like Move and Camera, in the holiday season when PlayStation VR launches in October at $399.

Boyes believes that in the VR race, there is also a last-mover advantage which Sony can take advantage of. "There's an advantage on both sides," he explains. "Being the first one out there, the cutting edge is great. Watching how the market evolves and changes and what works and doesn't is helpful."

Sony will have approximately six months to make minute adjustments to its marketing strategy before PSVR launches. It will benefit from Oculus and HTC making the case for VR as a whole, before it markets a specific, more affordable product to people who may be more accepting of VR. 

The Year of VR is still just getting started, and with Sony now fully in the ring, it's going to be fascinating to watch the market evolve and consumers get their first experiences with the medium.