Over the last couple of days, every PlayStation 4 video I’ve watched on YouTube has been swamped with irate Brazilian gamers complaining about the exorbitant price of the console in their country. Intrigued, I decided to do some research to discover exactly what’s going on, and whose fault it is.
It didn’t take long to find out why they’re annoyed. Brazilians hoping to purchase Sony’s next-gen console currently have to pay up to an eye-watering $1850 for the privilege; and that’s in US dollars, not Brazilian real. As a comparison, gamers in the US are expected to pay just $400, while those in the UK are paying approximately $565 after taxes.
And apparently ‘taxes’ is the key word for the situation in Brazil too, albeit on a much greater scale. To make things abundantly clear, Sony even released an apologetic official statement explaining exactly why the PS4 will cost so much in the South American country.
It turns out that a whopping 61% ($1128.50) of the $1850 price is due to import taxes, while 15.5% ($286.75) will go to the retailer, which leaves only 21.5% ($397.75) for Sony and doesn’t even cover the actual cost of the console. As is common in the videogame industry, Sony is marketing the PS4 at a loss, in the hope of making the money back through other areas of the business, i.e. software sales and PlayStation Plus subscriptions.
Therefore, due to the ridiculously high import taxes required by Brazilian law (after all, the government has to cover the cost of the 2014 FIFA World Cup and 2016 Olympic Games somehow!), Sony is stuck in a catch-22 situation, with only two equally unfavourable options. Either the PS4 is released at a prohibitively expensive price, which is sure to anger gamers, or the console’s arrival is delayed in the region, which would probably make them angrier.
Obviously Sony went with the first option, but one thing it can do to reduce the cost to the consumer in the long term is start manufacturing the console in Brazil, negating the need to import it into the country. This is in fact already what Microsoft is doing with the Xbox One, which has allowed them to sell it for a little over $1000, giving the company a significant advantage over its biggest rival.
With a population of over 200 million, Brazil offers a huge potential market, which clearly Sony won’t want to ignore. In its statement, the Japanese company did encouragingly speak of plans to begin building the console locally. However, the manufacture of PS3s in the country only began earlier this year, so there’s no telling when this will also be the case with the PS4 (presumably when the next-gen console has started making money in other markets).
This must be incredibly frustrating for both Sony and Brazilian gamers who have been looking forward to finally getting their hands on a PS4, only to find that now they probably can’t afford one. Charging over 60% import tax is frankly ridiculous, so it’ll be interesting to see where this story goes, and particularly what the Brazilian government’s reaction to the situation will be. One thing is for certain though; gamers in the rest of the world should definitely be thankful they don’t live in South America.