The Sony PS5 console could be priced higher than the PS4.

An expensive console could spell the death knell of the PlayStation line.

Microsoft and others are busy working on delivering console-quality games to smartphones at much lower costs.

This is going to be an exciting year for gaming enthusiasts as the console generation is all set for a change with the likes of Sony and Microsoft coming out with their latest hardware. Both companies have already given gamers a good idea about what to expect from the next PlayStation 5 (PS5) and Xbox Series X this year.

But don’t be surprised to see Sony shoot itself in the foot with the PS5 this time around. The Japanese giant could end up ceding its gaming supremacy to not just the Microsoft Xbox Series X, but to other deep-pocketed rivals as well that could force it to bring an end to the PlayStation line.

Sony’s big PS5 mistake

Sony recently pointed out that it is finding it difficult to price the PS5 console. But the grapevine indicates that the PlayStation 5 could turn out to be Sony’s most expensive console ever as it will reportedly cost $450 to manufacture as per Bloomberg’s estimates.

IHS Markit estimates that the PS4 – released nearly seven years ago – had a bill of materials of $381. That console was eventually launched at $399. This means that Sony didn’t make anything from the sale of the console itself if we factor in other costs such as marketing. And now that the cost of making the PS5 console has reportedly jumped over 18% thanks to costlier parts, one can expect Sony to price the new PlayStation at around $500.

That could be a bummer for Sony and very well mark the end of the PlayStation console line. The reason I’m saying this is because the gaming market is evolving beyond consoles and a potential price hike from Sony could end up killing the PS5.

Microsoft, for instance, is already looking past the console. Its Xbox Project xCloud – which is currently in the preview phase – is allowing gamers to stream more than 50 Xbox titles on their Android smartphone or tablet using Wi-Fi or mobile data. Microsoft says that users can stream console-quality games straight from the cloud to their handheld devices without any waiting time. What’s more, the software giant will continue to add more titles to this platform.

Microsoft hasn’t revealed the pricing of this platform just yet, but it isn’t likely to be very expensive. That’s because the company’s recently-announced Xbox Game Pass Ultimate can be subscribed for $15 a month. Sony’s competing streaming service – PlayStation Now – costs $10 a month.

Even if Microsoft’s streaming service is priced at a slight premium to these two plans, it could be a big win. That’s because anyone opting for the xCloud streaming service won’t have to buy a console like the PS5. One can simply use their smartphone to access games of their choice.

But anyone with Sony’s PlayStation Now streaming service won’t be able to do that. The service is only compatible with PS4 consoles and PCs, which means that gamers will have to make a major hardware investment. This is where the PS5 could end up failing as the world is moving toward cloud gaming, and Microsoft has started making the transition already.

Why the PlayStation 5 could be the end of the road

According to third-party research, the cloud gaming market is expected to clock a compound annual growth rate of nearly 25 percent through 2025. So, it is not surprising to see why Microsoft is looking to make gaming platform-independent, while Sony is stuck deciding the price of the PS5.

The alarming thing for Sony and the PS5 is that Microsoft is not the only one going after the cloud gaming market. Google, for instance, is planning to offer a free version of its Stadia cloud gaming service. The service is currently limited by an upfront investment of $129 for a Stadia controller and a Chromecast Ultra, and Google is now looking to knock that barrier down.

Google executive Phil Harrison recently told Protocol in an interview:

The big strategic difference is that over the next few months you will be able to experience Stadia for free…No money down, without having to put a box in your home, you can just click and play amazing games straight from our data center.

This could be another big challenge for Sony’s PS5, and probably not the last one as Amazon is reportedly looking to grab a piece of the action as well. Quoting Wedbush Securities analyst Michael Pachter, Protocol reported:

I would bet everything that it’s this year, an actual game-streaming service from Amazon. No later than the launch date for the Xbox Series X and the PlayStation 5.

Not surprisingly, Microsoft’s gaming head Phil Spencer now sees Amazon and Google as its primary rival in the gaming space and not Sony. He told Protocol:

When you talk about Nintendo and Sony, we have a ton of respect for them, but we see Amazon and Google as the main competitors going forward. That’s not to disrespect Nintendo and Sony, but the traditional gaming companies are somewhat out of position. I guess they could try to re-create Azure, but we’ve invested tens of billions of dollars in cloud over the years.

Given that there are around 3.5 billion smartphone users in the world, the likes of Microsoft, Amazon, and Google have a better shot at succeeding in the cloud gaming space thanks to their existing cloud infrastructure. People can simply buy a capable smartphone and stream games right from the cloud.

This is where Sony is currently lacking and that’s why don’t be surprised to see the PS5 turning out to be the last in the line of consoles from the Japanese company.