Brexit’s Influence On Exchange Rates May Increase The Price Of Consoles

In case you hadn’t been watching the financial news, today has a been rather bad on the markets. Share prices have tumbled, everyone from Easyjet to Greggs the Baker have had millions wiped off their value, and the pound has plummeted against the dollar.

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Piers Harding-Rolls, director at analyst IHS Technology, has been speaking to Eurogamer and said “The impact of Brexit on pricing depends on whether the exchange rate impact is sustained for a long period of time and whether it moderates after this initial shock.”

“There has been at least one example in the past where UK pricing has been increased, specifically for console hardware, in response to a weak pound. Any currency exchange rate swing is more likely to impact console hardware pricing over software, as margins on hardware are generally tighter than on software.”

It’s pretty easy to understand if we look at the price of an Xbox One S which will set you back £249. If we remove the 20% VAT that takes the price down to a smidgen under £209, and last Thursday the exchange rate was about $1.45 for every pound, so in dollars that is $302, close to the sales price (without tax) in America of $299.

Today, £209 will only get you $272, which means Microsoft are losing $29 on each console compared to last week. That’s a huge cost, just by selling 34 consoles at today’s rate they are losing $1000, and with the price cuts the Xbox One will be flying out the door and Microsoft’s profits along with them.

The question is, will the markets and currencies recover? Well at the moment there’s not much movement, there’s a big meeting of EU leaders tomorrow which may give the markets some better news, but at present things are looking rather grim.

Oh, and as mentioned, Greggs share price is also tumbling, so it is conceivable they could want to boost their profits (and thereby, share price) by increasing the price of a steak bake.

Source: Eurogamer

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News Editor, very inappropriate, probs fancies your dad.

29 Comments

  1. Not being funny but how often do you see this:

    Console selling for $399 in US and £399 in UK €399 In the EU. These companies can go do one.

    • *sigh* for the millionth time, UK prices include VAT, america prices don’t. So £399 vs $399 isn’t a fair comparison, £333 is the tax free price of £399. As you can see from the example give, £249 was only $3 more than the yanks were going to pay when you remove the tax.

      • Will psvr stay at the current pre-order price or can we expect that to change.

      • I think a lot will depend on what happens between now and October, further drops to the pound will almost certainly require Sony to seriously consider it.

      • Those $3’s add up cub. #NoParity. :D.

  2. I can’t see it making much of a difference in the long run.

    • That entirely depends on how low the pound goes compared to the Dollar and the Yen, and whether or not it can return to where it was before. If it stays at $1.30:£1, then there is no way that these companies won’t look to adjust their prices and look after their margins.

      • Yeah if the pound stays low, at the moment it seems the financial markets are afraid of the unknown. Who knows where we’ll be in six months or a year or twos time.

  3. There’s quite a few mistakes in this article, for starters the xboxone s isn’t even out yet.

    • Sure, but we know what the price is. The price is the important bit.

    • It was an example price, could have used anything

  4. That also means price increase for games too, this will only mean that the second hand game economy will boom

  5. The one place I thought I was safe to avoid all the EU Brexit talk :(

  6. And game development in the UK becomes cheaper in some ways. Swings and roundabouts.

    The sooner a new PM is appointed, the better. My personal preference is Theresa May. The (temporary imo) currency rates and ftse drops are uncertainty-driven more than anything.

  7. I’d rather have more expensive consoles (temporarily) than be a slave member of the fourth reich.

    Not sure who I want to succeed David Cameron as PM but it sure as hell isn’t Theresa or Boris. Although I’d rather have Boris of the two. A Boris and Trump team-up could be somewhat entertaining.

    • Well, they both have yellow hair and piss off all the right people. A lot of people are championing David Davis, which might be a bit of a pipe dream. BoJo is IMHO the least bad plausible candidate, and has the extra negotiating advantage of nobody knowing what’s going on in his head at any time.

      • A Boris & Donald partnership … Doris!

      • The code name of your assignment will be Boris. And your code name will be…

        Natasha?

        No… Doris.

        :)

  8. I know this is a gaming site, and that’s why I come here. But I very much doubt price rises of consoles and games, which I equally expect in the UK, will be among the more relevant outcomes of Brexit, not even for the hardcore gamers among us.

    If the Scots leave the UK, Cameron will definitely have ‘earned’ his firm place in UK history.

  9. What’s happened is essentially investors are playing chicken with each other based on Game Theory. Rather than a crash caused by the overvaluing of a speculation bubble, this is a series of drops and climbs caused by stock-holders trying to second guess each other.

    We should expect to see the jumps quieten down with each iteration and to see a gradual climb back to something resembling normalcy – depending of course on when the media plans to stop shouting about the economy collapsing. TSA.

  10. Christ guys… the pound will naturally drop due to the fact no one knows what new trade deals will be made… it’s called caution. Once we have officially left the EU & trade negotiations are made, the pound will rise. It may possibly become stronger than ever, due to the fact we could get better trade deals from the EU in order for it to survive, plus an absence of trading caps from outside the EU. It could go either way.

    • We’re not going to start negotiating til well in to next year.

      • Or the year after? McSturgeonface has a lot of the power right now.

      • Could well be right, the optimal strategy is likely to involve negotiating deals with other countries like India and Canada and Australia and the USA first, and then go into negotiation with the EU once we (or the gov’t) have a better idea of our own footing. Brussels is shouting at us to get a move on and hit the button, which suggests in the usual unsubtle Junckers fashion that their bargaining position depends upon it.

        Until the Tory party conference in October, we can’t expect much communication – but we should remember that they’ve got three years to wrap things up that impresses the general public enough to be re-elected, we’ve already had some very friendly noises from the biggest Anglophonic nations, Merkel can’t afford to be vindictive (so far), and that a bit of market fluctuation isn’t the end of the world. I’ll be keeping calm and carrying on, and there’s not much else possible to do anyway.

      • @Ron Guessing that McSturgeonfacemuttondressedaslambgobshite gives you the jitters then? :P

      • You mean Jimmy Krankie ;)

      • Indeed Dave, the resemblance is uncanny now that you mention it! :P

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