Next-Gen Pricing Still A Hot Issue

GamesIndustry.biz has two articles taking a look at next-gen pricing, both from Microsoft's point of view. Xbox VP Peter Moore says that next-generation pricing is actually going to be an excellent value for the money. From the article: "...he predicted that many games may be offered in limited edition bundles, similar to the already announced Perfect Dark Zero bundle, which costs an additional $10 but adds a significant amount of bonus content to the title, and that premium downloads costing 'maybe another $5' will also be a key strategy for publishers." Additionally, the Xbox marketing folks are already planning price reductions for the 360. From that article: "'We will wind up cost-reducing the product every year,' Todd Holmdahl, corporate vice president of the Xbox product group, told Reuters. It's estimated that the 360 costs approximately $100 less per unit to manufacture than Sony's PS3, giving Microsoft more scope for price cuts."

Choose your poison...

[nmaster64]

My Speculation...

Xbox 360
Perfect Dark Zero
Wireless Controller
Headset, Media Remote, + 20GB HD
Partial Online Access (Live Silver)
Total: $450

PS3
Metal Gear Solid 4
Wireless Controller
Media Remote
Online Access?
Total: $450

Nintendo Revolution
Super Smash Bros. Revolution
Wireless (Revolutionary!) Controller
Analog Stick Attachment
Full Online Access
Total: $300

Depending on how the Rev controller thing turns out with Smash Bros., I personally have to go with the Revolution. If, for no other reason, because that's all my wallet can handle, and it might not be able to handle that!

Price cuts are a bad thing (tm)

[rAiNsT0rm]

Price cuts are a tool companies use to bolster slow or lagging sales. They hurt the bottom line and they are not something companies wear as a badge of honor. This is probably the single most important sign of wavering confidence in this console war - yet the media is generally giving it a free pass.

Microsoft is backpedaling and stuttering like a scared little boy. On one hand they just the same day claimed how their console costs less to produce! Then they say they will be making yearly major price cuts. These two things do not jive in marketing. If you have a superior product that costs less to manufacture than your direct competitor you have the upper hand without price cut tactics. So something is massively wrong here. This should be raising red flags in every single persons mind, and shows some serious weakness in some aspect of their product to resort to price cutting and pulicising price cuts.

Honestly Microsoft just put a nail in their own coffin on this misstep. Consumers who are on the fence will now pass on the initial release to wait for Sony to release and compare the products, especially since they know now by waiting a year they will be saving money *and* have the chance to weigh their options. Many seasoned gamers will also play the wait game as they know that not much happens in the first year beyond one or two solid launch titles.

Bad move.

Three pricing strategies

[UES]

It looks like there will be three discrete strategies to grab differing types of consumers.

1) Sony

-Very high price point.
-Going after large installed user base as well as hardcore gamers.

Negatives:

-High manufacture cost means less opportunity for dicounting.
-Casual gamers and Parents (who buy gifts for minors) will likely balk at ultrahigh prices.

2) Microsoft
-Very high price point.
-Going after installed user base as well as hardcore gamers.

Negatives:

-High manufacture cost means less opportunity for dicounting.
-Likely consumer confustion over various hard drive options*
-Casual gamers and Parents (who buy gifts for minors) will likely balk at ultrahigh prices.

* Spare me your lectures. If you have ever worked retail, you know customers are dumb about stuff like this.

3) Nintendo

-Lower price point than Sony or Microsoft.
-Going after casual gamers, Women, and nostalgic gamers, as well as Nintendo Fanboy base.

Negatives:

-Unusual controllers may have tech glitches, forcing costly recall.
-Hardcore gamers think Nintendo is 'kiddy' and will probably avoid.
-Going after people who usually don't buy games is risky. They may still not care about games.

Just from this sketch, the best case scenario for each company is:

SONY
-Devotion to the Sony brand and superior graphics carries PS3 to victory.

MICROSOFT
-Marketing 'cool factor' and online elements, including exclusive licensing deals, carry XBox 360 to victory.

NINTENDO
-Expansion of the market due to lower priced option and attempt to keep games simple and innovative carry the Revolution to victory.

Note: 'Victory' means THE MOST PROFIT, not THE MOST UNITS SOLD. If you are a shareholder, you care about PROFIT.

I'd put my money on Nintendo. Sony and Microsoft and going to beat each other to death with their unlimited marketing checkbooks while Nintendo creates new customers.

Sony has the most to lose. Why should consumers pay hundreds of dollars for graphics that are somewhat better than what they have now?

I don't see where Microsoft goes. THey aren't innovative like Nintendo. They don't have the huge installed fanbase that Sony does.

Nintendo is taking a very high risk strategy, but the payoff could be immense.