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Evidence for Console Price Cuts 150

Posted by Zonk
from the encheapening-of-consumer-goods dept.
Next Generation offers up an exhaustive analysis of previous console generation price cuts, and concludes that we are definitely due for some cheaper next-gen action sometime in the near future. The piece includes charts of lowering system prices, as well as a breakdown of how many consoles sold at various price tiers. "Certainly we can use history as a guide, but there are limits to its use for prognostication. The price drops this generation may happen in ways entirely different from what has been suggested above. Maybe the $300 console this generation will be what the $200 console was last generation. Maybe Microsoft will forge ahead with its current price structure until after Halo 3 has come and gone. Maybe Sony will bless the PlayStation 3 with a 33% price drop sometime this year. And maybe Nintendo will give the Wii a small price drop by removing Wii Sports from the package. Those could happen, but don't bet on it."
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Evidence for Console Price Cuts

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  • Evidence?! (Score:5, Insightful)

    by RyanFenton (230700) on Thursday June 07, 2007 @12:18PM (#19424927)
    They're going through historic trends, and guessing what the current outcome is going to be. That is NOT evidence - that is conjecture.

    Ryan Fenton
  • by PhoenixOne (674466) on Thursday June 07, 2007 @12:20PM (#19424973)

    Past performance does not necessarily predict future results.

  • by CastrTroy (595695) on Thursday June 07, 2007 @12:21PM (#19424983) Homepage
    What's the news here? It's not saying that there is any indication that there will be any price cuts other than, "there was price cuts with the last generation, so there will be with this one". Personally, I think the PS3 has the most to lose. It's not selling well, and it's already being sold less than cost, so I don't think a price cut would Sony that much. However, if the XBox 360 and the Wii take a price cut, then the PS3 will be left as the really expensive one that nobody wants to buy.
  • Too many maybe's (Score:5, Insightful)

    by L. VeGas (580015) on Thursday June 07, 2007 @12:25PM (#19425063) Homepage Journal
    This is ridiculous.

    Maybe something will happen. Maybe it won't. I can make random conjectures too.
  • Re:Wii Sports (Score:3, Insightful)

    by CastrTroy (595695) on Thursday June 07, 2007 @12:26PM (#19425075) Homepage
    Also, it's not really that good, I mean, not something I'd pay $60 for separately from the system. If they debundled it, it would probably be best to sell it at $20-$30. It's a fun game, but you can tell it's just a tech-demo and that they didn't put a ton of work into it. With baseball, you don't even get to control the fielders or running the bases, and with golf, you only have 4 clubs, and 9 holes to play.
  • by Johnny_Law (701208) on Thursday June 07, 2007 @12:28PM (#19425107)

    And maybe Nintendo will give the Wii a small price drop by removing Wii Sports from the package. Those could happen, but don't bet on it."


    There isn't a good reason for Nintendo to drop Wii Sports from the North American Wii package. Wii Sports is a great hook for selling the system.

    At this point, the cost of removing Wii Sports would probably only save a a few dollars or so at most (Disc pressing, manual, and packing). Cutting the system price by $50 wouldn't require pulling Wii Sports to make it feasible. I suppose you could argue that Nintendo could make part of that $50 back by selling Wii Sports as a stand alone game. However, Nintendo would then risk not having a great ratio to new Wii sales and losing the part of the Wii system that makes the whole bundle so easy to pickup with family and friends who have never touched a game system.

    Simply put, cutting Wii Sports does not fit with the "Blue Ocean" strategy.
  • by Chris Burke (6130) on Thursday June 07, 2007 @12:28PM (#19425109) Homepage
    I simply cannot justify, however, spending 600 on a PS3. I don't care if it is a Blu-Ray player, I still cannot justify it.

    The valid point of view contrary to this is that if you have an HD setup, and are therefore probably considering getting some kind of next-gen player at some point, then the PS3 which is affordable as next-gen players go and is a game console actually looks like a decent deal. This is the standard argument against the PS3 being overpriced (the "you get a lot for the money" argument), and it is a valid viewpoint if it applies to you, but it misses the bigger point:

    Basically nobody who is balking at the price of the PS3 gives a shit about the "you get a lot for the money" argument. If you have enough to blow on an HD home theatre then you can easily afford the PS3 and sure maybe it's a good deal. "Good deal" and "affordable" aren't the same, and the fact is the PS3 is not affordable to many people. Just like a 70ft yacht for $100k might be a great deal, you will still find sales of such a yacht limited to the wealthy. Duh. So why people think "you get a free bluray player!" will make people leary of spending $600 on an entertainment device more likely to buy a PS3, I don't know.

  • by Tom (822) on Thursday June 07, 2007 @12:30PM (#19425131) Homepage Journal
    Why should Nintendo drop Wii Sports from the package? It's the biggest, best piece of advertisement they have. It's Wii Tennis, or Wii Bowling, that sells grandmothers and fathers on buying their own Wii after having played a round or two at their kids place.
  • Non-sensical (Score:1, Insightful)

    by Anonymous Coward on Thursday June 07, 2007 @12:33PM (#19425171)
    Why would they de-bundle a piece of software that costs them nothing to re-produce (bundle) in the first place? Customers are eating it up at the current price point as is.
  • Re:in all honesty (Score:3, Insightful)

    by Chris Burke (6130) on Thursday June 07, 2007 @12:47PM (#19425403) Homepage
    It has a Blu-Ray player that you can't find on other systems... and those do sell for at least $500 all on their own,

    Nobody who thinks $500 is a lot for a console cares.
  • Nintendo (Score:5, Insightful)

    by rlp (11898) on Thursday June 07, 2007 @01:40PM (#19426131)
    I cannot imagine Nintendo dropping the price on the Wii while supply / demand are so out of balance. If you're a manufacturer, and you can sell every single unit of a product you make, and you still have an order backlog, that's not a lot of motivation to drop price. On the other hand, if your product is sitting on the shelf and being outsold five to one by the competition in your home market *cough* Sony *cough*, you might consider dropping your price.
  • by ConfusedSelfHating (1000521) on Thursday June 07, 2007 @02:02PM (#19426479)

    The Wii is sold out pretty much as soon as it enters stores. A price INCREASE might may sense, but a price decrease doesn't make sense until you start having demand problems. I don't think they'll increase the price due to public outrage, but the demand is there.

    A price cut on the PS3 would bring an immediate price cut on the 360. Comparing a $500 PS3 to a $300 360, the $300 console is going to sell much better. Especially with a better game library right now. Sony should hope and pray that price cuts don't happen for any console until Sony has significantly reduced the manufacturing price.

    Microsoft should have cut the price of the 360 in May. The Wii is very quickly gaining ground on the 360 and will catch up soon. The lead over the PS3 may disappear when Final Fantasy XIII and Metal Gear Solid 4 come out. Microsoft should drop the 360 core (sell them with a hard drive for $249 until there are no more) and focus on a $299 360 premium. Anyone who wants to pay more can buy a $399 Elite. 360 sales are not very good and there is a lot of stock at stores. Pretty much everyone who wanted to buy one at $399 already has one.

    Microsoft has non-traditional sources of income for the 360. Live brings in $50 a year per subscriber. Profit from Live is probably at least 30%. Microsoft makes a 30% profit from downloads. If someone is a Live subscriber and buys $50 worth of downloads a year (movies, television shows, Arcade, expansions, downloadable content), that would be $30 a year. Over 4 years, that's $120 profit. With publishers paying Microsoft $8 for every game sold, 20 games over 4 years adds up to $160. Both of those together would be about $280. If Microsoft's cost of manufacturing a 360 is about $300 http://www.xbitlabs.com/news/multimedia/display/20 061120132150.html/ [xbitlabs.com] (the article is dated November 20, 2006 and I'm assuming that it's lower now) and their cost of shipping, assembling and store profit is about $100, their total cost per console would be $400. Once the 65nm chips are out, it will only cut the cost further. You could make an argument for any price between $199 and $299. A $299 price would get them many more sales and would still be a profitable position in the long run. I don't think a price less than $299 is in the planning, but I think it could be justified.

    If Microsoft wanted to screw over Sony, they would buy Rockstar and Square Enix. Buying Square Enix is probably the only way they could break into Japan. Make Grand Theft Auto and Final Fantasy exclusive to the 360. Release it for Windows Vista 6 months later. It would piss the Japanese off, but they would grit their teeth while buying a 360 to get some FF action. Losing Grand Theft Auto would kill the PS3 in North America and Europe, it would probably be enough to take it down worldwide. The Wii will continue to be profitable for Nintendo.

  • by SuperKendall (25149) on Thursday June 07, 2007 @02:26PM (#19426933)
    First of all, have you considered that every game today is on a Blu-Ray disc, and without a Blu-Ray drive you'd have zero games to play? That doesn't seem very smart.

    But to get back to the PS3 minus Blu-Ray - Sony is in this to win it all. Yes it has dampened PS3 sales, but only after a large surge of buying that has established the player in millions of homes. Is it winning against the 360? Not at all right now. But it may pick up a lot of steam later in the console cycle when the larger disc storage starts to show the difference.

    But the PS3 has made the difference in the HD media war, where Blu-Ray is winning big time - sales at over two to one over HD-DVD since January, and with a growing lead. A victory there is huge, and sets of Sony for a lot of good things later on. They could not ignore a need to win there, nor could they ignore that with Microsoft's unwillingness to really back HD-DVD by including it in the console, Sony's doing so insured essentially an automatic victory of the format.

    So short term losses for the gaming system for a much bigger win later on - in both gaming and media.
  • by Jthon (595383) on Thursday June 07, 2007 @04:33PM (#19429083)
    You don't have a nice HD setup if you think an up converted DVD looks as nice as anything on Blu-ray and HD-DVD. The OTA 1080i/720p signals from any of your local TV stations look light years better, then even a nicely up converted DVD. That is assuming you've actually seen real HD content.

    Several of the big broadcast networks only have a couple shows actually filmed and broadcast in HD, a lot of their content appears to be standard def stuff scaled just like your DVDs. Oddly enough where I live the PBS affiliate has the best HD programming OTA.

    If you truly want to enjoy your HD setup you really should reevaluate your decision to avoid the new formats. I'd at least pick one once the war has settled down because you're missing a lot by sticking with DVDs. It's not like you need to replace all your movies with HD stuff right away, just pick up new stuff that you like in the better format. Then again once you have several of these you might realize how terrible DVDs actually look.
  • Re:in all honesty (Score:2, Insightful)

    by jamie(really) (678877) on Thursday June 07, 2007 @08:06PM (#19431677)

    I have a $2700 1080p HDTV. But it only does HDMI at 1080i. If I want 1080p I have to use VGA. So since the PS3 only supports Blu-Ray 1080p over HDMI, its just not an option. Many, many people have HDTVs with no HDMI at all, just DVI or VGA. In contrast, the HD-DVD drive for the XBox will happily output 1080p VGA.

    Ironically, in trying to prevent me from copying my Blu-Ray discs, they've forced me to the only solution for viewing, which would, if I wanted, allow me to copy them, namely a PC with decryption software. Were it not for the PS3's HDMI DRM tosh I would be watching HD movies directly from my consoles with no need, or knowledge that such decryption software existed. Of course, now that I have both a Blu-Ray drive and an HD-DVD drive on my PC I am very happy with the situation.

    And now that I've spent the bucks on the PC/HD-DVD solution, spending a few extra hundred bucks for a blu-ray drive (I got my sony for $300) was a lot nicer on my wallet too.

  • Re:in all honesty (Score:3, Insightful)

    by Doctor_Jest (688315) * on Friday June 08, 2007 @12:29AM (#19433691)
    And Sega said "It's thinking..." ;) Sometimes marketing hype is clever... sometimes it just annoys. :) I don't think it has adversely affected performance, because the console was (dunno if it still is) selling at a faster clip in a shorter window than the PS2 did in the same months of its launch cycle (and we all know how many of those systems made it into homes...) The year head start by MS has proven two things... it doesn't matter when you start if your AAA titles aren't there yet (Halo 3), and going too fast can adversely affect console reliability (the 360 is far more prone to breakage this gen than I've seen in a while... even the weak plastic laser track right next to the power supply on the original Playstation) MS hasn't benefited all that greatly from the head start... and it appears to be leveling off... with stacks of both PS3s and 360s in most stores, judging sales by the # of consoles left on the shelf isn't a good barometer... (as I've seen some people mention, w/r/t PS3 sales). Having two winners this generation is a good thing... or 3 if you count the Wii... It means not much in the way of asinine exclusives... and it means competition... something missing last gen....

    If you consider the actual costs of owning a 360 is $400+, and $480 if you want HDMI... (and $500/$600 for the PS3) the persistent issue that we're seeing is consoles outprice themselves... not just Sony... for the average gamer. The Wii is an aberration that works for some, but not others... and is the darling of the marketing press right now... so until it falters (production delays that still persist might be the Achilles heel of the Wii) it'll be immune from the criticism the other two companies are getting w/r/t price.

    But I remember relative cost (in the 70's) that the Atari 2600 was not a "drop in the bucket" price-wise... Consoles followed a much slower price leveling than other gadget-type products (digital watches, calculators, VCRs, etc...) but we got spoiled in the last couple of generations by the same pricepoints for separate "generations" (I'll leave that to others to argue how that was delimited) and even in those there was one console maker willing to go below the "sacred" price to obtain new customers.

    Now we see both Sony and MS up their prices from the previous generation (Sony more than MS, but MS has saddled themselves with an HDD free console that developers are afraid not to support, and that has created issues, as we've read re: GTA IV) and I don't think we're going to see a launch console for less than $500 next generation... as a matter of fact, I think the console that will be the most value will not be the "core" systems from MS (or Sony if they decide to go that route this next time around...) but that will seek to further move the general console population to a less-than-mainstream appeal. Who knows? When Blu-ray or HD-DVD wins the format war, the next HD disc equipped console might be $300 again... but I doubt it. I'm just speculating... :)

    But in reference to "niche"... We're both still in a "niche" gaming market... (unless you have a Wii... then marketers and corporations refer to you as a "mainstream" gamer.) heh. I don't think gaming is as "mainstream" as the hype portrays it. Simply owning a PS3 or a 360 (goodness knows both puts you in an even smaller demographic) realistically moves your market potential out of the "mainstream".... Why? I have no idea... but I imagine it's the cost of both (as I said earlier).... It's a "mature" market that keeps outpacing itself to provide one-upsmanship for bragging rights, at the expense of market share.... something we don't traditionally see in a market that has moved mainstream...

    I suppose $300 was the sweet spot (remember the Saturn was $399)... and anything more than that will get a backlash from mainstream (whatever they're calling it now...) customers.

    I balked at the price of the PS3 early on... mainly as a preprogrammed response to the "it's more exp

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