PS3 Price Drop? Not Really….
Yes, I’ve seen the news about the PS3 “price drop.” We’ve all known it’s been coming for quite a while – heck, I even put a stake in the ground way back at the beginning of the year. To quote:
The Playstation 3 will have an effective price drop of at least $100 by Thanksgiving 2007. By effective, I mean that it’s also possible that the price will remain the same, but at least $100 of value will be added to the bundle.
And guess what? It’s the latter that happened; the PS3 has remained the same price, but with additional value bundled in. Remember, six months ago the PS3 launched at two price points: $499 (20 GB SKU) and $599 (60 GB SKU). The 20 GB SKU faded away, leaving just a single 60 GB SKU. Today all that’s happened is that the existing 60 GB SKU is now $499 and the new 80 GB SKU is $599 (with bundled Motorstorm).
Simply put, a few months ago there were two versions costing $500 and $600. Today there are two versions, costing $500 and $600. You get a bit more bang for your buck, but this isn’t going to move the needle significantly on console hardware sales. At the end of the day, the price of entry to play a PS3 game is still $500, just as it was when the console first launched.
Couple of other thoughts to consider. The new 80 GB SKU at $599 doesn’t have the backward compatibility hardware in it, so it’s not even as full-featured as the launch consoles. And the 80 GB hard drive isn’t that big a surprise. Drive prices drop and suppliers find it expensive to keep manufacturing older drives when they can migrate their production to higher-capacity drives at the same price. Sony very likely can’t even get 60 GB drives in volume anymore; expect to see the 80 GB drive to become standard in the lower-end SKU when the next, hopefully real, price drop comes.
All-in-all, not much to see here. Sony is still in a tough spot. On the one hand, they desperately need to keep the price high to try and recoup some of their costs. On the other, they need to drop price to sell more units. My guess is we may see a second, “real” price drop as soon as this holiday if the needle doesn’t shift much after a few months.
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Seems like Konami isn’t impressed either:
http://today.reuters.com/news/articlenews.aspx?type=technologyNews&storyid=2007-07-10T071757Z_01_N09243556_RTRUKOC_0_US-GAMESEXPO-KONAMI.xml
http://www.gamespot.com/news/6173911.html?om_act=convert&om_clk=newstop&tag=newstop;title;2
"Mulling" multiplatform MGS4? Ay ay ay Sony.
Consumers see price drops as a sign of weakness. I worked in retail and received many comments when price drops happened. “Because Nintendo/Sony/Microsoft x console dropped in price, it must be doing bad. I won’t be buying one now.” An odd mentality, but it’s out there among many consumers. If the 360 doesn’t drop in price following the PS3’s, it’s a statement that the 360 is going strong and doesn’t need it.
You would have to think that if all consoles had a price break it would help Nintendo the most. I can see Nintendo selling the Wii minus Wii Sports for $200 or even $175 and really cleaning house while MS & Sony are still selling systems at $300+ even after a price break.
I see your point, Ozy, and I completely agree. I think what MS doesn’t “get” however is the fact that fans DO see this as a price drop – especially if they’ve been holding out for the 60gb model. And since the 20gb was dropped, there were no $500 options for a few months.
MS doesn’t understand what a 100 million userbase gives you for leverage in this war. People are now seeing an almost 2-year-old xbox that’s the same price, and sometimes more expensive, as it was when it was first introduced. They also see Sony with a less than year old console already dropping the price.
On top of that, the xbox is seen as broken. Who would you want to buy from? Which company, at this time, looks as if it’s “reaching out to its customers” with outstreched arms and which looks like the stingy little rich boy clutching a hundred dollar bill?
I’m all for MS and the 360, but I don’t agree with not dropping the price. Now is the time, MS and you’re floundering. I keep saying this… not that I expect it to make a difference, but I think it will become more obvious in the months to come that Sony WILL make up ground with this supposed price drop.
Instead of playing the “react” game, be “proactive” MS and you will win this war easily. A $400 xbox isn’t seen as the value it once was and your sales are going to suffer while the sales of your competitors will rise.
I have to agree with Maynard about the benefits of a “proactive” MS.
I remember the “react” to the PS2 price drop on Xbox1 – free games and controllers for early adopters (I had a friend who had bought one at launch) – surely a financial sting – but one that convinced me to rush out and buy one as it clearly showed MS were serious (and the Halo/dvdremote/bundle was such a great deal) – and since I’d been sitting on the fence for a few months – sold me.
Now scenarios will differ for different people (as in my case above – I din’t see a “react” as a weak sign at all – rather that they were aware at the market forces at play), but I don’t think Sony’s price “drop” will hinder an upswing of sales because some consumers think it must be “doing badly” because the price has dropped.
Most people just walk into a store – see what bundle of goodies they can walk off with (and also what games are still there or on the way that they want) for how much money and make their decision based on that. Unfortunately though – and sales of some more obscure “hardcore” titles prove that people are often looking at more than just the games.
There is one other important factor to consider. Video Games are a luxury purchase – hardly essential. While people will buy nearly anything < $200 (hence why handhelds, late lifecycle consoles always sell more - they qualify more as impulse buys) - most people like to feel smart in their purchases, and think they're getting a "deal". The people who've been putting off a 360 purchase - be it for a price drop, lower voltage chips, Halo3 - whatever - have no added incentive to "jump in" at this stage - or even rationalise to themselves that "now is the time to buy". Sure they see a wealth of games (and I personally am in demo/preorder/release nirvana at the moment) - but the system is still the same price as it was when their friend had one over a year ago.
I know people (in RL – 3 of them actually) who’ve been buying games – yet to purchase a system – just waiting for a price drop. There’s no rush for them. For the next couple of months it seems they’ll be waiting for some rationalisation to indulge in their luxury “hobby”.
Anyway – keep up the good, honest work Ozy. I appreciate the open discussion and critique you provide (and in some cases encourage) in this blog.
Wireless isn’t an issue. The majority of gamers use wired. Wired is a waste to include. I don’t want to pay for something I wouldn’t use…nor do most people. People use wired because it’s more stable, and offers a faster transfer rate and internet connection.
Wow, this is really funny. So the "price drop" was only there to clear out the stock of 60 GB SKUs. As soon as those are sold we’ll be back at 599$.
What i’m *desperately* hoping for is that Microsft do a round of price cuts, trimming a little bit off the premium and the elite, but cutting a whole chunk off the core, getting it down to a level where people start to think of it as a no brainer. This would create a huge surge of 360 sales, resulting ultimately in more and better 360 games and more exclusives (and the demise of the PS3 – Yay :p ). The money they’d lose on subsidising the cheap cores would be made up in games royalties.
Having said that, the comment about Sony finding it difficult to get 60GB drives in volume any more (and using that as a negative) is a bit weird considering that the 360 premium still ships with a 20GB. By the same argument shouldn’t these be even harder to get in volume?
Great call Ozy. http://www.joystiq.com/2007/07/13/sony-switcheroo-no-more-60gb-playstation-3-in-us-after-july/
@ Valagas : You beat me to it…
This move does seem to me to be something of a potential PR nightmare for them again. Sony isn’t really changing their pricing as Ozy pointed out, only trying to add value for the dollars spent – So maybe this won’t turn out bad (or more accurately – any worse) than their previous efforts.
Good call, Ozy.
Just keep an eye out for the real price cut just before Thanksgiving. $100 off.
RE: PS3 Price Drop? Not Really….
Sony announced a PS3 "value pack" (no sarcasm intended) for Europe at E3 this year. I’ve seen a bit of