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Does the PS3 need a price cut? |

To clarify the question: Do you think the PS3 needs a price cut to stay competitive and sell well relative to other consoles this holiday season?

Personally, I have no idea. There is an elaborate art behind consumer electronics pricing issues such as this, and I lack the market research, pricing theory, and the business experience to give a definitive answer. However, I can provide the basic ups and downs of each side:

Arguments For: The PS3 DOES need to cut price to stay competitive this holiday

  1. Many buyers, particularly gift shoppers buying for a family member, just care about the upfront purchase price and don’t think about other costs until later such as hard drives and WiFi adapters and online acess charges. They need a low price to get them in the door.
  2. Look at the success of the Wii at $250, and the continued success of the aging PS2 at $129, and of course the success of the Nintendo DS, and the PSP. Clearly, budget pricing is where the volume sales are happening.
  3. The bulk of gamers aren’t enthusiast adults with large disposable incomes, but a younger audience in the 5-20 age range which are far more price limited. Often, the actual buyers are parents and grandparents who are heavily influenced by price point and marketing.
  4. There is a large difference in the entry prices of these systems. The base PS3 model will now be completely double the base 360 price and is still slighlty less than double the Wii price.

Arguments Against: The PS3 does NOT need to cut price, and will remain competitive with their current pricing structure.

  1. In general, gamers are notoriously opinionated about their console preferences. Lots of people have their mind set on a particular console brand, and a mere price cut certainly isn’t going to change their mind. Of course, many gamers buy all the consoles, and many gamers really are “swing-buyers” that chose consoles based on cost, but they are the minority.
  2. The success of the Wii has more to do with Nintendo’s success at connecting with a certain type of consumer rather than its price. Many Wii consumers didn’t want a cheaper PS3 or 360, they wanted a completely different product with a completely different brand identity.
  3. Quality is more important than price. And the PS3 arguably has a much better software lineup this year than the competition and has made more progress in terms of base system functionality as well.
  4. The PS3 is still very competitive in the short term. A 360, with fairly basic add-ons (hard drive, WiFi, and first year of online service) still costs as much as a base PS3, and the PS3 still has blu-ray, a larger hard drive, better upgrade options, and permanently free online access.
  5. Obviously, they will drop price, the question is when. Beyond price, another barrier to more mainstream adoption is the physical size and weight of the PS3. Maybe it would be better to time a price cut alongside a slimline PS3? Or maybe after they switch to cheaper production techniques? Or after they roll in some new mainstream feature, that is not game related?
  • Price isn’t everything, believe me…

    The all singing all dancing 199€ price barrier isn’t as magical as you might expect. I mean, look at the Dreamcast, the Saturn… this list is LONG. All had prices below 200€, yet they still died all an untimely death, despite having really good games.

    If you compare the PS3 and 360 on a price and performance level, you see that both console (without online costs for the 360) cost the same, yet the 360 still offers less (Blu Ray, Linux, PS1…). I don’t want to start an argument here, let me finish first. The Arcade package of MSs offering is a sore joke in my opinion. For casual gamers it might be enough, but those people now buy Wiis, the 50€ price difference is offset but the inclusion of Wifi and a game.

    There’s tooo much to say about this, but in the end, the PS3 doesn’t need a price cut, as it is VERY good value for 400€, but it might need one, because the other consoles are cheaper and might seem better value.

  • A low price can’t make a console a success, but a high price can certainly prevent success.

  • It’s a double edged sword, I guess.

    Because with a high price Sony might not sell as many PS3’s as it could be selling and thus Sony might lose the console”battle” in the long run.

    But, if the price were to be reduced, then Sony would, as it stands now, lose money on each console sold. And might then lose the console”battle” because of an unprofitable console.

    So at the moment Sony is walking a kind of tightrope-walk. On one hand they’d like the PS3 to have as a competitive a price as possible. On the other hand they’d also like the PS3 to be profitable. So much so that they even make money on it.

    So my guess is, that Sony is waiting for the profit margen to be even more in their favour before a price cut.

    But I am sure Sony knows what they are doing.

  • Jerry

    The Price will not make a big difference in how well the system will sell this Holiday season. This console war is mainly an Arms race between 360 and PS3. By arms I mean who can come out with the Best Games the Fastest. History has shown that if there is a game that people really really want to play systems will be bought in oder to play those games. MGS4 for example sold Millions of PS3s in just a week. If Sony is thinking on their feet they should expect a ton of Sales for both the system and Software, due to the blockbuster releases of Little Big Planet, Resistance 2, and KillZone 2. Those titles alone could bring the system to new hights and level out the proverbial battle field.

  • They should have released killzone 2 instead of resistance 2 for the holiday season.. To make me happy, of course.

    Cheapest ps3 will be double the price of cheapes 360, and I am guessing this may create close to 1:3 ratio of ps3 per 360 sold for the holidays.

  • mcloki

    Sony does not have to have a price cut but they can offer incentives (bundles) to move the system.
    Offer 5 Bluray titles with the purchase of a PS3. They are doing a bit of that now and this value proposition needs to be advertised.
    A price cut wouldn’t hurt but right now Sony has a great value proposition. 399 Ps3 vs 199 360 + stand alone bluray player. On cost alone the 360 route is more expensive. They need to tell people who want to get the most out of their New HDTV that fact.

    Offering free PSN games. qore subscriptions, games. bundling in LBP (Brilliant)
    With LBP they need to be on every Soccer Mom show explaining how video games )LBP) are family friendly. Sackboys are too cute. And the level design is just too addicting. Give them away on Oprah. Every morning show. Levels designed by celebrities and their kids. MArket the hell out of it.
    The new xbox price is meant for people that unfortunately are penny wise but pound foolish.
    The arcade unit is woefully underpowered and most people will opt for the next version up. And unfortunately for them they will get sucked in.

  • matt

    They really need to push the Blu-Ray angle. Get people thinking that DVD is dead and Blu is the future. This will make it a purchase for the Parents and the children. Right now the parents don’t have any incentive to have a choice in the matter. Point out HD movies and you may get people to bite at the $100 more price difference between the 60gb 360.

    Price is what holds back the vast majority of console buyers. The PS2 sold the majority of its units when it hit $199 and even more at $149.

    Really Sony only has to be close this holiday. They need to stop bleeding money and trying to make a profit. The HD movie war win has made it worth it for them to lose billions so far. They can’t use that any more with the stock holders.