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E3 Analysis: PS3 Price

Reach into your wallets. A little more. Deaper, deaper. Yup. Now grab the cash. All of it. Yup, take it all. Now go borrow some from your Mom. Next, beg some from Dad. Now sell your dog. Now go to Walmart and spend it all on a brand-spanking new PS3.

Sony has announced that their high-end PS3 will cost $599US when it debuts in November. $599 is the launch price, and we don’t know when Sony will reduce it. So for now, it’s the price. I’ve read around the web and I see that most people don’t like it. After all, who likes spending a lot of money? Would you rather spend $399 or $599 on a new console? That’s a no-brainer. $399 of course, like the 360! And the PS2 came out at $299 after all, so why should we have to spend double that for the decent PS3? (I’m ignoring the low-end PS3 and low-end 360. Because really, who wants those?)

Well, the first thing I could ask is this: is the PS2 a PS3? Are they the same device? No. Is the PS3 an Xbox 360? Are they the same device? No. Then you can’t really complain the PS3 has a different price, can you?

But but but but! Of course you can. You do, after all. I’ve seen many of you complain. The PS3 is so expensive! It’s $600 for heaven’s sake. That’s, like, 10 to 12 games right there!

PS3Okay sure. It’s a lot of money. But the important question to ask is this: what is the PS3 worth to you? What is the PS3’s value proposition? What value will the PS3 give me at $599? Let’s take a look. The obvious thing now really would be to look at what the competition has to offer. What’s the competition’s value proposition versus the PS3? The competition is of course the Xbox 360, priced at $399. The price difference then is $200. So let’s contrast and compare. The 360 has a 20GB HDD versus the PS3’s 60GB one. The PS3 has three times the HDD space. That’s a nice plus in the PS3 column. The PS3 has a BD drive. To me, that’s a very important addition. According to Sony’s research, 34% of PS2 owners have an HDTV. That’s a pretty large percentage, if you ask me. And that number will continue to climb quickly. So to all us PS2 owners with an HDTV, the BD drive is a win. To me personally, the PS3’s BD drive is alone worth the $200 price premium over the 360. So I guess I’m done! 🙂 Actually, well, no I’m not. Because that BD drive may not be worth $200 to you. Remember though, that the BD drive will also give publishers the ability to ship their games worldwide a lot easier because they’ll be able to put all the languages for a game on one disc. Still not convinced? Well if you don’t care about BD, what do you care about? What about some WiFi? Free online gaming? That’s nice – really nice actually. No monthly or yearly fees for a Gold service of any kind. What else? An HDMI port. A CompactFlash/SD/MemoryStick reader. Bluetooth. 1080p support. PSP integration. Motion-sensitive controller.

That’s quite the list. So is 40 extra GB, BD, WiFi, HDMI, memory reader, Bluetooth, 1080p, PSP integration, free online gaming, and motion sensitivity worth an extra $200 to you? Take a look at that list again. If those features aren’t worth $200 to you, you’re not a hard-core gamer. And guess who Sony’s target market is at launch? The hard-core gamer. In my mind, Sony can only keep the prices this high for the first six months or so, until all the hard-core gamers have their systems. When trying to attract the mass audience, though, Sony had better reduce the price. They’re just not willing to pay $500 or $600 for a gaming system.

So you’ll note that I spent a lot of time defending the $600 price point, and then turned around and said Sony must decrease the price. And that’s what I believe. For the first half year or so, $600 is a defensible position. But after that it isn’t tenable anymore. Sony will have to decrease PS3 prices sometime next year if it hopes to gain marketshare against the Xbox 360. That’s what I think, and I’m sticking to it.