Even though the gaming industry is doing well, which is even more suspiring during this tough economical time, Sony's Playstation 3 console is behind the leaders. This seems to be a growing trend month after month for Sony's console and because of this, publishers are pressuring Sony to drop the price of their console. Mike Hickey, an analyst from Janco Partners, is expecting a price drop in the coming weeks between $50 to $100 US in the coming weeks. Reasons are obvious on why Sony doesn't want to drop the price, the console is expensive to make. From the Blu-Ray player to the cell processor, the hardware inside is not cheap. Not only that, profits from the console are down and any sort of speculation or announcement would stall sales numbers until the price drop occurs, and Sony isn't afraid to tell the world that they do not want to do it. Sony shares are also already down 11 percent this year.
At look at the graph clearly shows an argument for the price drops. And with sales numbers like that, major publishers seem to be moving towards the Wii. Sony needs to get people to want their consoles, not just the hardcore gamer crowd, but the casual gamers. Looks like best thing Sony could do to please everyone, but themselves obviously, is to cut the prices. With Sony continuing to lose exclusives, Sony needs to do something.
But not all is negative for Sony. The recently released exclusive Killzone 2 has sold nearly a million copies so far. The game ranks number 3 in terms of sales figures for game, behind Metal Gear Solid 4 and Grand Theft Auto IV. And with an install base of 20 million, that is a really positive result.
Publishers would rather Sony lose the money so they can profit from it than take the risk themselves. Which is a fair enough business practice I suppose. However, if I were manufacturing a console and selling it at a loss I wouldn't be inclined to increase my losses to appease these publisher's whims.
I can understand why publishers want the console to be cheaper and I can understand why Sony are holding back on price-cuts for as long as possible.
So they may actually end up getting more money by lowering the price because more people will buy it
If you're already selling at a loss and you then lower your price further - the more units you sell the more money you lose.
Won it in a Pepsi comp... with a PSP. I <3 my PS3.
Sony is only a few mistakes away from making Blu-ray players for other peoples' consoles and in this global depression perhaps they need to rethink what they consider an acceptable initial retail loss before they are further buried under the other systems' lower prices and higher sell-throughs.
Microsoft is loving the $199 price point and Nintendo won't lower their $249 price any time soon. So Sony is stuck right now. The longer the PS3 stays so expensive the wider the gap becomes in units sold versus the competition. Developers/publishers are already canning PS3 SKUs because the extra time spent developing the PS3 version doesn't come through in sales due to the relatively tiny install-base. Expect that trend to continue unless Sony acts soon. The longer Sony waits the more PS3 SKUs get reassessed.
Last edited by Aahz on 18 Mar 2009 - 17:38
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