LongShot #116: How Much Is Too Much?
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by Freakhead » Fri Apr 21, 2006 1:20 pm
Interesting column. Charging more money wouldn't have changed the number of units available at launch tho. What's the difference if the 360 is sold out and you can't get one or it's priced too high and there's units on the shelf because no one wants to pay that much? I'd say the videogame publishers would rather have the former, out of the gate, rather than the latter because the more consoles out there the more titles they can expect to sell. MS wants to sell more software too as they make money on that as well.
Sure you're right in that MS could have charged a bit more because they know the early adopter crowd will buy anything that comes out. But they wouldn't have created half the hype they did by having the console not available for 6 months. More consumers would have put the brakes on pre-orders and all we'd hear about it is how high priced it is. I think hearing that's it's sold out creates more of a 'I must buy one because everyone else is' urge. And at $400 we still heard the 360 was high-priced.
Really MS should have waited till Spring to launch when they would have had more units. And it would have helped publishers sell more last gen titles during the 2k5 xmas season and the transition downturn would have been lessened. 360 games might have been more polished and maybe the consoles themselves would have had less problems. They probably wouldn't have created all the 'sold-out' talk tho that they did since last xmas, but again the transition would have been smoother. Not to mention the Xbox wasn't even 4 yrs old and still had life in it for consumers.
Also I think if you look at your income chart you'll see median household income has actually fallen since the start of the last generation (altho the cost of living has gone up every year since then.) I don't think folks have more money since the launch of the PS2. I totally think it remains to be seen whether $400 is a mass market price. Again so far the 360 is mostly about the early adopter crowd. That crowd will buy anything.
I see what you're saying about pricing the PS3 high, but it would be suicide for Sony to price the PS3 alot higher than the 360. They are restricted from pricing the PS3 in that sense. I think too that folks that are buying the $130 PS2 now aren't going to be your potential PS3 buyers and vice versa. So I don't think jacking up the PS3's price will encourage even more PS2 sales to any degree. The PS2 is outselling the 360 as it is.
Sure you're right in that MS could have charged a bit more because they know the early adopter crowd will buy anything that comes out. But they wouldn't have created half the hype they did by having the console not available for 6 months. More consumers would have put the brakes on pre-orders and all we'd hear about it is how high priced it is. I think hearing that's it's sold out creates more of a 'I must buy one because everyone else is' urge. And at $400 we still heard the 360 was high-priced.
Really MS should have waited till Spring to launch when they would have had more units. And it would have helped publishers sell more last gen titles during the 2k5 xmas season and the transition downturn would have been lessened. 360 games might have been more polished and maybe the consoles themselves would have had less problems. They probably wouldn't have created all the 'sold-out' talk tho that they did since last xmas, but again the transition would have been smoother. Not to mention the Xbox wasn't even 4 yrs old and still had life in it for consumers.
Also I think if you look at your income chart you'll see median household income has actually fallen since the start of the last generation (altho the cost of living has gone up every year since then.) I don't think folks have more money since the launch of the PS2. I totally think it remains to be seen whether $400 is a mass market price. Again so far the 360 is mostly about the early adopter crowd. That crowd will buy anything.
I see what you're saying about pricing the PS3 high, but it would be suicide for Sony to price the PS3 alot higher than the 360. They are restricted from pricing the PS3 in that sense. I think too that folks that are buying the $130 PS2 now aren't going to be your potential PS3 buyers and vice versa. So I don't think jacking up the PS3's price will encourage even more PS2 sales to any degree. The PS2 is outselling the 360 as it is.
Last edited by Freakhead on Fri Apr 21, 2006 3:54 pm, edited 1 time in total.
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by Darkhonor » Fri Apr 21, 2006 3:05 pm
I've been a gamer for years.. YEARS.. ok, so since the early 80's when we had an atari around the house. However, I've never been an early adopter because I've never been in an income bracket that could just throw around the cash for a system until after the prices dropped considerably. I sat around with a Nintendo 64 (Purchased in the very short period between my dad starting to make a good chunk of money and the beginning of college) for.. geez.. 6.. 7 years? Before I even bought a PS2 - 4 years after release! And I spent every year drooling over the newer systems but I could not validate spending money on a PS2 with two kids to feed and rent to pay. Nor could I validate the continued spending every time we wanted a new game. So though you may believe that consoles should be a 'luxury' item.. Trust me, they already are for a lot of us.
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by txa1265 » Fri Apr 21, 2006 7:27 pm
I also believe that Microsoft screwed this generation up badly - for everyone. First, by charging a reasonable price for what people saw as 'latest and greatest' that also ran older stuff, they generated huge demand. Then they failed to deliver in many ways - the systems are not all that robust or reliable, the demand far outstripped supply, and so on. The impact of this is that people have mentally set expectations that 'the next gen is available and affordable on day 1'
Remember when videos came out for $80? Now they are <$20 and they sell the vast majority in the first four weeks. Movies sell through immediately or are gone. Consumer electronics have massive launches or are dead. And so on.
Had Microsoft charged $700 and had only one flavor, they would have upset a vast amount of people. And still sold out every system they could produce.
But now Sony, who by all indications offers nothing more than the XBOX360 in terms of real performance, is stuck - if they fail to match price they are in big trouble. If they do - well, they better have the manufacturing systems cranking!
I like the analogy to generalized home entertainment - it just works. It used to be very much like buying a GBA - it was for the kids. But now it is for the family at the lease, and certainly vrey much for the family. Which is another reason we don't have a console other than the Cube - my wife sees no value.
Mike
Remember when videos came out for $80? Now they are <$20 and they sell the vast majority in the first four weeks. Movies sell through immediately or are gone. Consumer electronics have massive launches or are dead. And so on.
Had Microsoft charged $700 and had only one flavor, they would have upset a vast amount of people. And still sold out every system they could produce.
But now Sony, who by all indications offers nothing more than the XBOX360 in terms of real performance, is stuck - if they fail to match price they are in big trouble. If they do - well, they better have the manufacturing systems cranking!
I like the analogy to generalized home entertainment - it just works. It used to be very much like buying a GBA - it was for the kids. But now it is for the family at the lease, and certainly vrey much for the family. Which is another reason we don't have a console other than the Cube - my wife sees no value.
Mike
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by SiW » Fri Apr 21, 2006 8:53 pm
Ehhhhhhhhh.. hmm.
Honestly Dave, I think it comes off as snobby, because you're saying a new console should only be available to the hardcore gamer. I just don't think today's industry can be supported by hardcore gamers, it's as if companies need the Halos and the GTAs and the Maddens just to make enough money to produce the rest of the lineup, with their crazy development costs.
The 360 was snapped up by early adopters, but that group isn't exclusively made up of gamers. There are plenty of people who will buy anything that's billed as the hot new thing, and while I think you were saying that it would have been better if gamers had been able to get the units those people bought, and a higher price would have made that happen, I just don't think that would have happened.
It certainly is an interesting landscape though. In one camp you have Sony, who have intimated that you will need to take on another job to pay for a PS3, but I believe they'll be crucified if they come out with something more expensive than the 360's starting price. They can already expect to see a 360 price drop when they launch, and even a small differential can be significant in the mind of the Christmas shopper.
Then there's Nintendo, who will be going for a mainstream audience both in price (I think they've said less than $200, and every Nintendo console has launched at $199) and in content and accessibility, but if the mainstream press isn't talking about them, will they be able to reach those people? I think they will, as long as there are a couple of "catchy" titles released at launch - mainstream press coverage sold an awful lot of Guitar Heroes last Christmas.
Honestly Dave, I think it comes off as snobby, because you're saying a new console should only be available to the hardcore gamer. I just don't think today's industry can be supported by hardcore gamers, it's as if companies need the Halos and the GTAs and the Maddens just to make enough money to produce the rest of the lineup, with their crazy development costs.
The 360 was snapped up by early adopters, but that group isn't exclusively made up of gamers. There are plenty of people who will buy anything that's billed as the hot new thing, and while I think you were saying that it would have been better if gamers had been able to get the units those people bought, and a higher price would have made that happen, I just don't think that would have happened.
It certainly is an interesting landscape though. In one camp you have Sony, who have intimated that you will need to take on another job to pay for a PS3, but I believe they'll be crucified if they come out with something more expensive than the 360's starting price. They can already expect to see a 360 price drop when they launch, and even a small differential can be significant in the mind of the Christmas shopper.
Then there's Nintendo, who will be going for a mainstream audience both in price (I think they've said less than $200, and every Nintendo console has launched at $199) and in content and accessibility, but if the mainstream press isn't talking about them, will they be able to reach those people? I think they will, as long as there are a couple of "catchy" titles released at launch - mainstream press coverage sold an awful lot of Guitar Heroes last Christmas.
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by txa1265 » Fri Apr 21, 2006 9:44 pm
I think that by pricing the box high, they could also have made it seem that people were getting a 'sneak peek at the next gen' and having to pay for it - and then they could have explained away all of the design & QC issues they've had. They could even have made price cuts prior to the PS3 launch.
As for the Revolution, I think of that like the DS. The mainstream gaming press (made up largely of affluent 20 - 30 year old males) were jonesing for the PSP, and dissed the DS wide and far. I remember GamePro having an issue where they basically said that the DS is fine if you're a kiddie who wants to keep playing GBA games, but the PSP is for 'real gamers'. After launch the DS was largely ignored while the PSP was a media darling and every positive word (i.e. the UMD sales) was trumpeted far and wide. It took some time - and games - for everyone to realize that there was not this great discrepency.
Mike
As for the Revolution, I think of that like the DS. The mainstream gaming press (made up largely of affluent 20 - 30 year old males) were jonesing for the PSP, and dissed the DS wide and far. I remember GamePro having an issue where they basically said that the DS is fine if you're a kiddie who wants to keep playing GBA games, but the PSP is for 'real gamers'. After launch the DS was largely ignored while the PSP was a media darling and every positive word (i.e. the UMD sales) was trumpeted far and wide. It took some time - and games - for everyone to realize that there was not this great discrepency.
Mike
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by GamerDad » Sat Apr 22, 2006 12:17 am
I think MS botched the release, but it's turning out great for them. Why? Because the PS3 got delayed. Now the Xbox360 is the ONLY HD videogame system you can buy and since last Christmas was the highest to date evidence of HD purchases ... I think they clearly made the right move launching when they did. Now it's unlikely that the PS3 will really outperform the 360, and the 360 gets a year head start with the hardcore HD owners. That's worth the risk of scarcity during a period when you have no real competition.
Dave's got a point that this also means that MS could have gotten an extra $100 per unit (or more) because we're talking about an affluent target audience, but MS believed the PS3 would be coming out sooner (Sony bluffed really). I think they were worried a higher price point would make those HD buyers cringe and make them wait for the PS3.
Remember folks, Sony put the final nail in the DreamCast coffin simply by announcing the PS2 when they did. MS isn't Sony, so the jump won't hurt them as badly as it hurt Sega.
Now, I'll be proven wrong if the PS3 release opens huge and lets Sony keep its tremendous lead. The more likely event is that the PS3 will launch in November/December, and it'll be scarce, but customers will probably find lots of Xbox 360s to console them and their "under the tree" needs. (I'm only not mentioning the Revolution here because I think that's a different market really.)
Also Mike, I'm talking about articles about UMD that appeared at Christmas time and I'm talking about mainstream coverage of those sales numbers. Your points about the anti-DS bias are correct, but that only really applies to the more tech heavy/geek publications. Y'know the type that picked the Sega GameGear to annihilate the GameBoy.
Dave's got a point that this also means that MS could have gotten an extra $100 per unit (or more) because we're talking about an affluent target audience, but MS believed the PS3 would be coming out sooner (Sony bluffed really). I think they were worried a higher price point would make those HD buyers cringe and make them wait for the PS3.
Remember folks, Sony put the final nail in the DreamCast coffin simply by announcing the PS2 when they did. MS isn't Sony, so the jump won't hurt them as badly as it hurt Sega.
Now, I'll be proven wrong if the PS3 release opens huge and lets Sony keep its tremendous lead. The more likely event is that the PS3 will launch in November/December, and it'll be scarce, but customers will probably find lots of Xbox 360s to console them and their "under the tree" needs. (I'm only not mentioning the Revolution here because I think that's a different market really.)
Also Mike, I'm talking about articles about UMD that appeared at Christmas time and I'm talking about mainstream coverage of those sales numbers. Your points about the anti-DS bias are correct, but that only really applies to the more tech heavy/geek publications. Y'know the type that picked the Sega GameGear to annihilate the GameBoy.
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by MrAndyPuppy » Sat Apr 22, 2006 1:47 am
A guy over here in Oz did some rough calculations. Note that these are approximates, and are in Aussie dollars:
PS2 in 2001 dollars = $750
Xbox 360 in 2001 dollars = $526
Average PS2 launch title in 2001 dollars = $99.95
Average Xbox 360 launch title in 2001 dollars = $100.25
PS2 in 2006 dollars = $897
Xbox 360 in 2006 dollars = $650
Average PS2 launch title in 2006 dollars = $118
Average Xbox 360 launch title in 2006 dollars = $120
It's easy to see that the 360 is actually cheaper than the PS2 was at launch.
And game prices have remained static in line with inflation.
Not that I am impressed with paying $120 for an X360 game. To ease your calculating minds, converting to US with the current exchange rate of about 0.77 makes that equivalent to $90US - pretty sad really.
That's why I have all of my consoles modded (except for the 360), and buy imports if the price is better.
However, even though the pricing is, based on inflation, cheaper than the PS2, I think MS would have struggled here to sell as many units as they did, there was LOTS of b*tching about the price point.
Based on official sales figures, the 360 has outsold any other console in Australia on launch... here's an excerpt:
The report released today estimated 30,421 Xbox 360s had been sold in Australia during the four days between launch on Thursday, March 23 through to Sunday, March 26.
This is the highest recorded launch sales figure for consoles in Australia; against the Nintendo GameCube (9,190 in May 2002), original Xbox (6,672 in March 2002) and Sony PlayStation 2 (3,366 in November 2000). It also betters sales for the best selling handheld, Sony’s PSP (27,055 in September 2005).
What's interesting here is the low figures for the PS2 - obviously their launch price point was just too high to be justifiable here to sell through in decent numbers.
PS2 in 2001 dollars = $750
Xbox 360 in 2001 dollars = $526
Average PS2 launch title in 2001 dollars = $99.95
Average Xbox 360 launch title in 2001 dollars = $100.25
PS2 in 2006 dollars = $897
Xbox 360 in 2006 dollars = $650
Average PS2 launch title in 2006 dollars = $118
Average Xbox 360 launch title in 2006 dollars = $120
It's easy to see that the 360 is actually cheaper than the PS2 was at launch.
And game prices have remained static in line with inflation.
Not that I am impressed with paying $120 for an X360 game. To ease your calculating minds, converting to US with the current exchange rate of about 0.77 makes that equivalent to $90US - pretty sad really.
That's why I have all of my consoles modded (except for the 360), and buy imports if the price is better.
However, even though the pricing is, based on inflation, cheaper than the PS2, I think MS would have struggled here to sell as many units as they did, there was LOTS of b*tching about the price point.
Based on official sales figures, the 360 has outsold any other console in Australia on launch... here's an excerpt:
The report released today estimated 30,421 Xbox 360s had been sold in Australia during the four days between launch on Thursday, March 23 through to Sunday, March 26.
This is the highest recorded launch sales figure for consoles in Australia; against the Nintendo GameCube (9,190 in May 2002), original Xbox (6,672 in March 2002) and Sony PlayStation 2 (3,366 in November 2000). It also betters sales for the best selling handheld, Sony’s PSP (27,055 in September 2005).
What's interesting here is the low figures for the PS2 - obviously their launch price point was just too high to be justifiable here to sell through in decent numbers.
GAMEparents is helping parents in Australia and New Zealand understand the value of computer gaming.
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by Tater-Dad » Mon Apr 24, 2006 11:58 am
thinking of my own personal finances 
Sony will be shooting themselves in thier stubbly little feet if they price higher than the 360. I hope the rest of the bullet wounds have healed 
I already had them at the bottom of my "next gen" list, well because thier hardware is scary I've learned, so I'll wait to see what bugs land with it. You tack on an extra hundred bucks, and I get 2 years before I gotta buy a new one or ship it back to you for 2 weeks...no I don't really want YOUR next gen. I will probably own all 3, and if I can (financially speaking) I'll be day one on the Revolution.
Sony will be shooting themselves in thier stubbly little feet if they price higher than the 360. I hope the rest of the bullet wounds have healed I already had them at the bottom of my "next gen" list, well because thier hardware is scary I've learned, so I'll wait to see what bugs land with it. You tack on an extra hundred bucks, and I get 2 years before I gotta buy a new one or ship it back to you for 2 weeks...no I don't really want YOUR next gen. I will probably own all 3, and if I can (financially speaking) I'll be day one on the Revolution.
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by SteveFulton » Mon Apr 24, 2006 12:15 pm
With my new-found love of Nintendo (thanks to Final Fantasy), I will be placing a Revolution and several games under the Christmas tree for my girls this year. The price (supposedly) is right, and with the ability to play the 100's of classic Nintendo and Genesis games I missed in the early 90's, it's a ure bet for me.
As far as I'm concerned, I've realized in the past few months that my tastes are 8/16-bit . I love play 8/16-bit games, and love to make 8/16-bit games. I've turned into one of those classic car guys who appreciated the high-tech of modern cars, but just can escape the curves, lines, and simplicity of combustion-engine era designs.
As far as I'm concerned, I've realized in the past few months that my tastes are 8/16-bit . I love play 8/16-bit games, and love to make 8/16-bit games. I've turned into one of those classic car guys who appreciated the high-tech of modern cars, but just can escape the curves, lines, and simplicity of combustion-engine era designs.
Steve Fulton
stevefulton@adelphia.net
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by txa1265 » Mon Apr 24, 2006 12:22 pm
Given what I pay to keep up as a 'bleeding edge' laptop gamer I know I have no right complaining price on anything ....
I just have no interest. But I am sure we'll end up with something for the boys in a couple of years. I like the idea of the Rev best, but have plenty of time.
Mike
I just have no interest. But I am sure we'll end up with something for the boys in a couple of years. I like the idea of the Rev best, but have plenty of time.
Mike
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by txa1265 » Mon Apr 24, 2006 4:00 pm
Dave gets 'Kotaku'd':
Kewl!
GamerDad has an interesting perspective on the launch price and success of the Xbox 360: it was too cheap and it unnecessarily hurt Microsoft. I doubt many gamers who were seriously financially impacted by dropping $400 on the console would agree, but they raise an interesting question. Would the Xbox 360 still have sold out at $450? At $500? I wouldn’t be surprised if it had.
<snip>
While I welcome the possibility of a lower priced Revolution, I’m willing to make the investment on my next-gen consoles. What do you think? How much is too much?
Kewl!
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