What is the impact of no PS3 price drop?

[Akumajou]

Let's face it, Resistance is a good game but it is not a hype/system seller type of game like Gears Of War.
Neither is Motorstorm, and LBP is a new franchise.
It's not surprise for me that neither R2 or LBP are selling well at this moment.
But when we think about MGS4, now, that is a big, big system seller, so it sold really well (or GTA).

In the next year, it's easy to predict big sales for RE5, God of War or GT5. These are very strong established franchises that will sell millions of copies easely. Probably when GOW releases the PS3 will see the biggest boom in sales since it launched.

As for Killzone 2, unfortunalety I don't think it will do extremely well. I think it will do just well. Killzone 1 was a good game, but Killzone is not a strong franchise and has only 2 titles released.

Just needed to point this out, see while MGS4 did well, GTA4 despite being multiplat did not do as well as previous GTAs that were made only available for PS2 before the ports.

Gears of War however was helped in hype, marketing, evangelizing due to Epic Games's experience in marketing Unreal 1, 2 and the UT games on PC over the internet (basically reapplied to console 360) but more over they were helped by tv channels dedicating 30 to one hour informercial documentiaries to help sell the game with the Sci Fi doc, G4TV's ever constant free advertising for Microsoft XBox only games.

My friend who has On Demand from comcast is constantly complaining about how ridiculous it is that GoW2 is constantly popping up in the pip box as something people need to see or know about, to me at first it seemed like just business but I admitted it was extreme because it is constantly looping so short of saying that G4TV is somehow owned by an affiliated company you can get an idea of why its presence is felt even with people who don't care and why Assasins Creed really sold 7 million despite being a mediocre effort.

However, RFoM sold mostly to the tune of 2 million on a Playstation branded console that is not really associated with FPS shooters only console box so Resistance 2 is guarranteed to simply sell 2 million units to those who played and liked the first one, after that its going to depend on new PS3 owners who recently bought their console and its up to them to buy the game since no one is spoon feeding them a constant presence to buy the game.

 

[Akumajou]

All currencies are volatile right now, but the strong yen is brutal for the Japanese exporters. A product that had a 5% positive margin before is now well negative, and a product that had a pre-existing negative margin like the PS3 is now much more so.

The PS3 sells for $400 - for Sony that was 44,000 yen. Now for the same $400 they get 37,200. A $100 price cut before would have taken it to 33,000... they're almost there already without having done anything. A $100 price cut now would take it to 27,900 - approaching half of what they received just half a year ago.

I don't know the production costs of the PS3, but I know they're higher than 27,900 yen. The only solace is that for externally sourced components, the yen strength will help to reduce those sourcing costs. But that's not much comfort, since the one side of the scale so vastly outweighs the other.



Because they have to move them. Believe me, look at Panasonic's recent profit revision to get an idea of the brutality out there - they slashed net income forecasts by 90% due to the exchange rate and slowdown issues.

With the PS3, if it's built, at least you'll be able to sell it later on if it's stuck in inventory. The way the TV product cycles work, if it's built, but it's not sold, then it's looking at being an eventual huge write down. Sony will be selling different TVs next year - if they want to recover on the manufacturing of this years sets, then they need to sell them, and sell them now... at any price (within reason).

Next year, obviously, they'll simply build fewer TVs. The reports of LCD ramp-downs for next year are everywhere.



Remember the fixed costs are on the manufacturing side, so in that respect 65nm does matter (and the answer is yes they have), but those savings only effect new production. If you have legacy hardware in the channel and you decide to mark down the PS3 price based on current cost savings, you're still absorbing a write-down spread on that older pre-existing product. And as above, I mean... those cost savings are all they can do right now just to mitigate exchange rates.

That's not anything directly related to what you were saying or even the thread itself, but it's something to think about. People sometimes equate manufacturing cost savings with the ability to price reduce immediately; only when your inventory is essentially zero on the pre-existing. Otherwise, you're still facing a stark choice as it relates to eating cost on those other systems.

For may different Black Friday fliers I myself saw PS3s being sold with Casino Royale and a free game like Ratchet and Clank Future ToD at Best Buy and others did similar things...

Of course we all know there is a bad cloud over consumers and its forcing their purchases but I have faith that consumers will see a flier that says free game and movie or more included in the sale as an opportunity but I cannot say that people will have a hard time resisting the other console being constantly advertised with a rather misleading $199 price tag on TV but thats how sales people work.

I think that despite this economic hard time, Sony is only able to just swallow the gulp and hold their breath until after KillZone 2 is released, after Resident Evil 5 is released and any other major title and then a couple of months later do a price drop crucial to a non-gift giving shopping season to spur sales of their console.

 

[Zassk]

I think you would have to consider Blu-ray revenue for Sony in the long run, they didn't put BD in the PS3 just to make it more expensive.

I don't know what specifically made Sony attach its cart to the Blu Ray horse back circa 2004, but as I understand it, Panasonic and Philips are the largest benefactors of Blu Ray royalties, not Sony. I'm not sure how Blu ray royalties could have been worth sacrificing a 200m console leadership position in another profitable market. I wonder if this was just a regrettable move by Krazy Ken.

 

[assen]

...why Assasins Creed really sold 7 million despite being a mediocre effort.

Assassin's Creed was, and still is one of the most visually stunning games of the generation. It has a well established, familiar setting. This counts for something.

 

[Zassk]

If I remember correctly when the 360 price initially happened, the sales between PS3 and 360 were pretty much at parity... after that the x-mas rush happened and Gears and... needless to say perhaps MS's momentum will not continue and Sony is aware of this.

But then Sony will be that much farther behind. March is just the wrong time of year for a price cut, regardless of the PS2's traditional spring price cut timing. The console war doesn't swing on a few spring months of leading by 50k consoles. For maximum sales effect, a Jul/Aug/Sept price cut is ideal, as we've already seen by both Sony and MS previously.

Sony won't turn this race around until they get aggressive in the half of the year that matters most. Having an MGS4 or KZ2 each spring isn't going to lift them above the competition overall. There's a reason why MS never releases anything important in the first half of the year.

Looking at the past 3 years, it's easy to see MS's strategy: target the last 6 months of each year when sales are highest, and ignore the first 6 months of each year when sales are lowest. MS doesn't seem to be perturbed by the fact that Jan-June sales have been poor every year, and why should they, when they reap so much hay every holiday season?

 

[function]

And what is that, exactly?! Hasn't this gen shown that every gen starts almost from scratch, and it's what you offer this gen that matters, regardless of last gen? MS and Nintendo were smaller than Sony last gen. Now they're bigger, vastly so in Nintendo's case, who were a 'little league' player last gen.

I wasn't very clear, I meant in terms of that generation and not the one that follows it. As the next generation approaches the niche player gets increasingly squeezed by the winners' self supporting success and also by development dollars being diverted to the next generation. They learn to become grateful for none-shoddy ports and, long before their rivals, see their retail shelf space wither up and die while their AAA "killer apps" are rounded up into bargain bins like cattle that are going to be burned because they have foot and mouth or something.

3rd place doesn't really get to enjoy milking the ... long tail ... of... the cash cow (something like that). Even the GC (cheap to make) with very, very strong first party titles didn't have a long tail.

I think the lack of a price drop this Christmas shows exactly what Sony's long term expectations for the PS3 are.

 

[groper]

Just needed to point this out, see while MGS4 did well, GTA4 despite being multiplat did not do as well as previous GTAs that were made only available for PS2 before the ports.

AFAIK GTA IV is doing better than ViceCity...

 

[Shifty Geezer]

I wasn't very clear, I meant in terms of that generation and not the one that follows it. As the next generation approaches the niche player gets increasingly squeezed by the winners' self supporting success and also by development dollars being diverted to the next generation. They learn to become grateful for none-shoddy ports and, long before their rivals, see their retail shelf space wither up and die while their AAA "killer apps" are rounded up into bargain bins like cattle that are going to be burned because they have foot and mouth or something.

Though I agree with you in principle, I thinks that's lmited to how badly a console fails If content continues to sell, the platform will continue to get exposure. Being 3rd place does not necessitate being sidelined and painfully disposed, and a healthy 3rd place should keep things looking up.

 

[Akumajou]

Assassin's Creed was, and still is one of the most visually stunning games of the generation. It has a well established, familiar setting. This counts for something.

Familiar setting, so we live in an age where people walk around wearing robes that barely show their faces, can stab someone right in front of a guard and then assume a praying position to "evade" being guilty as well as easily climb buildings???

Its highly overrated, overhyped, too much Jade Raymond (I betcha you know who she is) 99.9% of the game's owners still don't know it was created by a bald, obese, pasty bearded man and lets not even mention all of the glowing reviews and free tv spots, just do the math and calculate G4's, GT.com and others in how they hyped it to death, I can tell you confidently that neither Resistance 2 nor Killzone 2 will ever get that free pass promotional spots even if they were to have hired a hot looking producer.

 

[Akumajou]

I don't know what specifically made Sony attach its cart to the Blu Ray horse back circa 2004, but as I understand it, Panasonic and Philips are the largest benefactors of Blu Ray royalties, not Sony. I'm not sure how Blu ray royalties could have been worth sacrificing a 200m console leadership position in another profitable market. I wonder if this was just a regrettable move by Krazy Ken.

I understand you post is riddled with a missinformed opinion and disrespect aimed at Ken Kutaragi but seriously how did "console piracy" escape you as a major reason why PS2 was and still is losing software sales revenue.

 

[dobwal]

I understand you post is riddled with a missinformed opinion and disrespect aimed at Ken Kutaragi but seriously how did "console piracy" escape you as a major reason why PS2 was and still is losing software sales revenue.

Given the current realities, I'd bet Sony would gladly accept PS2 level piracy if the PS3 could only be as popular as the PS2 in its hay day.

 

[Zassk]

I understand you post is riddled with a missinformed opinion and disrespect aimed at Ken Kutaragi but seriously how did "console piracy" escape you as a major reason why PS2 was and still is losing software sales revenue.

Now that you have vented, do you have some information to contribute to the royalty question? Sony's sacrifices made to establish the Blu Ray standard will generate more profits for its competitors than for itself. I would love to understand the business case for this tradeoff.

 

[Silent]

Assassin's Creed was, and still is one of the most visually stunning games of the generation. It has a well established, familiar setting. This counts for something.

That is true but I will also remind it (as GTA IV) in the future as one of the most boring and uninspiring games of this generation.

It disturbs me that such games are selling in big numbers and more creative titles (like LBP) are struggling. This gives the signal to produce more boring and uninspiring…

 

[BadTB25]

That is true but I will also remind it (as GTA IV) in the future as one of the most boring and uninspiring games of this generation.

It disturbs me that such games are selling in big numbers and more creative titles (like LBP) are struggling. This gives the signal to produce more boring and uninspiring…

I'd say that this is very subjective. One mans junk is another treasure.
I myself do not enjoy open world type games. I haven't played Oblivion or GTAIV nor finished any of its predecessors and I probably won't pick up Fallout 3, but I can see its appeal for many.

Concerning, LBP, I'd love to pick it up for the wife simply for its "cuteness" factor. I'm kinda disturbed from post here on Beyond3D about it maybe being more hardcore than I think she can handle. From the vids on-line, the floatiness of the movement is a little of a turn-off as well.

Besides don't you know that sex and violence sells...at least in regards to GTAIV.

 

[patsu]

Why invest billions more in a product when at best that product will return a small profit, or possibly only a loss?

It doesn't make sense, that money is better invested where it can make a healthy return. This is why MS got out of the original Xbox and put the money into the 360.

... because they are still trying to complete the model ? If they stop now, they'd be in a limbo. Sony has done quite a few experiments on PSN and new IPs. It's also the first time for Sony to launch a relatively successful network service (teh PS Store). There are convergent play at work, plus Blu-ray platform to push. The work is not done yet.

Sony lacks razor-sharp focus, but it is not out of options (yet). I can think of at least one interesting move, but it's all up to Sony. No point for me to speculate.

Sony have either decided to accept a much smaller share of the games market and are hoping to make the PS3 investment back over a very long period of time (I can't see this being their plan - they know what happens to little players as the next generation approaches) or they're planning to minimise PS3 losses while they prepare to get into the next generation (and fairly early).

The prospect of a $150 360 next Christmas means there's no light at the end of the (recession reinforced) tunnel for the PS3.

Microsoft's aggressive move is not unexpected. They'd need to do more than that to throw an experienced exec off.

 

[2008 IQ is unacceptable]

Just skimmed over page 1, so I may not be the 1st to say this, but there's far more negative effects for everyone if sony cuts the cost.

They've already switched from sony to asus to foxconn, have already lost too much, and I'm kind of getting the feeling that they aren't impressed with the ps3 itself, even though I find it more impressive than the x360.

They'd lose 3rd pty support and ultimately would have far fewer games if they lowered the price of the system and jacked up the royalty fees on devs/pubs. They wouldn't have as many games if they did that, thus giving the system less value.

They could cut the price of the system, but then maybe they'd have to start using lesser quality discs for the games and the issue of scratched games would be ressurected.

If they cut the price, something exclusive to the ps3 would be cut, like it's reliability. It sounds like many haven't been able to play the x360 as much as they'd like, b/c they were actually all originally defective. I'm probably wrong, but I believe the just released jasper is actually the 1st one that's not supposed to have problems. If I were an x360 fan, that would be just one more thing for me that my money couldn't buy. In other words, the x360 wasn't offered free from defects at a price a fanboy would be willing to pay. An x360 that was *honestly* guaranteed free from defects wasn't available for those who were willing to pay in excess of $800 for it. Thank god I'm a pc fanboy. Although, pc tech is far from perfect, and I'm willing to pay more for the things I wish were available. I'd be willing to pay nvidia for each driver download if they were better and had the features I wanted. Unfortunately, I'm in the minority which means I'm sol.

Just like I'd be willing to pay $70 or more for a pc collectors ed of the new pop that didn't use any lossy audio files. But...
It ain't gonna happen, so I'm s.o.l. as I almost always am.

 

[assen]

Familiar setting, so we live in an age where people walk around wearing robes that barely show their faces, can stab someone right in front of a guard and then assume a praying position to "evade" being guilty as well as easily climb buildings???

Do we live in an age where people jump on turtles and dinosaurs kidnap princesses?

Do we live in an age where antropomorphic cats and mice wreak havok in households?

The idealized middle ages and the time of the Crusades have been treated in many works of art, including one recent high-profile movie.

Its highly overrated, overhyped, too much Jade Raymond (I betcha you know who she is)

Don't move the discussion from "why did the game sell" to "does the game suck". My point is that AC is very marketable due to its setting and high-quality graphics, and you are supporting it by pointing out that it was, indeed, well marketed. So it's perfectly normal that it sold so well.

That is true but I will also remind it (as GTA IV) in the future as one of the most boring and uninspiring games of this generation.

When you get to the point to find out that AC is boring and uninspiring, as you claim, you have bought it and spend 30-60 minutes with it. The factors above (graphics, setting, good marketing) affect you much earlier in your experience with the product (which starts at the announcement of the game, not the initial loading screen).

It disturbs me that such games are selling in big numbers and more creative titles (like LBP) are struggling. This gives the signal to produce more boring and uninspiring…

I'm sure a large part of its appeal is in its brilliant *and accessible* graphics. If LBP had exactly the same gameplay, level editing and level sharing mechanics, but had below average graphics, or had beautiful but weird graphics (like my beloved Patapon, for example), it would have sold even less.

If this disturbs you, you'd better never find out what sells in music, cars and food

 

[function]

Though I agree with you in principle, I thinks that's lmited to how badly a console fails If content continues to sell, the platform will continue to get exposure. Being 3rd place does not necessitate being sidelined and painfully disposed, and a healthy 3rd place should keep things looking up.

Absolutely, and the closer to 2nd place that 3rd place is, the healthier 3rd place's software market will remain. That's what's interesting about Sony's lack of price cut this Christmas - they've decided to let themselves fall further behind (by how much we'll have to wait and see) because the cost of staying closer isn't worth it.

I don't think they expect to be able to make up all of this lost ground next year - I think they've decided to accept lower market share and potentially shorter lifespan in return for limiting losses on the PS3 project as a whole. They aren't going to do a Saturn and actively and vocally kill the platform before they have a successor ready (and while they can still recover some costs), but I definitely can see them doing an Xbox.

 

[Cheezdoodles]

It's also the first time for Sony to launch a relatively successful network service (teh PS Store). There are convergent play at work, plus Blu-ray platform to push. The work is not done yet.

Problem is that the work should have been done ages ago.

i was shocked to find out in what state the PS3 was when it launched, it lacked a gazillion features, it was allmost like you bought a product that is actually a beta.

And it doesn't help when the features they add all come to late. It took sony what? 2 years to get trophies? They must have the most incompetent programmers ever, im sure if i would lock 3 programming geeks in a basement for 3 months they could have came up with the same, only much faster.

Home which has been hyped for a long time now is still a long way from a build that is of any interest to the general public.

It took allmost freaking 2 years for in-game XMB!?!?!?!?!?

It allmost looks like Sony has foolishly thought that the brand name would be enough this generation, and didn't bother to make a proper effort. Getting a PS3 after the X360 i was shocked how many online features where missing, even basic stuff like being able to join a friends game etc (without an invite, you see them playing online, you just join them)..

 

[patsu]

Sure, but to answer function's original question, that's why Sony is still investing in PS3. They have not fully realized their vision and benefits yet.

Your post also highlighted Sony's key problem (Lack of focus from gamers' perspective). Playstation Network features like Trophies and in-game XMB were prioritized to second year (after Blu-ray and media enhancements were completed). Sony had an inside-out view of the world, which may not match the needs of its core users. They paid dearly for it but things have improved drastically since then.

As for Playstation Home, I actually don't mind its slow rollout because it is very different and more difficult to "get right" than a regular online gaming platform. I am very interested to see how third party will use Home. Most importantly, it is the "only" thing that can unify all/most of Sony's gaming and non-gaming offerings, plus user-generated content and Internet activities. So far, Sony has simply spammed its users with lots of piecemeal features that don't exactly integrate with each other. e.g., RemotePlay, Ad Hoc Party, Live with Playstation, Qore, web browser, ...

Most people see Home as a 3D world but in fact, Home can be successful with a 2D UI too. The underlying idea of Home is community and integration, not merely 3D visualization. I believe Home will be impactful and influential with integrated user-driven activities and content. It will mostly likely fail if Sony does not follow through.