Could 9th gen consoles be $500 USD?

[iroboto]

A quick Google suggests many millions of 4K TV sets are being sold. Like 50 million+. How many are buying 4K consoles? What are the sales of the XBox One X again? And as the cost of XBOX drops, the new consoles will get even nearer. How many are going to want to buy a last-gen console for their 4K TV?

No consoles have been announced yet. And one just launched last month. So the masses aren’t going to play the waiting game when there are two well capable devices, well, only 1 capable of delivering on all facets of 4K entertainment.

Next gen can be a very long way out. Until an announcement is made no one is going to stop and think about next gen.
Except us, because we enjoy it lol. But everyone else it’s a matter of desires and price points.

 

[rokkerkory]

Totally in for $500 if quality is there, although I prefer $400.

 

[dobwal]

mate, Are you ignoring your previous post
$299 in the year 1995 is equivalent to $480.26 in 2017.
It only really took off when it dropped in 1996 (a year later) to $199

And? Consoles have a habit of selling much better when receiving multiple price drops to more mainstream pricing.

Setting a launch price isn't about selling at the start as it would if a console were $199. A viable launch price is one that persuades hardcore/core gamers and early adopters to readily buy a console at a healthy rate until the time u can drop to a price point that attracts more mainstream buyers.

 

[Deleted member 11852]

A viable launch price is one that persuades hardcore/core gamers and early adopters to readily buy a console at a healthy rate until the time u can drop to a price point that attracts more mainstream buyers.

This. If you can sell all of your production of your new console for $500 then do that. When demand drops because you've exhausted that market, you lower the price and open up to the people who are willing to buy at $450 then $500. There is still the complex economic balance of BOM and hardware profit margins vs. software margins and charging more than you need will slow adoption rate and reduce the greater margin products (software) selling but basically you want to charge as much as what the market can sustain at any particular time. But if your consoles are moving and your margins are good, you bleed the early adopters for as much as they're willing to pay

It's a business.

 

[JPT]

It's a business.

And that is the core of everything in regards to prices

 

[Silent_Buddha]

This. If you can sell all of your production of your new console for $500 then do that. When demand drops because you've exhausted that market, you lower the price and open up to the people who are willing to buy at $450 then $500. There is still the complex economic balance of BOM and hardware profit margins vs. software margins and charging more than you need will slow adoption rate and reduce the greater margin products (software) selling but basically you want to charge as much as what the market can sustain at any particular time. But if your consoles are moving and your margins are good, you bleed the early adopters for as much as they're willing to pay

It's a business.

This is what many people have a hard time grasping.

As a business and economically, if you are sold out of your product for multiple months (say 6+ months) then you have done your company a disservice by charging far too low a price for your product.

• Some people erroneously think that duh, you should just increase production for launch. The problem here is that production doesn't come for free, having too much supply is much riskier than having too little supply. You aren't likely to go out of business if you have too little supply, but you could definitely go out of business if you have too much supply.

Ideally, you want to price it such that there is just enough demand that you are sold out for 1-2 months and then supply and demand remain relatively equal for a lengthy period of time (say 6-12 months) as you gradually ramp up production by taking feedback from how well your product is selling. For non-consumable goods, demand should start to drop relative to supply around that time, and thus you drop prices as you potentially continue to increase supply (assuming a positive margin and supply*margin is greater at lower price and greater supply than at greater price and lower supply).

There are always exceptions, of course. Some markets are designed to have price drops in shorter time frames (3-6 months) as they want to get to a volume position and see greater profit potential at higher volume with lower margins and/or their product inherently loses value quickly (Televisions, for example). OTOH, some products experience constant demand and/or have an inherently low volume market and thus the price doesn't drop for a very long time.

Regards,
SB

 

[iroboto]

And that is the core of everything in regards to prices

most times
in those rare moments where demand completely outstrips supply, then.. we see the opposite happening

 

[zed]

This. If you can sell all of your production of your new console for $500 then do that.

So you're saying Sony was right to launch the ps3 at $499/599 (since they sold out at that price) and Nintedo was right to sell 3ds at $249, and for both to have large pricecuts soon after launch.
Donno mate, IMO you dont want to lose that momentum, as when its gone often it wont come back, see Wii U for example

PS5 launch at eg $1000 is good? After all it will still sell out and then 3 months later cut the price to $400, donno man, seems like that will just piss everyone off

 

[Scott_Arm]

Price increases with demand. Basics. Get as much as you can for every unit you have. The issue with consoles is you'll always have incredible demand at launch. Question is whether demand continues after six months to a year.

 

[Silent_Buddha]

So you're saying Sony was right to launch the ps3 at $499/599 (since they sold out at that price) and Nintedo was right to sell 3ds at $249, and for both to have large pricecuts soon after launch.
Donno mate, IMO you dont want to lose that momentum, as when its gone often it wont come back, see Wii U for example

PS5 launch at eg $1000 is good? After all it will still sell out and then 3 months later cut the price to $400, donno man, seems like that will just piss everyone off

Context.

Yes the PS3 sold out at launch. But less than a month later, there was a supply glut once resupply happened.

The console + launch games weren't able to sustain any momentum at that point.

So what lessons do you take from that?

• If you go with a traditional console launch, you either need
  1. An incredibly compelling launch lineup.
  2. A low enough price that once pre-orders are fulfilled, you aren't saddled with supply being significantly greater than demand.
  3. You keep production low enough that supply and demand at that price point is relatively equal. You're going for a premium product with high margins and low volume.
  4. You quickly reduce the price to match demand over time. This one isn't a great option except for a few market categories.
• Alternatively, you go with rolling generations where there is always a compelling lineup whenever a console launches as there is always a vast library of titles available to play on the console. Of course, that comes with some caveats as you must give people a reason to get the new console.
  • Greater graphics fidelity (resolution, settings, etc.) in existing titles.
  • Better and more consistent performance in existing titles.
  • New titles that take advantage of the hardware with reduced settings for the console immediately previous. Nice opportunity to show the improvements with side by side comparisons.

Depending on the viewpoint the PS3 was a failure due to a lot of factors. A less than stellar launch lineup. Way too much console production at that price point OR too high price point for the amount of consoles that Sony wanted to sell. Fix any of those 3 and it would have done fine at launch. IE - the high price wasn't necessarily why it did abysmally for the first 6 months.

Regards,
SB

 

[Deleted member 11852]

So you're saying Sony was right to launch the ps3 at $499/599 (since they sold out at that price) and Nintedo was right to sell 3ds at $249, and for both to have large pricecuts soon after launch.

If you're selling what you can produce as fast as you can produce it, your pricing is right - or possibly even too low. Lowing prices is about shifting more units because you're not selling things as fast as you can make them. At least in a devolved economy ecosystem like videogame consoles. The hardware is the barrier to entry for profitable software licensing revenue.