How to sell next-gen consoles, Marketing, Positioning, and Pricing [2020]

Lack of price announcement does not mean that they are not bold on pricing. All Access has shown they are bold. You could get a One X with a 40% off the MSRP. Yeah there were deals where you could buy an One X outright for less than $399, but I suspect that was to clear out inventory.

Tommy McClain

 

All Access and Gamepass is bold yes, but I'm talking about the hardware introduction price going into next gen. It's a really big moment for every generation. The MS that priced the 360 at $300 / $400 and the Sony that went for $399 with PS4 have been strangely absent so far. Can't think of a time when we were so close to launch, summer holidays were over, and no-one was speaking about prices. Then again, times aren't exactly normal right now.

Sony have the market on their side though, and immense brand power. MS are still investing massively in gaming (perhaps more than ever) but it's things like Xcloud, Gamepass and building up their studios where they've invested probably billions now.

 

So Sony is not being bold either?

Tommy McClain

 

What percentage of the installed base subscribed to the Game Pass?

Idea is appealing, sounds good on paper, like Netflix of gaming.

But do people game that much? Especially when they're also binging TV shows?

 

Over 10 Million Subscribers. So 20% to 18% using 50 million to 58 million consoles.

Microsoft's data shows GamePass subscribers play and buy more games.

Game Pass is amazing value for me. There are so many games I have tried and really enjoyed that I never would have otherwise.

 

Microsoft stated that it exceeded 10 million Game Pass subscribers & 90 million Live users on April 29, 2020...

Why does it matter how much they game? It's there when they want to. Some will people will game all of the time. Some will may play 1 game the whole time they have the service(Sea of Thieves or some other GAaS). And there will be homes where it is shared across multiple people. My kids are getting more bang for my buck than I do at the moment. Other days I get more value than they do. There's something for everyone.

But I will say that Gary Whitta has said on the Kina Funny xCast podcasts that he thought it wasn't just the best value in gaming, but the best value in entertainment. Being it is a better value than Netflix or other movie/TV services.

Just because you don't see the value doesn't mean a lot of other people can't. Right now 10+ million do.

Tommy McClain

 

Sometimes people just make things up, other times people misunderstand what figures represent, i.e. place holder prices over confirmed prices. It's easy for completely incorrect things to pushed as facts. Like the Github leaks. Those number had to be for PS5 right, because they came from an AMD intern.

You can, you just din't want to because it looks bad. But it won't be a couple of months, it'll be 6-9 months. And before they reduce the cost of the actual console, they'll employ various "value added" bundles like throwing in a subscription for a service and/or more games.

 

You mention Xbox One which was cost reduced six months after launch by removing Kinect but PlayStation 3 is a master class is cost reducing while trying to dodge the perception that early adopters were fleeced. Focussing just on the US pricing for the first twelve months:

- November 2006 - 60Gb model launched at $599, 20Gb mode at $499.
- April 2007 - 20Gb model discontinued
- July 2007 - 60Gb model price cut by $100 (now $499)
- August 2007 - 80Gb model introduced at $599
- October 2007 - 60Gb model discontinued. 80Gb model price cut by $100 (now $499).
- November 2008 - 40Gb model introduced at $399.

What's the price point that you feel unhappy going above? I get where you're coming from, $599 does like a lot but then I remember paying around $299 (UK equivalent) for the PlayStation 2 almost 20 years ago. PS4 was $399 7 years ago. Inflation is a thing and looking at the tech/specifications in the box, especially compared to PCs, makes these console look tremendous value even at $799. You just couldn't build a PC anywhere near XSX/PS5 performance for that cost.

I would expect that if there were midget bumps, they would be expensive again whereas the base models will gave cost reduced quite well. Wouldn't you perhaps balk again at paying that performance premium midgen?

edit: years in dates corrected.

 

Sony has no reason to be bold. They have market share and importantly mind share.

Xbox team have to win people over. Sony has to focus only on retention which is easier.

 

Hmm, what about this...

 

Completely disagree. Of course Sony has to be bold. Nothing is guaranteed, and PS3 proved that.

The question here is what they consider 'bold' compared to what MS consider 'bold'.

But to expect Sony to just sit and wait for the cash to come in, that's just not realistic. And it also doesn't match the reality of what Sony has been doing in the last few years.

 

I'm with @London-boy there. Never settle for mediocrity. If you're not being bold, your competitor clearly will.

Latest rumor....

Series X will will be valued at $539.99 after looking at the terms of a new Monster Energy Series X/Halo Infinite promotion?

https://mspoweruser.com/xbox-series-x-price-539-dollars-monster-energy/

Tommy McClain

 

I could definitely see this. We already know the other 2 Xbox One SKUs are done. So a new cheaper One S SKU would be cool. I think the $299 price is a placeholder though. It should be at least at the One S All Digital price of $249, but could see $199 or $149. Then they could go for $299 for Series S & $499 for the Series X.

Tommy McClain

 

Exactly and you should be even more bold if you the market leader.

 

Any difference between stated value and actual value will not be awarded.

 

Their version of bold doesn't need to be as explicit as Xbox at this stage. All they need to do it show more PS5 related material and they get far more exposure than their rivals do. Also MS is helping Sony each time they make a move, mostly by getting it wrong, but also because the conversation almost always turns in the Playstations favour within in a short time.

With analysts predicting a 2:1 market share in Sonys favour again, this generation, the onus is very much on MS to prove themselves in the console market.

 

Yeah, lawyers. LOL

Tommy McClain

 

Apologies. Was a rough last 24 hours. Took me a bit to get back here. Still a bit addled in the brain.

A place to start.

Just wanted to be clear I don't buy the $600. I just do not. If I should be proven wrong, then so be it. I have real trouble thinking they were designing 3 years before launch with a projected BOM that would require a $600 price tag. If it was low $500 BOM and something went awry, like RAM prices or a the PS3 blue laser issue, then I could see it. There just hasn't really been anything to date that would indicate that.

Price Cut post launch:

I had some trouble looking up the historical price and release of different PS3 models. I am going to assume you are correct (looks right) and that the dates for April onward should read "2008". I can grant that it was well executed after the initial problems. However, I always thought they lowered the price because they fixed the outrageous BR laser cost issue. Wasn't it projected as something like $200 at the beginning? There doesn't seem to be a Kinect/ BR level issue at this point. Meaning, nothing to remove or manufacture much cheaper that would allow that kind of price drop without major losses. There was something I was trying to point out here, but frankly my addled brain has lost it for the moment. Cyclobenzaprine does this to me.

Price Point:

Hell. I paid $85 plus tax for GoldenEye. Used to rent a Neo-Geo a couple of times a year because there was just no way to afford that beast. Or its $200 games. The Sega Genesis was the first system I bought with my own money. 15 years old, minimum wage warehouse job while in high school. That was a pretty penny at the time.

For me, the price is $500. With local sales tax that is $532.49. If it was a touch higher for some reason, say $524.99 I might well bite the bullet. Call that a toss up at best. You mentioned value. Something I think Sony pushed as a term in an interview recently. The best way I can think of to get my position across on this: Say MS still worked with Nvidia. Further say they stuffed a 3080 in there. Just guessing at the price on that - something North of $1200 for the base 3080 card alone. If I built a console with top flight specs and a 3080 built in and charged you something around $1500 - less than a PC with a 3080 would cost to build, would you say that is great value or would you say that is ridiculous and excessive for a game console?

For me, and of course, yes - just for me, that price point is basically $500. Which I will not, much, go beyond. I want something relatively inexpensive and long lasting. With retail being bypassed for digital more and more, and thus having no recourse for purchasing a game at full price that you end up hating, services like GamePass and XCloud are a serious plus. I can try some games before I buy them (assuming 3rd party - limited time access). I also want something that has permanent (or near permanent) backwards compatibility. Those are really critical functions to me with the slow disappearance of the resale market.

Midgen:

This last round, I wasn't really a target customer for mid-gen upgrades. They don't offer enough. This makes sense if you know that I don't yet have a 4k display anywhere in the house. Feels a bit pointless to upgrade to an X or Pro if you don't have a higher res display. Little bumps like increased SSD space are just toss-ins to me. I can take them or leave them. Practically speaking, going from say 1TB to 1.5TB would have somewhere between little and no value to me. Not something I would really notice. I would consider it a marketing/ purchasing agreement choice more than anything else. Meaning - justify keeping the price ala' your PS3 example or something changed on the manufacturing side where an existing contract was up, or had a buyout, and newer chips were simply cheaper and of larger capacity. More of a manufacturer convenience choice than anything else.

Strangely, I might consider myself more of a mid-gen target this time around. I don't see them going after 8k native resolution. That just seems beyond silly. Which means any bump beyond just a bit of storage space would be storage speed, RT or ML related. I wouldn't consider there to be a memory bump unless there was a resolution bump that required it. That actually pricks my curiosity a bit....

Starting to get a bit restless again regards information. ~3 months from launch and no price, preorder, PS5 controller details or PSVR2. Ugh. Not to mention the promised teardown. Didn't they say "soon"? *grumbles*

 

I'm just wondering if it would make sense for MS to make a new One S?

Or would it be possible to make completely new design that would be compatible with One S but using modern parts that would be cost effective to manufacture. Like 4C/8T or 8C/8T Zen2 core, ~2 TF RDNA1/2 GPU, memory setup using GDDR5/6 etc.

 

Die shrink is much more effective anyway. Zen cores are much larger than Jaguar, RDNA too, GDDR is more expensive.