Thoughts on the expense of PS3

[Shifty Geezer]

So what happens if all these people with HDTV's buy a PS3 for its Blu Ray and not play games, or only decide to buy a few games (3 or less) throughout the system's lifespan? Is the tradeoff in price enough for Sony to justify losing lots of marketshare to less expensive game consoles?

If it helps BluRay become the standard, yes. These few early adopters who only use PS3 for movies will be helping seed the massive BluRay player future. The losses in the console sector are more than made up for from income from BRD licensing fees.

 

[hey69]

I think Sony is going to pull an Ebay .
launch expensive and start lowering their prices faster then they usually did.
(but then again, I feel like the only one who didnt get surprised about the ps3 price.. ps2 launched at 520euro backcalculating the euro 6 years ago)

 

[Diamond.G]

Launch Bundles

So how much do you guys think we will be fleeced for this year on the bundle front?

 

[rabidrabbit]

For a games console, it is expensive if you look at past launch prices.

But as an home entertainment electronics device, it doesn't seem so expensive.
I mean, I recently paid €580 (rrp €699) for my dvb pvr, and it's a common price for such a device. It does what pvr's do, records digital TV to a HDD and little else. I'm sure there's a lot more air in it's price than there is in PS3 and I'm sure the PS3 is a lot more finished and polished device than that buggy pvr.

It does seem Sony is about to differentiate the Playstation brand from being what is traditionally known as a games console, but class it as one home entertainment device among TV's, receivers, DVD/Blu-ray players and such, that have traditionally been priced a lot higher than games consoles for what they actually are capable of.

It's not that the high price actually came as a surprise though, Kutaragi has always said it'll be expensive and that you'd have to work overtime to afford one

 

[Diamond.G]

For a games console, it is expensive if you look at past launch prices.

But as an home entertainment electronics device, it doesn't seem so expensive.
I mean, I recently paid €580 (rrp €699) for my dvb pvr, and it's a common price for such a device. It does what pvr's do, records digital TV to a HDD and little else. I'm sure there's a lot more air in it's price than there is in PS3 and I'm sure the PS3 is a lot more finished and polished device than that buggy pvr.

It does seem Sony is about to differentiate the Playstation brand from being what is traditionally known as a games console, but class it as one home entertainment device among TV's, receivers, DVD/Blu-ray players and such, that have traditionally been priced a lot higher than games consoles for what they actually are capable of.

It's not that the high price actually came as a surprise though, Kutaragi has always said it'll be expensive and that you'd have to work overtime to afford one

Actually that leads to another good question. Are the Videogame boutiques not gonna do bundles? I mean this thing is supposed to be a media centre of sorts so it would only make sense to not sell *force* games and extras that don't help push that image. Otherwise how much do you think they will tack on to the price of the already expensive ride?

 

[quest55720]

Actually that leads to another good question. Are the Videogame boutiques not gonna do bundles? I mean this thing is supposed to be a media centre of sorts so it would only make sense to not sell *force* games and extras that don't help push that image. Otherwise how much do you think they will tack on to the price of the already expensive ride?

The bundles never going away for popular system launches. It is a way for the stores to make a lot of extra money. I would not be shocked to see some store start bundles at 750+ dollars for the stripped down unit plus extras and 900+ for the real ps3 plus extras. If people were willing to pay a grand on ebay for a 360 I am sure even more would not mind spending 750+ on a ps3 bundle from a store. Soon as supply catches up the bundles will disapear like for the 360. When there is massive shortages someone will take advantage it could be the store or an ebayer.

 

[Nesh]

A lot of folks on other boards have been trying to make a parallel between the PS3 pricing and the launch of the 3DO, but I don't think they match up well. Your average consumer had no idea what 3DO was or did. Everyone knows what a PS3 is.

The problem Sony is going to face is one they've never had to contend with before: real competition. Say all you will about the Dreamcast, it was neither as well supported as the Xbox 360 and had no killer app or unique functionality such as the Wii is going to launch with in terms of Zelda and the Wiimote. Here's the choice the vast majority of console consumers - parents - are going to face when they go to Best Buy the day after Thanksgiving:

1) PS3 - on display but unavailable for purchase. In fact, it's been unavailable for over a week now in stores and is available only on Ebay for a minimum reserve of $900. For the 20 gb version.

2) Xbox 360 - available with a lot of games. Set up right next to the PS3 display. Dad can tell no difference between the racing game demos on the PS3 and the Xbox 360. Except that the 360 controller rumbles when you hit a wall.

3) Wii - there's a ring of kids around the child playing Zelda under the watchful eye of a Best Buy employee. There's a 5 minute limit on each kid to play on the unit, and even the parents can't help but smile at the TV remote being used to control the action on screen by pointing. Unfortunately, they sold out at opening this morning to the folks that had been camped out since closing on the day before Thanksgiving, but a new shipment is due next week. Oh, did we mention you can buy the console AND Zelda for the price of an Xbox 360 itself?

Forget the 3DO analogy. Sony's situation reminds me of one of my favorite ironies: at one time, TLC (the singing group) was the top grossing female touring group in the country and bankrupt at the same time. Sony will represent the same this holiday season - massive sales and shortages initially, but the mindshare is going to be lost after the New Year along with the demand, as children have their Wiis and existing Xbox 360s to play with, and your average parent, even those who could reasonably afford to, will not pay $500 for a console (without a game!) outside of the holiday season. The hardcore gamers will have theirs. Who, then, will be left to buy the PS3?

Possible scenarios but way too pessimistic towards PS3 dont you think?

 

[Sis]

I think Sony is going to pull an Ebay .
launch expensive and start lowering their prices faster then they usually did.
(but then again, I feel like the only one who didnt get surprised about the ps3 price.. ps2 launched at 520euro backcalculating the euro 6 years ago)

I think Europe is the only place that won't be impacted by this. But there're two things you still need to account for:

1) If Sony does drop their price quickly, they will create instability in the consumer trust of the value. This could cause loss of sales simply because people don't want to buy something that may be cheaper 6 months from now.

2) Loss of mindshare due to anger and resentment over the price in other markets. This could spill over into Europe, regardless of the price similarity between PS2 and PS3 over there.

 

[Shifty Geezer]

I can agree with 1, but dropping prices is something that'll always bother people. I imagine those buying at $600 are anxious to be first with the tech and consider it worth the premium, so a drop wouldn't offend them so much.

As for 2, I think quite the converse. In Europe PS3 would likely sell more on account of it being the same price abroad, than sell less because the US isn't getting it cheap like they usually do

 

[hey69]

-yes but people already anticipate this. some of my collegues who even dont know what a xbox360 is tell me they will buy in the future a ps3 but they will wait a year so prices fall down.. its always like that they say. I mean, people are aware of this.
hardcore gamers buy it first, then the rest follows.

- at the european launch, the ps2 was much more expensive then the usa model, yes lots of people bitched about it.. mainly again hardcore gamers, people who visit forums etc.. but the average joe who wants a console does not know its much more chepaer in the USA or Japan..

I think it depends alot on the type of customers they are atracting. sureley you atract an other type of customer at 600euro then 299euro

 

[Sis]

-yes but people already anticipate this. some of my collegues who even dont know what a xbox360 is tell me they will buy in the future a ps3 but they will wait a year so prices fall down.. its always like that they say. I mean, people are aware of this.
hardcore gamers buy it first, then the rest follows.

hey69 and Shifty--I agree that price drops are always expected, especially in consoles. The issue is whether Sony can drop the price of the PS3 in the normal fashion. Hey69, you say in one year time, and I agree, it's possible that Sony would have a price drop every year. But how much of a price drop does that have to be in order to get to the reasonable price point quickly? If they knock off $100--a big price drop, IMO, but not unheard of--they are still sitting at $400-500. Now we have evidence that the hardcore gaming market isn't averse to $400 given the Xbox 360 sales, but isn't that market already saturated?

To me, even with annual $100 dollar price drops, the PS3 is still 2-3 years out for most people (except, apparently Europe :smile: ).

 

[Shifty Geezer]

Yes, an annual $100 drop still keeps PS3 a while out of mainstream. Sony basically need to convince people it's more than XB360 and a device everyone wants, a device that isn't comparable to the cheaper alternatives. As a congent device PS3 could be vey good. I don't know if the market is ready for it, and it needs educating that PlayStation doesn't just mean 'Games Console'. Which, at the moment looks difficult to communicate as we lack some decent evidence of extra-console functionality. Show us PS3 with Linux and a PVR program loaded on that works easily, and Sony willl be getting somewhere!

 

[NavNucST3]

Yes, an annual $100 drop still keeps PS3 a while out of mainstream. Sony basically need to convince people it's more than XB360 and a device everyone wants, a device that isn't comparable to the cheaper alternatives. As a congent device PS3 could be vey good. I don't know if the market is ready for it, and it needs educating that PlayStation doesn't just mean 'Games Console'. Which, at the moment looks difficult to communicate as we lack some decent evidence of extra-console functionality. Show us PS3 with Linux and a PVR program loaded on that works easily, and Sony willl be getting somewhere!

I 'm sure you will see MythTV on the PS3, the question is will the usb tv tuners work, and neither 20 or 60gb in terms of size for HD material, for SD its still limited, but maybe you can set the storage to your usb external hdd instead or maybe even network storage...
All of that though is not "pretty", I only have a usb keyboard attached to my 360 for typing and it definitely stands out in the living room. I'm not quite sure the mass market is going to want to have three or four extra peripherals laying next to their entertainment device, in their entertainment space. Not to mention the setup required.
Besides in the US, my cable company, Comcast, "gives" me a HDTV PVR tuner for $10/month (I have three of them), those have 120GB hdds, and even that doesn't feel like enough.

I think it would take years to get over the stigma of "game console", either way I think Sony has their marketing work cut out for them.

 

[expletive]

As this console cycle moves along I wonder now if Sony has to hit 299-399, or if they need to be price competitive with the 360/Wii.

Thats really 2 different questions and in the past the consoles were always comparably priced so we never viewed it in these terms before. For example, in 2 years if the PS3 is 299 is that good enough regardless, or is it only good enough if the 360 isnt 199? We're talking about the PS3 getting to a certain price as if then they would have the price issue 'solved' but it may only really be solved if their pricing is competitive.

Also, the undelying question here is really not about price for Sony its about cost. What is their cost going to be in 2 years? 3 Years? We know it will be at least a Hard Drive more expensive than the 360. If theyre at a cost disadvantage theyll have to choose between: 1) Not competing on price or 2)Matching price and losing money on the hardware for a LONG time.

 

[Npl]

Also, the undelying question here is really not about price for Sony its about cost. What is their cost going to be in 2 years? 3 Years? We know it will be at least a Hard Drive more expensive than the 360. If theyre at a cost disadvantage theyll have to choose between: 1) Not competing on price or 2)Matching price and losing money on the hardware for a LONG time.

That depends if you want to matchup a HDD-including-PS3 to a HDD-less-XBox. I think the choice of having a plain standard SATA Harddrive is alot better than the XBox "HDD-Caddy". After they brought home the point that a HDD is vital to a PS3 in the same sense as a Memory-Card to a PS2, they could still decide to make a HDD-less SKU.

I doubt the cost of CPU/GPU is a big difference between the 2 consoles - the BD-Rom certainly is though. The step price of BD-Drives is mostly a concern of non-existing production capabilities, not the the technology involved. It should fall fast when BD-Roms/Players get more common (the WHEN being the big question here ).

IMHO I wouldve accepted a price this high (or even 50€ higher) if Sony wouldve stuck additional 256MB XDR or GDDR ram in the box. Shouldve made a decent difference even in launch-titles. The PS3 definitly has additional value compared to the other consoles, just that you likely wont see it for a while, and in case of multiplatform titles - possibly never. A bigger pool of memory would be used from day 1.

 

[SugarCoat]

I think Sony is going to pull an Ebay .
launch expensive and start lowering their prices faster then they usually did.
(but then again, I feel like the only one who didnt get surprised about the ps3 price.. ps2 launched at 520euro backcalculating the euro 6 years ago)

they cant afford to take anymore of a massive earnings hit. The PS3 as priced will be launching at about a 30-35% loss. Where are they going to get the savings from if they rapidly drop the price? The answer is nowhere. This is the price they pay unfortunetly for the expensive exotic and difficult design of the system. The system will drop in line with improved yields and reduced production costs which is usually a yearly event, it wont just magically drop price within months.

 

[bunapi]

Possible scenarios but way too pessimistic towards PS3 dont you think?

Just poking some fun. There's some truth in there I think: Wii is going to be huge and PS3, despite claims that it's more than just a games machine, is going to be perceived as just that by the majority of consumers, which is big trouble for Sony given its price.

 

[patsu]

they cant afford to take anymore of a massive earnings hit. The PS3 as priced will be launching at about a 30-35% loss. Where are they going to get the savings from if they rapidly drop the price? The answer is nowhere. This is the price they pay unfortunetly for the expensive exotic and difficult design of the system. The system will drop in line with improved yields and reduced production costs which is usually a yearly event, it wont just magically drop price within months.

+ Since PS3 is now a consolidated Sony group effort, it is also positioned as the beach-head for their digital distribution and media thrust. Without PS3, they will have to spend some of their money to further their objectives on PCs (e.g., stupid rootkit investments). Here, PS3 allows Sony to focus their effort better. And it's on their platform where they have total control. So part of the loss should be seen as an investment.

+ Once the PS Online and the number of PS3 exceeds certain critical mass, there will be multiple revenue streams for Sony (More than just licensing), so it's possible that PS3 will drop its price faster than PS2.

 

[JasonLD]

Despite the price..Sony will sell out initial 6-10 million units without any problem....high price or not...I mean, Blu-Ray capable player will crack 5 million units when HDDVD player isn't likely to break million units(even considering Xbox360 add=on)...and those who purchased PS3 will definitely buy Blu-Ray movies .Just the fact that they can make a huge jump start on HDDVD is worth the risk.
Since Blu-Ray is only clear advantage they have against Xbox360..it will be the main point of PS3 marketing...they will talk about Blu-Ray like there is no tomorrow..

 

[expletive]

That depends if you want to matchup a HDD-including-PS3 to a HDD-less-XBox. I think the choice of having a plain standard SATA Harddrive is alot better than the XBox "HDD-Caddy". After they brought home the point that a HDD is vital to a PS3 in the same sense as a Memory-Card to a PS2, they could still decide to make a HDD-less SKU.

Forget me, dont you think console gamers are going to put the cost of a HDD-less 360 against the PS3 at some point?

I think theres plenty of gamers where it will be something like "Ok how much to play Halo 3 $379 (or $329 if theres a price drop by the time it launches). How much to play MGS4, $550" When you distill the whole thing down to just playing games i think that scenario comes up quite a bit in 2007.