What is the impact of no PS3 price drop?

[mrcorbo]

That's why I included the part in brackets, the more technically inclined buyer (which is basically anyone who isn't a casual gamer) believes (in many cases quite strongly) that the PS3 is a hands down superior package.

Sony are very good at marketing (aka blatant lying) and many people believe this spin and simply refuse to believe otherwise.

For example in Australia in 2008 the consoles standings were:
Xbox 360 - 237,000
PlayStation 3 - 213,000
Which is not a lot, taking into account the price difference (which is larger than the difference in the States)
It shows PS3 sales are growing, despite the high price point.
360 sales largely remained stagnant before the significant price drop gave it a much needed shot of adrenalin.

Non Wii consumers would but the PS3 regardless of price it would seem, while 360 sales seem very much price dependent, especially in territories outside the US where it doesn't enjoy a home field advantage.

You are disregarding that the PS3 had a price drop in Nov '07. This plus the launch of MGS 4 and BR winning the format war all within a few months heavily front-loaded 2008 for the PS3. If you were to compare those numbers for just the first half of 2008 they would probably be in PS3's favor instead of behind. The 360, by comparison, was showing the effects of not having a price drop since Aug '07 (to $450, $350 and $280 for the 3 SKUs) and therefore having already exhausted a larger portion of consumers willing to buy in at that price. The fact that the PS3's monthly sales have been down YOY for the last couple of months seems to be a direct result of comparing post price drop sales to no price drop sales.

Price is *always* a factor.

 

[midorigreenwood]

If you guys are talking Australia, you also have to take into account that Sony had a promotion where they gave away free PS3s with the purchase of their Bravia Tvs.

I can't remember the specific numbers.....but they're in the tens of thousands.


Its hard to tell how well HD console games are selling in Aust..... not much hard data except sales charts

Brain training outsold every single HD console game except GTA4 in 2008

 

[Butta]

I wonder if it would be possible to try and extrapolate how much consumers have paid ($) for each next gen console since launch. I would assume that although consumers have bought more 360s they have spent more money on the PS3.

Ex:

Average price for consoles sold
PS3=480
360=320
Wii=250

Money spent on next gen consoles
PS3=480x20000000= $9,600,000,000
360=320x28000000=$8,960,000,000
Wii=250x47000000=$11,500,000,000

Looking at it this way and based on the fact that there wasn't such a disparity in price in previous console generations (if you don't count the 3D0). The consumer seems to have spent nearly the same amount on all 3 consoles and the investment made in the Sony brand does not seem so bad.

 

[Cheezdoodles]

I wonder if it would be possible to try and extrapolate how much consumers have paid ($) for each next gen console since launch.

Your post is kinda misleading because you talk about the average price for "consoles" bought, which would imply that your only interested in what price people paid for their console? In that case, yes it can be easily extrapolated if somebody writes up when price cuts where done and have sales data.

The latter part of your post, kinda makes me think that your talking about what consumers on average spend on their consoles, rather than what the price of the console itself was:

I would assume that although consumers have bought more 360s they have spent more money on the PS3.

If your just talking about the average price of the console, then it should be obvious to anyone that PS3 has the higher average (seeing how its retail price has never been below the x360).... If your talking about how much people spendt on their consoles (like games, controllers etc) then that cannot be calculated unless somebody provides some serious sales statistics.

Edit: oh wait, i think i get it now. What you want to know is if the dollar $ value of all 360's and PS3's worth (and then you can compare it)..

I got to say that would be a rather uninteresting figure, whats really interesting is the total amount of money spend on each console (including everything, games controllers etc) as each console manufacturer has a completely different pricing scheme. Microsoft "forces" many into buying expensive addons like Wifi and rechargeable batteries, PS3 lacks hd cables, but has wifi etc, Nintendo charges $30 for $2 worth of plastic etc...

I would assume that although consumers have bought more 360s they have spent more money on the PS3.

If we assume 28mill 360's, 20mill PS3's and we dont care about exchange rates etc, the PS3's average price only has to be about 1\3 higher than the X360 average price. I think that this should be the case, if we consider that the PS3 has been priced about 100-200$ more than the 360 at all times.

 

[Butta]

Do you mean how much consumers have paid when they bought the console or how much consumers spend on each of the next gen consoles in total (like with controllers and headsets and crap)

Just the initial purchase of the console itself. Nothing else.

 

[Cheezdoodles]

Just the initial purchase of the console itself. Nothing else.

This can easily be computed, it can even be very precise if one bothers to account for exchange rates etc.

We would need sales data for all regions and a piece of paper saying when price cuts where done. Of course, we can allways use less, but it would be at the expense of accuracy.

It still doesn't have to be a bad estimate thought, price cuts are generally done in the same time within each region, and i doubt there is that much difference in how much the pricecuts affected sales within each region, this simplifies a lot of things.

 

[BadTB25]

Also, what does it really matter if each console cost is different for the manufacturer's.

For example:
Company 1 sales console for $200, but makes a $5 profit on it.
Company 2 sales console for $300, but makes a $1 profit on it.

both sale a 100 each.
Company 1 makes $500 profit although total money brought in is $200,000
Company 2 makes $100 profit although total money brought in is $300,000

Which position would you rather be in?
Also, since cost of manufacturing is fluid, it would really be difficult to extrapolate these figure without inside information.

 

[Butta]

Also, what does it really matter if each console cost is different for the manufacturer's.

For example:
Company 1 sales console for $200, but makes a $5 profit on it.
Company 2 sales console for $300, but makes a $1 profit on it.

both sale a 100 each.
Company 1 makes $500 profit although total money brought in is $200,000
Company 2 makes $100 profit although total money brought in is $300,000

Which position would you rather be in?
Also, since cost of manufacturing is fluid, it would really be difficult to extrapolate these figure without inside information.

The reason that I wanted to know what amount people spent on the initial purchase of the 3 consoles is the following:

- The cost of the console is the #1 determining factor whether someone will even purchase it
- As bad as I thought Sony was doing this gen, it seems that its user base has spent nearly as much on the initial purchase of its console (the entry point to owning a next gen system) and possibly even moreso than for the 360

 

[BadTB25]

I see. You're probably correct about the amt spent for price of entry for PS3 owners getting in this generation.

The cost of the console combined with the software available combined to me is the number 1 factor of owning a next gen console.

For some reason though, this didn't help the Dreamcast that had both good software and price when the PS2 arrived. Some say it was the Sony hype that killed, some say it was the lack of support from EA, it could be a combination of both to include public perception.

 

[mrcorbo]

- As bad as I thought Sony was doing this gen, it seems that its user base has spent nearly as much on the initial purchase of its console (the entry point to owning a next gen system) and possibly even moreso than for the 360

Why is this important?

 

[Butta]

Why is this important?

Why it is not important... it's the first consideration when buying a console (the price of the unit)

 

[Asher]

There are two things that matter:
1) Number of units sold
2) Profit for the company

The PS3 is a distant third in both of these categories. The raw revenue they brought in has no importance, because they lost more money than everyone else on top of that.

 

[betan]

Why is this important?

It certainly is more important than attach rate which is still being used by console warriors and PR people.

 

[RancidLunchmeat]

I still don't see how it matters if a smaller group of people were willing to spend a larger amount of money.

Although, I do sense car analogy potential!

 

[mrcorbo]

Why it is not important... it's the first consideration when buying a console (the price of the unit)

It establishes that enough people are willing to pay enough of a premium for the PS3 to enable them to achieve equal or greater revenue than the 360 overall with fewer sales.

Is it that willingness to pay a premium that you consider important?

 

[mrcorbo]

I still don't see how it matters if a smaller group of people were willing to spend a larger amount of money.

Although, I do sense car analogy potential!

The problem with applying car analogies to console discussions is that cars (generally) all run on the same fuel and on the same roads. The proprietary nature of consoles will break most of those types of comparisons.

 

[mrcorbo]

It certainly is more important than attach rate which is still being used by console warriors and PR people.

Why?

 

[RancidLunchmeat]

The problem with applying car analogies to console discussions is that cars (generally) all run on the same fuel and on the same roads. The proprietary nature of consoles will break most of those types of comparisons.

Hmm? I don't see how that doesn't apply here, the limited number of exclusives this generation would seem to negate those differences, IMO.

As far as I can see, both the PS3 and the 360 run on the same fuel and on the same roads for 95% of the time.

In terms of your equal or greater revenue discussion, why is revenue per sale important at all?

I understand the importance of attach rate (I don't know why betan doesn't think it's an important or at least interesting metric). But I don't get revenue at all.

Profits, I understand would be interesting to examine because they could possibly predict lifespan and future strategy/launches. But revenue? I don't see how it applies.

 

[Zassk]

Since the profit is on the software side, IMO one should compare total amount spent on software instead. If there is a discrepancy in the average price per unit of software for the different consoles, then we can factor that in.

 

[jonabbey]

Hmm? I don't see how that doesn't apply here, the limited number of exclusives this generation would seem to negate those differences, IMO.

As far as I can see, both the PS3 and the 360 run on the same fuel and on the same roads for 95% of the time.

Nope, the PS3 and 360 run on different, incompatible brands of fuel and separate road ways, even if you can get either brand of fuel at most any station, and they both have pretty decent road systems to get to most of the same places.

Separate means not equal when it comes to competing network effect domains, unless the development, marketing, and distribution costs for supporting both platforms is absolutely nominal, and it ain't that.