Why should consoles start from USD299?

[gongo]

...or US$399...if you will, why is that some benchmark to buy into..? Frustrating me to see many forum'ers kept claiming..next gen wont be a great leap...Sony won't want to lose money...Nintendo success with cheap Wii/DS paves the way it is meant to be....this is so restrictive....i want my consoles US$599....big box...250W TDP...big exhaust...big graphics...big computational... like so many people won't mind paying US$600+ for the latest phones...tablets...or even more with data plan...US$800++ and the phone will be worthless in 2 years.....you telling me the 4G radio is that expensive...? the processors these mobile devices are using..happens afaik in the past we refer to them as budget chips...the celerons and durons and atoms of the batch....

When...if...though unlikely..that Sony announce PS4, to again ...strike at US$599....you know those "pro" game sites will start making jokes about its price tag...Sony is doom! ..bloggers...forum'ers...will go viral about US$5-9-9 gifs and all...spreading the doom! ..this is so sad when you think about next gen...

 

[mrcorbo]

...or US$399...if you will, why is that some benchmark to buy into..? Frustrating me to see many forum'ers kept claiming..next gen wont be a great leap...Sony won't want to lose money...Nintendo success with cheap Wii/DS paves the way it is meant to be....this is so restrictive....i want my consoles US$599....big box...250W TDP...big exhaust...big graphics...big computational... like so many people won't mind paying US$600+ for the latest phones...tablets...or even more with data plan...US$800++ and the phone will be worthless in 2 years.....you telling me the 4G radio is that expensive...? the processors these mobile devices are using..happens afaik in the past we refer to them as budget chips...the celerons and durons and atoms of the batch....

When...if...though unlikely..that Sony announce PS4, to again ...strike at US$599....you know those "pro" game sites will start making jokes about its price tag...Sony is doom! ..bloggers...forum'ers...will go viral about US$5-9-9 gifs and all...spreading the doom! ..this is so sad when you think about next gen...

You're comparison with mobile devices is misguided, but regardless, the answer to your question is simple. Consumers (prior to this gen) had been conditioned to expect consoles to cost $299 at launch. Therefore anything higher than that seemed expensive and clearly affected the sales of the HD consoles early on (there were other factors as well, but with the PS3 I believe price was their biggest issue).

Than you have the Wii, which launched at $249 and sold like crazy. Again there were other factors, and in their case price may not have been the biggest contributor to their sales. It certainly didn't hurt, though, that it was "cheap".

As I've stated before, MS have been smart to continually to occupy the $399 price point with a high-end SKU as when next-gen does launch I think they will have firmly established that $399 price point in consumer's minds as the cost for a top-end console SKU.

 

[monkeyx]

like so many people won't mind paying US$600+ for the latest phones...tablets...or even more with data plan...US$800++ and the phone will be worthless in 2 years.....you telling me the 4G radio is that expensive...?

I agree with you but (at least in the U.S.) people don't tend to buy their phones outright they subsidize them for a cheaper initial price. A lot of people have short memories and we have had consoles in the past that debuted at 600 - 700 and they were normally the more advanced consoles. Going a step further the Genesis (mega drive) and TurboGrafx (pc-engine) had CD ROM attachments that put those devices in the 600 dollar range. This is why when the PS3 announced their price I was a little surprised but I wasnt outraged. I would have bought one at launch had Metal Gear Solid 4 been available.

With Alienware bringing out a console form-factor gaming PC around 700 I wouldn't mind seeing the console makers hit the 500 or 600 dollar mark but I think it would be problematic for most.

 

[Nesh]

Well considering that the companies dont want to lose money, they have to find that golden rule between production costs, retail price and demand.

Its not that easy to shove down $599 for a console unless its got something that the consumer REALLY needs NOW. And it is hard to find that something that will pull everyone in. People arent rich. Not even the first adopters. The majority are always the typical everyday guy. It is extremely important for a console to sell big amounts at launch! It is unlike other forms of gadgetry like state of the art TV's, tablets smartphones etc because they need to move a given amount of software too. Consoles cant afford to start as slow as those other products. They have to start strong from the get go. Developers and publishers rely on your product's success to profit. If they are unhappy with your launch they will develop more on competition. And by doing so, you get less support and less support means less hardware sales and less royalties from software sales. A console is nothing without software. Those other products either work as standalones or/and they have their software ready (in the case of tablets and smartphones they have immediate access to software developed on their predecessors).
Produce a console that is good enough for $399 and more everyday guys will be willing to buy at launch and hence the more secure your product is.

Then there are the technology advancements. With more powerful hardware it is becoming harder and harder to contain everything in a small box without producing too much heat and consume too much energy. We are hitting diminishing returns. So unless you want something that is powerful and too expensive, they have to target something that is affordable, safer and consumer friendly

We are living on very difficult times too! People are more reluctant to spend than before.

 

[TheWretched]

Sony and MS could as well subsidize their consoles through PSN Plus or XBL Gold like a mobile contract... like a mandatory 24 months, but the console is lower in price by X amount.

 

[tongue_of_colicab]

Problem with that is that unlike a mobile phone contract psn or xbl doesn't give you anything back. Phone contact gives you a phone, internet connection, acces to free apps, calling etc. Basically you can do everything just by signing the contact. xbl or psn won't give you anything apart from the possibility to do online gaming. But only after you paid another 60 euro's for a game. So it's not nearly as attractive as a phone contract.

 

[Shifty Geezer]

You're comparison with mobile devices is misguided, but regardless, the answer to your question is simple. Consumers (prior to this gen) had been conditioned to expect consoles to cost $299 at launch.

Not conditioned. They've just demonstrated so far that that's the typical price early adopters are willing to pay. Some consoles have launched more expensive and generally failed as a result. Also the higher the starting price, the longer it takes to get the price down to more acceptible prices. That's fine for smartphones where you can sell different models (Galaxy Mini, Ace, S), but consoles depend on massive install bases on the same uniform hardware which means getting the price low enough for those less willing to spend more.

 

[TheWretched]

Problem with that is that unlike a mobile phone contract psn or xbl doesn't give you anything back. Phone contact gives you a phone, internet connection, acces to free apps, calling etc. Basically you can do everything just by signing the contact. xbl or psn won't give you anything apart from the possibility to do online gaming. But only after you paid another 60 euro's for a game. So it's not nearly as attractive as a phone contract.

Have you ever seen what PSN Plus offers? It's VERY much different from Gold (which basically just allows online gaming and not much else). You get free games, free full game demos (time limited), free DLC... ... it's VERY much compelling.

 

[DuckThor Evil]

X360 with HDD started $399 and sold much better than the Core unit, so I think $399 as a starting point should at least be fine. For me it depends how cutting edge and powerful it will be (of course that also influences the price). $599 is a no no.

 

[novcze]

PSN Plus gives you free games, discounts, cloud save, etc.
I'm decided to buy membership when PS4 arrives, so phone contract like offer would be good.
I hope they also offer PS4 model without HDD so I can buy whatever I like (SSD). I would buy SSD for PS3 if I knew there will be no SSD like cache in PS4.

 

[gongo]

X360 with HDD started $399 and sold much better than the Core unit, so I think $399 as a starting point should at least be fine. For me it depends how cutting edge and powerful it will be (of course that also influences the price). $599 is a no no.

is that a personal no no....or a no no on behalf of the masses...or a no no because you think the active voices will make a meal of it? imho the gaming media and fanboy community should be more supportive of a expensive but powerful hardware...that Sony/MS will feel comfortable to make one and take a loss on it.....with further consideration that last gen the bom for the controller is like $1 per set....next gen expect controllers bom to increase 10-20 fold? ...and these so called hardcores are the downer..the first in line to trollololol if next gen launch at USD599....as Epic would say...why launch a new console if it is not feeling the next gen.

 

[gongo]

Problem with that is that unlike a mobile phone contract psn or xbl doesn't give you anything back. Phone contact gives you a phone, internet connection, acces to free apps, calling etc. Basically you can do everything just by signing the contact. xbl or psn won't give you anything apart from the possibility to do online gaming. But only after you paid another 60 euro's for a game. So it's not nearly as attractive as a phone contract.

the full 24 month phone contract...i think even a USD599 console + 24 month internet sub....will not be much expensive...you can do a lot more on a powerful console...and support will last 5-7 years...unlike the Android and iOS...
60 euros game otoh...would you pay more upfront for the hardware...in turn see game prices go back down to 40-50 euros...? i would..

 

[McHuj]

I think there's simply not enough people willing to buy them at $599 and certainly not enough to build out an install base for software. I don't think developers could make back the money on that install base early in the life of the system so you'd be in a catch-22. Little software with a small hardware install base that won't get better software support until there's a bigger install base, but that can't happen without the software coming first and repeat.

Also, if your console is 599 at launch, how much will it cost in 2 years 3 years, or 5 years? 6 years in the PS3 is $249 and the Xbox is $199 for the base unit. It's a lot harder to reach mass market prices when starting at a really high price.

 

[DuckThor Evil]

is that a personal no no....or a no no on behalf of the masses...or a no no because you think the active voices will make a meal of it? imho the gaming media and fanboy community should be more supportive of a expensive but powerful hardware...that Sony/MS will feel comfortable to make one and take a loss on it.....with further consideration that last gen the bom for the controller is like $1 per set....next gen expect controllers bom to increase 10-20 fold? ...and these so called hardcores are the downer..the first in line to trollololol if next gen launch at USD599....as Epic would say...why launch a new console if it is not feeling the next gen.

$599 would certainly put heavy brakes on the mass market adoption of the console. I personally wouldn't pay that much either, unless it would have the ability to do everything I do on the PC today. Sometime in the past I would have, but not anymore.

I personally feel that we have shifted quite a bit from hardware to software and developer skill/resources anyway with regards to gaming experiences. Next gen should still bring a solid leap in visuals as well, but it's importance is going to continue to diminish.

 

[novcze]

I understand why new consoles have to be cheap so more people can buy them, but there is market for premium. Is it possible to have optional double GPU SKU? Something like standard PS4 ($399) would run certain game at 30 fps, premium PS4 ($549) at 60 fps or with better AA or higher resolution. I would probably buy premium one.

 

[liolio]

...or US$399...if you will, why is that some benchmark to buy into..? Frustrating me to see many forum'ers kept claiming..next gen wont be a great leap...Sony won't want to lose money...Nintendo success with cheap Wii/DS paves the way it is meant to be....this is so restrictive....i want my consoles US$599....big box...250W TDP...big exhaust...big graphics...big computational... like so many people won't mind paying US$600+ for the latest phones...tablets...or even more with data plan...US$800++ and the phone will be worthless in 2 years.....you telling me the 4G radio is that expensive...? the processors these mobile devices are using..happens afaik in the past we refer to them as budget chips...the celerons and durons and atoms of the batch....

When...if...though unlikely..that Sony announce PS4, to again ...strike at US$599....you know those "pro" game sites will start making jokes about its price tag...Sony is doom! ..bloggers...forum'ers...will go viral about US$5-9-9 gifs and all...spreading the doom! ..this is so sad when you think about next gen...

Console are evolved toys, for most like me their marginal value is lower than the the one of a computers, slates, phones.
Then about how a manufacturer will price something is factor of BOM but more importantly which part of the public it wants to reach and so the match (by the top) the marginal value a game console has for the part of the market, for enthusiast like you it seems that +500$ is not a problem. For me 300 is a maximum as I can get way more useful device for the price (from PC to Phone) and I can't justify to my self spending as much in a gaming device.

So why the price is not going up with inflation? That's a good one. Pay check not going up fast enough, marginal value vs other electronic devices. And how it's achieved is even more interesting, lowered margins, modern form of slavery, currencies manipulations, low custom taxes on critical products (entertainment is critical go figure) and ultimately Moore law. But assuming Moore Law allow to decouple from inflation by it-self is a joke.

Subjective vs objective approach of the economy. You're going in the wrong direction primary materials are not what make the price of a product. The market/ Human give a price for a product then the rest adapt till it can basically, for now tricks and progress have CE devices to kind of decouple from inflation when this reach the end of the road the market/human will make new arbitration on what should be the value of CE devices then adapt price, replacement length, etc.

Back to our question is strategy after +7 years how much of your costumer do you want to transition to your new system fast ? 100% obviously won't happen. How much production constrained will you be at launch ? If you price your system to reach most of your user base you will be production constrained no matter what => Can price higher feeding a specific part of your user base. An interesting question is how much a manufacturers can deliver because it important to pricing. If you launch cheap you would want to greatly increase the reach of your product as a trade off. If you peak at 10 millions units a year... then it not a good idea to launch cheap as you might find 10 millions users that will agree on paying a premium.
To give a picture out of my ass if you launch a complete system (including fancy peripheral(s)) at 299$ you want to be able to produce at lot, think more than the number of Wii Nintendo produced in the first years. You're trying to maximize your impact of the market, ideally you would want to not be production limited at all.

Gaming is a big market, I believe that one could get more users per year to transition than most believe if your production capacity is not a bottleneck, price is lo, etc. Once again primary resources is not the most important part, if you're willing to let aside the premium a part of user base is willing to pay on volume you are not able to get higher anyway, you will make a system so mass production is not a problem if you see what I mean.

Ultimately what decides what the system embarks and at which price is humans not technological progress and considerations in insulation. Business decision trying to fill human needs.

 

[Acert93]

My 2 cents: I think the first "progressive" console if it launches alone should launch at $399 and promptly drop to $299 the following Summer. There are always suppl6y/demand issues at launch and people will by a quality console in droves. Sony/MS should probably shy away, if there is limited inventory, from allowing ebays to make the biggest cut on gouging. I think $499 does NOT sit well with consumers though.

So even if both makers have a dual SKU tier product (ala Pro / Arcade) their best approach is NO Arcade at launch and go with a $399 Pro. Maybe the following Holiday introduce a $299 non-gimpy (but lesser storage or whatnot) Arcade while keeping a $399/$379 Pro model.

I could also see a Premium tiered product, e.g. a $499-$599 DVR style tuner/HTPC style product being in the mix.

 

[Nesh]

I understand why new consoles have to be cheap so more people can buy them, but there is market for premium. Is it possible to have optional double GPU SKU? Something like standard PS4 ($399) would run certain game at 30 fps, premium PS4 ($549) at 60 fps or with better AA or higher resolution. I would probably buy premium one.

That would be insane
That would have worked only under the assumption that it would be a good business model. Which it is not. It adds an extra hassle to game development, it will create confusion among consumers and dissatisfaction as the single GPU PS4 will be slowly faced out as prices go down and the consumer who bought a single GPU PS4 in (lets say) 2013 will be left with an inferior product in comparison to a consumer who bought a double GPU PS4 in 2014 or 2015 for the same price or less.

A developer will be trying to push the hardware as much as possible. A double GPU PS4 would open more possibilities to the developers than a single one. And thats where devs would face a dilemma. What would each developer do? Push the double GPU model to its limits and ignore the single GPU model because it doesnt have the power? Or just push the single GPU model to its limits living the double GPU model's untapped power unexplored by simply providing better framerates and resolution? If the latter is the case thats a lot of hardware cost and investment gone down the drain! What if some developers go for the first option and others for the second? Thats fragmenting the userbase right ther

Also there would be many consumers who will not purchase the weaker version and will simply wait for a price cut because they d want the better experience. That would inevitably cause a slowdown to sales and give the impression of low demand when Sony would want to have as many sales as possible at any given time considering the competition and their clients' needs!

Consoles arent like tablets!

 

[RudeCurve]

That would be insane
That would have worked only under the assumption that it would be a good business model. Which it is not. It adds an extra hassle to game development, it will create confusion among consumers and dissatisfaction as the single GPU PS4 will be slowly faced out as prices go down and the consumer who bought a single GPU PS4 in (lets say) 2013 will be left with an inferior product in comparison to a consumer who bought a double GPU PS4 in 2014 or 2015 for the same price or less.

A developer will be trying to push the hardware as much as possible. A double GPU PS4 would open more possibilities to the developers than a single one. And thats where devs would face a dilemma. What would each developer do? Push the double GPU model to its limits and ignore the single GPU model because it doesnt have the power? Or just push the single GPU model to its limits living the double GPU model's untapped power unexplored by simply providing better framerates and resolution? If the latter is the case thats a lot of hardware cost and investment gone down the drain! What if some developers go for the first option and others for the second? Thats fragmenting the userbase right ther

Also there would be many consumers who will not purchase the weaker version and will simply wait for a price cut because they d want the better experience. That would inevitably cause a slowdown to sales and give the impression of low demand when Sony would want to have as many sales as possible at any given time considering the competition and their clients' needs!

Consoles arent like tablets!

Shouldn't be a problem if the game is developed with forwards compatibility in mind from the start. This may be one of the new strategies possible, the other being new hardware every 2 years.

 

[novcze]

That would be insane
That would have worked only under the assumption that it would be a good business model. Which it is not. It adds an extra hassle to game development, it will create confusion among consumers and dissatisfaction as the single GPU PS4 will be slowly faced out as prices go down and the consumer who bought a single GPU PS4 in (lets say) 2013 will be left with an inferior product in comparison to a consumer who bought a double GPU PS4 in 2014 or 2015 for the same price or less.

A developer will be trying to push the hardware as much as possible. A double GPU PS4 would open more possibilities to the developers than a single one. And thats where devs would face a dilemma. What would each developer do? Push the double GPU model to its limits and ignore the single GPU model because it doesnt have the power? Or just push the single GPU model to its limits living the double GPU model's untapped power unexplored by simply providing better framerates and resolution? If the latter is the case thats a lot of hardware cost and investment gone down the drain! What if some developers go for the first option and others for the second? Thats fragmenting the userbase right ther

Also there would be many consumers who will not purchase the weaker version and will simply wait for a price cut because they d want the better experience. That would inevitably cause a slowdown to sales and give the impression of low demand when Sony would want to have as many sales as possible at any given time considering the competition and their clients' needs!

Consoles arent like tablets!

I don't think you quite get my idea. I proposed two SKU's right from the start of new console, not standard first and premium later. And advantage of the premium one should be just in picture quality (AA) or higher framerate/resolution (or support for two displays). This should be relatively easy for game developers to implement and will satisfy hardcore gamers.