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411mania » The 411 » Adam Larck
Name:Adam Larck
Current Roles:News writer for the games section. Contributed to Fact or Fiction and Top 5. Also preview and review games.
Past Roles:Writer of the 10th Hour column.
Other credits:
My thoughts on a Playstation 3 price drop - 01.13.2009

After reading that Michael Pachteran, an analyst, thinks the Playstation 3 will drop in price by April, and that Sony may post their first loss in 14 years, I wanted to post my actual thoughts on a price drop for the system. As harsh as it sounds for the company and all the employees who donít have such a hard view as the corporate employees, this loss could be exactly what Sony needs. With them expected to take a $1.1 billion loss, in U.S. dollars, Sony will have to do something to increase sales of everything. While Iím just going to focus on the PS3 here, they need to increase PSP sales, TV sales, DVD players, etc., and hope that the economy will strengthen to allow more impulse buys like these.

Right now the low-end PS3 system is still $400 new. While the Xbox 360 price is also at $400, thatís for the Elite system, the biggest one they have. The mid-size system is only $300, while the low-end, great for just a casual gamer, is just $200, coming in cheaper then the Wii. Ah, the WiiÖthe only system with one flat cost, $250. But why mention all the low, mid, and high levels of each system? Because, as stated earlier in the paragraph, $400 is Sonyís LOW-END model. For the high-end? Expect to pay $500 new.

Now, itís no secret that Sony has been making PS3s at a loss either. But, the good news is that this loss has decreased over the year. According to iSuppli, the cost of making the first-generation models was $690.23. At the end of October 2008, that cost was down to $448.73. Still making the systems at a loss? Yes, but over $200 less of a loss. Now, as long as these estimates are correct (or at least close), the company is losing almost $50 per console.

This ties in to my actual point. While still losing money, the loss isnít nowhere near as bad as it once was. With the overall cost being cheaper, yes, the company can occur less of a loss, but with the high value of the system they still wonít sell enough to even begin to compensate for the $1.1 billion overall loss. To truly increase sales of the system, the company will have to take a bit higher loss per system. Iím not saying drop it $200 to match their original loss price, but what if they drop it $100, or even $150. They still get that loss, yes, but itís still giving them back an extra $100 to $50 they didnít have. This would easily be offset by the rising sales. I donít know how many gamers I know of that have been waiting to by the PS3 after a price drop. Iím one of them. But, even if Sony were to implement this, when would the best time be?

Now? No, why would someone buy a system now. Nothing is coming out for the system in the next few months besides Killzone 2 and Resident Evil 5, which also comes to the 360. While they could try to compete with that, after that nothing big releases again so in the long run a 360 gamer would not buy a system for a multisystem game. This is the same reason I donít agree with Pachter, because Sony needs more to sell than just a system, they need a game to go with it. So, what better time than a price drop right alongside of one of itís exclusive titles. The obvious choice would be God of War III, but with that not expected to come out until late 2009, Sony needs to do the price drop earlier than that. But, why not inFAMOUS? Itís a Sony exclusive, from the same guys who made Sly Cooper, and looks to be one of their first big summer titles. Sonyís hoping this game will be as big as Sly Cooper, and with a perfectly placed price drop at the exact same time, this could help jump-start PS3 sales right through the summer and build with other releases like God of War III and Uncharted 2: Among Thieves.

As I stated at the top, this is all just my opinion, but it does make a good marketing sense from their standpoint. Weíll have to wait till later in the year to see if any price drop at all happens, and when it will if (and when) it does.
full blog
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