The Price Is Not Right

Adam LaMosca

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The Price Is Not Right

Let's look at current generation console prices to date, in U.S. dollars. Nintendo's Wii rings up at about $250. Microsoft's Xbox 360's three flavors include the $300 Core pack, the $400 Premium edition, and the $480 Elite. Sony's PlayStation 3 is available in $500 and $600 options. All other things being equal, the Wii's price is obviously the most attractive, which might explain why it's outselling the 360 by about 2-to-1, and the PS3 by about 4-to-1.

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May 29, 2007
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This is like trying to compare a £2 watch with one that is £100. The cheaper watch is definatly going to sell more but does that mean that people will only pay £2 for any watch? Of course not!

The only thing that Nintendo has done is avoid trying to target the same market as Sony and Microsoft because they know they can not compete. As they are targeting a totally different market with a differant product how on earth can you compare them on the number being sold?
 

TomBeraha

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An interesting point of view, but I think that it would be far more likely that as gaming expands it is going to break down into the same rough market distribution we find in almost every other market I can think of off the top of my head.


You have the elite - cream of the crop - best of the best - In our current generation I suppose Both the PS3 and the Xbox360 are arguing for it (at least in the console world) Yet neither come close to the cost of maintaining a truly cutting edge system.. The PC. High End new PCs will easily dwarf the cost of any console, or even all 3 big players and even include a high def tv to play them on along with several games. It's THAT big of a difference.

Next down we'll find the midrange value, this is generally going to be the price point on the curve where discerning buyers will get the most value for their dollar. (When value matters - this is key) Nintendo Wii is trying to fit in here, I think it's falling short in some ways and succeeding admirably in others. In the Computer market there are PCs built by dell that you can buy for 400 with a monitor, and the fit here too. They're perfectly fine, but don't pretend it's a gaming rig.

At the bottom end we'll find the lower end stuff, PC's that are bought used come here, as do at the moment in the videogame chain the handheld items. This is NOT to say that we can't find great value at these price points. But in general I expect a market to show a 50+% jump each time you go up a step. So 50% of all market users will be on the bottom, 75% in the bottom 2, 82.5% in three, so on, and 50% I pulled out of nowhere, but it gives you an idea of the distribution I'm trying to show.

Example -> Restaurants
Most people dine out. Most people do not dine out at restaurants that normally cost $1000 for a meal. Very few dine out at 100$ a meal. There are more who will dine out at $50,25, all the way down till you hit fast food, and It's no suprise to anyone that McDonalds still has a long line.

Example -> Games
Given that the crowd we are looking at are all gamers. Most gamers do not spend $20,000 on gaming in any given year. Very few spend $10,000 on gaming. Even less as we go down until we hit your lowest end games. I don't think the DS is your fast food, I think it's probably the handheld games in toy isles, possibly the cell phone games.

Now that I've rambled a bit, The real point I'm making is that a lesser price is certainly going to affect sale numbers. Much more telling about value is how far a product will sell beyond it's normal range. This requires defining at what spot in that range a product is. How well the Wii sells to gamers who normally play cell phone games only, or weren't even gamers before, and how well it sells to the person who still buys a 10,000 dollar computer every year are very telling signs of it's value. I think the only semi-accurate graph I could envision to compare sales to value is one where you saw how well a product sold on a graph where the purchases are adjusted by their cost relative to the buyer's income. related graphs would be the buyer's normal expenditures in that area, and comparable products with the same customers.


At the end of all this speculation and number crunching I would argue you could find a "best value". But it would all mean nothing to you if you didn't like the product. That started as my 2 cents and got way out of hand.
 

Ajar

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Here [http://curmudgeongamer.com/2006/05/history-of-console-prices-or-500-aint.html] are inflation-adjusted and unadjusted graphs showing the prices of consoles throughout history. The most immediately obvious thing I note is that no console with an inflation-adjusted base MSRP above US$400 has met with major market success since the Atari 2600. In real terms, no console with an unadjusted base MSRP above US$300 has met with major market success. When you draw the US$300 line on the unadjusted graph, look at what drops out: Atari 5200, Neo Geo, CD-i, Saturn, and PlayStation3.

I suspect that's part of the reason for the existence of the Xbox 360 Core System at US$299.
 

TomBeraha

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Ajar said:
The most immediately obvious thing I note is that no console with an inflation-adjusted base MSRP above US$400 has met with major market success since the Atari 2600. In real terms, no console with an unadjusted base MSRP above US$300 has met with major market success. When you draw the US$300 line on the unadjusted graph, look at what drops out: Atari 5200, Neo Geo, CD-i, Saturn, and PlayStation3.
I think it might also be prudent to consider which consoles faired poorly that were too far below the adjusted lines. I imagine like most things, a sweet spot will exist.

Can anyone take these figures and adjust them for console sales? possibly with a break down of per year since launch as a second graph?
 

Blaxton

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Why is the Wii considered risk-averse? They went in the opposite direction of the next-gen console trend and thats risk-averse? They could have fallen flat on their faces with their "gimmick" but it has been working so far.

Also, saying the game play lacks depth isn't founded either. It's a new controller and developers will have to get used to that; deep game play will come with time. If you have only played Wii Sports I can understand your gripe, but thats not the only type of game available for the console. The whole "take in the general feeling for the console" thing that seems so popular just doesn't speak to the actual situation. Are there a good bit of shallow games? Sure. However, there are deeper games. I don't sit around and play every title that comes out, I don't have the time or the money, but I find the ones I do think I will like and I buy them. The Wii has supplied me with enough game play depth that I've seen nothing to complain about.

The console is not the games, and you need to find the games you like within the console(s) you have. The Wii has a lot of family friendly titles, but to boil it down to "a kid's toy" is marketing propaganda, and it doesn't have a place in the minds of intelligent gamers.

I think the 360 is a lot of fun too, and, though my experience with the PS3 has been in store only, the PS3 is pretty neat. All the consoles look fun, and they are mostly similar and offer mostly similar experiences. I really don't think the average (or even the most hardcore gamer) will notice a big difference in Wii game play in relation to 360 game play. The cosmetics are the real concern for developers it seems. Besides the looks, there was nothing really spectacular about Gears of War, sorry to say. It's definitely fun, but its not ground breaking in anyway, and exists mostly as a time filler while we wait for Halo 3. There are a few games on each I really want to try, but that doesn't make one a "hardcore gamer's machine" and another a "casual gamer's machine". Find the kinds of games you want on the console you have, buy another console if you can afford it. I'll probably save up for a 360 because it has a good list of upcoming titles (BioShock, Mass Effect to name a couple). I don't, however believe that the console does a specific genre or style better, it just has a couple of titles that interest me (same goes for my Wii and, though I will probably never own one, the PS3).

I like the low price point for the Wii. You don't need tons of power to make great games. It really bothers me that to play Age of Conan I'll have to buy a brand new computer to get it to run smoothly. Is it really necessary to force me into new hardware (and this time, with a new OS) every year? That is why the PC console market has been in decline. Four thousand dollars for a rig that actually plays the games as they are meant to be played is outrageous. Something tells me the game itself will be same-old MMO experience with a couple of changes, I don't want to have to upgrade around another game again for no good reason.
 

Ajar

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TomBeraha said:
Ajar said:
The most immediately obvious thing I note is that no console with an inflation-adjusted base MSRP above US$400 has met with major market success since the Atari 2600. In real terms, no console with an unadjusted base MSRP above US$300 has met with major market success. When you draw the US$300 line on the unadjusted graph, look at what drops out: Atari 5200, Neo Geo, CD-i, Saturn, and PlayStation3.
I think it might also be prudent to consider which consoles faired poorly that were too far below the adjusted lines. I imagine like most things, a sweet spot will exist.
That could definitely be useful to look at, yeah.

TomBeraha said:
Can anyone take these figures and adjust them for console sales? possibly with a break down of per year since launch as a second graph?
I could do both, I just need some time. I may have time to do it tomorrow night.
 

Cygni [deprecated]

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Don't agree with the comparisons of Wii to McDonalds, or the idea that Wii's success is only coming from people who normally don't buy consoles. I'm a fairly serious gamer myself. Own an expensive gaming PC, Xbox 360, PS2 and a Wii. Games to me are about immersion, and this is where Wii won me over. Mimicking swinging a bat or sword and having the mediorce graphically drawn representation on my TV do exactly that, feels more real than pushing R2+X and watching a much more advance image on screen. This is why the Wii is getting significantly more playtime than the Xbox360. Only the PC gets more time from me, which I can place the blame squarely on one addictive online game.
 

Ajar

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Okay, Tom, I made a rough first pass with console sales figures that I could find with some quick Googling.

Worldwide Sales vs. Base MSRP (Not Adjusted for Inflation) [http://www.strobelight.ca/gameinfo/FixedMSRP.pdf]
Worldwide Sales vs. Base MSRP (Adjusted for Inflation) [http://www.strobelight.ca/gameinfo/InflatedMSRP.pdf]

I didn't label the consoles, but I used the list from my earlier Curmudgeon link and found sales estimates for as many as I could. Obviously the 105 and 118 million ones are the PS and PS2, respectively; 61 million is the NES.
 

TomBeraha

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Thanks a lot for doing that Ajar!

Both graphs seem to suggest that any correlation between price and sales would be incidental at best to me. If you notice in actual cost (not adjusted) we have consoles that faired extremely well and extremely poorly all at the same price. Even with adjustments for inflation to try and rid the bias of time we still see consoles which outperform others at very close price by several hundred percent. This would lead me to suggest that perceived value is a much more likely indicator. Which is a fancy way of saying the one that people thought was the best for the money (or worth it) is the one they got. Shocking, I'm sure.

Cygni - I wasn't trying to compare the Wii to McDonalds, I was trying to compare the video game market to the restaurant market. I still think this comparison fits. Even in my example I though I was suggesting that cell phone games and possibly Popcap were your McDonalds or your Taco Bell. This isn't to say that either restaurant is a bad restaurant, or that Popcap games aren't awesomely fun. What I was trying to show was that as a item is more accessible price wise the more likely it will be bought buy it's neighboring segments if it has a high perceived value.
 

Dom Camus

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Bongo Bill said:
Games are finally getting something they've desperately needed: a broad price spectrum.
Definitely !

But wait... is that good for us ? Where by "us" I mean hardcore gamers. Without the mass market unwittingly subsidising our favourite products are they suddenly going to become way more expensive, or even vanish entirely ? (Is Clover Studios already a casualty of this process ?)
 

Ajar

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Bongo Bill said:
All those graphs suggest to me is that there's not enough data.
I'd expand on that somewhat: there isn't enough data to reliably separate price from the myriad other factors that influence a decision to buy a game console.
 

Bongo Bill

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Dom Camus said:
But wait... is that good for us ? Where by "us" I mean hardcore gamers. Without the mass market unwittingly subsidising our favourite products are they suddenly going to become way more expensive, or even vanish entirely ? (Is Clover Studios already a casualty of this process ?)
Clover Studios is a casualty of a broad price spectrum not existing in software, or at least not in all directions. When every game is fifty dollars, you have to sell X00,000 copies to make it back. What if only X0,000 people want it? Too bad, the game won't get made. What if you're one of those X0,000, and you want to play it so bad that you'd pay more than the $50 to get it? Currently, there's no real way to do this. If you sell the game for $100, though, the game might get made, and most of those X0,000 get to play it - and nobody has to pander to the X00,000.

(Disclaimer: all the numbers in the preceding paragraph were made up)

A broad price spectrum means that niche titles get marked up instead of getting canceled. Surely, after all, there are games you've heard about that, if you could, you'd pay more than retail price if it meant the difference between being released and being axed.

Not that any of this is relevant to this discussion; software already has games worth less than the normal amount, whereas all hardware has is products worth more than the mode. The Wii is ensuring that all three consoles have substantially different prices, by being the one with the broadest appeal. In this case, the PS3 and the 360 are the niche products.
 

ZippyDSMlee

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THIS IS LONG,if tis too long and to ranty please remove it,I apologize for the long windedness,but its how my brain farts..LOL
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Nowadays dev houses are a dime a dozen collected, divided up and watered down due to the demands of the market or the new "owners" and only seem to be worth anything when they try and sale a game (Bioshock for instance not bad but heavily mainstreamed).

Sadly Devs being chewed up and spat out is due to the publishers who have all the power more often than not, then you have mega dev houses and conglomerates stifling creativity even more, I dunno I might be gettign old and bitter but I see the game industry as neo hollywood where fun and options in gameplay is like class and style for hollywood a fond memory, but I digress lets get to the topic at hand.

From what I have said above you should get a feeling on some of my opinions lets give a not so quick run off on what I think of the current systems and where they are going,lets start with the Revolution....er piss?...no wait WII LOL
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WII
I kid I kid I like the WII the most, price and innovation is a good match however I see holes in its success like lack of full innovation in giving the user full control over the wii mote and numb chuck and let you config it to any GC or VC game as well as give more polished control over the WII control system prehaps its the casual gamer focus that has stifled its innovation I would like to see more VC games and a 40$ price drop, sorry its just 10$ for a game I have or had is just a bit OTT no VC game should be more than 5$ of course I am the type of gamer they are not aiming to market to, hell I am not the kind of gamer the market markets too >>, personal issues aside the WII is a solid console the graphics are good enough the games will mostly likely take up the PS2s range of titles (a ton of mediocre games and few hits) while the PS3 will retain 70% of its PS"X" titles the WII will undercut the 360 and PS3 via price and that availability to consumers ontop of profits from unit sale fill nins warchest so the coming dev jump to the PS3 in 2-4 years will not hurt them and yes the PS3 will have its day unless MS can somehow win Asia, so for now the WII is king until a rival can get his "full" console into the 350 minus range.

The WII has the games Nintendo based/Japaneses devs/3rd party and a few multi console titles its pretty much taken up the PS2's gauntlet.
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ZippyDSMlee

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360
Playing fast and lose with "price" and quality control has gone long and well to make MS the console to beat even with rampant hardware issues and coming disc space issues and mandatory need for HDD caching games the 360 is the winner for high end gaming, despite its "upgrading" issues the elite>HDMI units this year>64NM chip units later this year it makes the PS3 production changes seem simple.

If that was all confusing you're not alone welcome to the 7th generation of gaming, the 360 had a rocky start dead BWC, iffy launch titles and then overheating issues, by the end of the year the MS should have a handle on the hardware issues but a new trouble is raising and that is space issues, PGR is the frist game to have almost 2 different versions for each system and in a couple years this will only get worse MS needs to drop the core and spam out cheap HDD kits to make the core unit a distance memory, its bad enough MS misjudged the media content they started to sale on it that makes the 20GB units cry(teen+ money=rent crap on LIVE) the 360 is moving to a fully solid hardware and software base even tho its virtually still stuck in the same niche the Xbox was of US PC style gaming if it would not steal so many PC titles and make a better effort to get Japaneses devs aboard it would go longer to expand its niche.

The 360's foundation is deep and MS wont back down so it will switch from 2nd to 3rd wheel in a full scale console war this is due to the general niche the 360 falls in of
PC/PC style/multi console games.
I see issues coming up over space, if MS would drop the core and let devs fully dev for a HDD based 360 I see the 360 doing well, the longer they wait on this and multi disc games the more damage will rack up over the years.
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PS3

Let me start off by saying this games or no games if sony had the balls to launch the PS3 at 400-480 on launch thats the 60GB unit they would have gained 2 billion in debt(would make the current 5 billion in all)but they would have pushed BR ahead of HDVD to a point where HDVD might could not catch up as well as make a solid foundation for the PS3 but of course thats wishful thinking adding to that fiction Sony thinking the PS3 is doing well that the clearance price on the older better 60GB units was a great idea as well as the upping the price back to 600, I am sorry but sony has 2 clear choices lower the units to 350-450 gain some debt but put consoles in houses and make profit off PSN and games the only other choice is go the arrogant high price elitist route this "could" work there are plenty of sheeple out there willing to pay for it but will it be worth being 3-6 million unit sales behind the others...I am sure their investors will like that..."we are not losing money...not making it either..." LOL

(Yes there is more)

There is 1 hidden option I have discovered (being crazy lets you think up crazy stuff)...

Sony could be biding its time until MGS and FF are out and then hit with a 100-200$ price drop this would both maximize and minimize their losses however its unlike sony to step away from tis price points without being forced to, Sony games department reminds me of sega "we can not do no wrong,whoops we are closing our console development", however Sony has more cash flow and can keep the PS3 in production and sale them at 600+ and not fair well but will their ego cave in after another year or 2 with poor sales....I do not know,all I know is they do not wish to lower the price of the units because they think they still have rep left from the PS2.

The PS3 also has another major issue to deal with besides price and sales and that is optimization, while some games run great on the PS3 some run poorly from my best estimates a steady flow of "optimized" titles wont come for 10-20 months leaving the PS3 even more weakened.

I might have not have mentioned the removal of the PS2 EE chip reduces the BWC to the PSX/PS2 by 30-40% but adds more filtering options I hope they advance the emulation with speed and save states(wishful thinking I know) the BWC issues is a annoyance as much as the 360s if not more Sony pioneered it for christ sake and now they are backing out of it to save a few million sony just dose not udnerstand that their arrogant views over DRM, user rights ,price and options are not to be dismissed...

oh ya the PS3 is a decent BR player so I here LOL

the PS3 has the Japaneses devs (but only some)/ multi console titles
the main issue with the PS3 production cost the total opposite of the PS2's cheap to produce for setup.

The PS3 is a mix of the N64 with a touch of the DC sony is goign to have to work hard to regain its seat in the throne room and they are to busy trying to over throw the kingdom instead of showing they are a good leader.

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ZippyDSMlee

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In final (do I ever shut up? :p)
The 360 and the PS3 chose a entertainment center approach that only adds to production costs, while the 360 went to market early first its clearly its niche was not enough to make it number 1 in a full scale console war its hardware might not stand up well to 3 more years of gaming without new "updated" systems,if MS would offer a free update or 100$ exchange that would not be a bad idea but where things are headed they need the HDD and multi discs.
The PS3 jsut needs a price drop the rest will follow after that,if they do not it will alg behind the 360 in world wide revenue, hell Sony would do well to lower world wide price to no more than 600USD and drop the PS3 to 500 even that would raise its numbers be a million or 2.
The WII cant do wrong even tho I think it can do better (I want a DS/GBA adapter for it dammit,I hate handhelds),the WII is basically the PS2 reborn without 2 or 3 lead titles but it will make up for "hollywood protection level titles" with fun and simple titles hardcore gamers might have already seen but it will thrill and awe the casual set for 2-3 years to come.





Notes:I suck at grammar so no smarmy comments dammit :p
I also ranted to much I realized that now LOL
and yse I am full of hot air >>

wanna rant at me go here LOL
http://www.gamepoliticsforums.com/member.php?u=8
 

shadow skill

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The argument does not make sense because essentially everything that a computer can do the ps3 can do (Just install Linux on it and off you go more or less, it's not perfect at the moment but it is getting theree as people learn how to optimise the Linux kernel and various programs for the Cell.) Therefore you could argue that the PS3 IS indeed a computer; further more consoles really have always been computers although they have been more like embedded systems for most of their existence. In addition there is nothing, and I mean nothing stopping the consoles of this generation (or even last generation in all likelyhood.) from supporting mods like pc games do. UT3 will make this readily apparent for the PS3 at the least.

The ps3 was never once over priced and neither was the 360 at the time either.