Analyst: High Consoles Prices Are a "Strategic Error"

[Andy Chalk]

Analyst: High Consoles Prices Are a "Strategic Error"

Industry analyst Michael Pachter says console manufacturers have made a "strategic error" by refusing to lower the prices of their hardware, which has resulted in slumping hardware and software sales across all three platforms.

Pachter blamed "consumer fatigue" over the refusal of Nintendo [http://www.microsoft.com] to drop the prices of their consoles for the fourth consecutive month of declining sales in the U.S. He predicted that U.S. videogame sales in June will reach $670 million, a 23 percent drop from June 2008, with Xbox 360 software sales down nine percent, PlayStation 3 software down 14 percent and Wii software sales down 24 percent.

"We believe that the manufacturers have made a strategic error by maintaining pricing for too long," Pachter said. "We think that the negative software trend is less attributable to a weak software line-up, and can only conclude that until consumers are sufficiently interested in buying consoles, it will be difficult for publishers alone to drive sales higher each month."

Console sales are suffering as well, with combined sales of the Wii [http://www.xbox.com] down a full 43 percent over the previous year. But that could translate into good news for gamers, as Pachter said he believes the falling numbers will force manufacturers to cut prices relatively soon.

"We think that the console manufacturers will therefore be forced to consider a price cut before year-end, with Sony cutting the PS3's price by October 1. Further, we do not think that Nintendo's hardware forecast figures are achievable without a price cut, and we expect one around the same time as the PS3 price cut," Pachter said.

"It is likely both manufacturers will cut by USD 50, with Sony making up any lack of increased demand with a software bundle," he continued. "We expect Microsoft to follow suit, giving us confidence that US software sales will grow later in the year, notwithstanding negative sales in the early part of the year."

Source: GamesIndustry [http://www.gamesindustry.biz/articles/high-cost-of-consoles-a-strategic-error-for-manufacturers]


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[Sparrow]

This guy is an analyst?

Seriously, I've managed to figure that out by myself. And that really is saying something about the small amount of brain power needed to come to this conclusion.

 

[GonzoGamer]

The Wii and PS3 need to be cheaper at this point.
The 360 on the other hand needs to be guaranteed rrod free for it to move ahead, the only reason it's so popular this generation is that it put release date ahead of quality control.

 

[FinalHeart95]

It doesn't matter. I won't get a PS3 until they put backward-compatibility in. I don't want to waste space with my PS2 AND PS3.

 

[Fenring]

If the PS3 does drop price, I may start saving to buy one after PAX. That would be cool.

If the Wii does drop, my sister will buy it. I'll live in a three console house! Yay!

If the 360 drops I expect the more powerful I expect the Elite will stay the same, just recieving a larger HDD.

 

[HardRockSamurai]

It's all eyes on SONY now. With their financial situation in the danger zone, dropping the price could either lead to economic stability or ultimate disaster.

I do admit I'm one of those people who wants a PS3 price cut, but at the cost of the entire company? If they DO drop the price, they'd better hope this analyst is right.

 

[ae86gamer]

I think a great way for SONY to make more money is to put backwards compatibility back into the PS3. I want a PS3, but I'm not going to waste $400 on something that has blue-ray and all this other great stuff, but it can't play old PS2 games.

 

[Radeonx]

I think a great way for SONY to make more money is to put backwards compatibility back into the PS3. I want a PS3, but I'm not going to waste $400 on something that has blue-ray and all this other great stuff, but it can't play old PS2 games.

If Sony did this I'd buy a PS3 without question.

 

[Vriggchan]

if the wii drop that means a wii will cost about 150 right? if so totally getting one

 

[L.B. Jeffries]

I call Shenanigans on the Wii price cut. They'll the cost of Wii Fit Plus and plaster Wii Sports Resort on every commercial and billboard in the country.

You don't sell consoles, you sell the damn games they're on.

 

[Canadamus Prime]

It's good to know that a good sums of money are still being spent to have people point out the obvious.
Although truth be told, Nintendo and Microsoft aren't too too bad when it comes to the price of their hardware; the worst offender is Sony and it's "big unfeeling black box" as Yahtzee called it.

 

[Pendragon9]

Really, I wish I could shoot this analyst. I'm tired of hearing his bullcrap day after day.

I think a great way for SONY to make more money is to put backwards compatibility back into the PS3. I want a PS3, but I'm not going to waste $400 on something that has blue-ray and all this other great stuff, but it can't play old PS2 games.

If Sony did this I'd buy a PS3 without question.

You realize that if they do make a price cut, I will come back to this thread and demand you show us video evidence of you buying a PS3. Just to be sure you're not lying.

 

[Pendragon9]

Really, I wish I could shoot this analyst. I'm tired of hearing his bullcrap day after day.

I think a great way for SONY to make more money is to put backwards compatibility back into the PS3. I want a PS3, but I'm not going to waste $400 on something that has blue-ray and all this other great stuff, but it can't play old PS2 games.

If Sony did this I'd buy a PS3 without question.

You realize that if they do make a price cut, I will come back to this thread and demand you show us video evidence of you buying a PS3. Just to be sure you're not lying.

Because obviously Sony has been hanging on until they got the Radeonx seal of approval before dropping the price, so you want to make sure they aren't doing it on false info? WTH?

Why do you instantly assume someone is lying if they say they're interested in something at a lower price? It's not that uncommon a sentiment -- about practically anything.

Because a few years ago I asked several of my friends if they would buy the Ps3 if they dropped the price from 599 to something lower. They all said yes.

years later, and I'm still the only one who owns a Ps3 in our group. Now I suspect Radeon is trying to pull the same deal.

Simply put, since he says he'll buy the PS3 after a price, I'm simply demanding he give evidence when it does. It's a fair request.

 

[randommaster]

Here is the problem that Prachter and other analysts do not see when it comes to consoles. The consoles are sold at a loss and relies on the expensive games and accessories to make up the loss of the console. So a price cut would be even worse for the big three if the consoles were lowered in price.

Right now the problem that needs to be fixed is an appropriate pricing strategy that will restore the previous status quo when it came to previous console generations. This is the only console generation I know that has had such turmoil with the increased size of consumers since the 360 and ps3 are seen as multimedia systems and not video game consoles(although the playstation was the pioneer on that front).

If a price can be set then the price of games can be lowered and companies can still profit off the DLC or start actually including DLC back into their games making a sixty dollar game not actually cost seventy to eighty dollars.

Patcher's problem is that he uses blogs and messaga boards for info instead of reliable sources. His track record is crap and you are better off doing the opposite of what he says. This comment was probably the result of him reading a bunch of comments about people saying they'd buy a console if it was cheaper.

Also, just wondering, but is the Wii sold at a loss? Last I heard, Nintendo was making money off of each one.

 

[chronobreak]

I'd like to shove this in the face of all the people who keep saying the PS3 shouldn't lower their prices, that people should just bite the bullet and save up more for it. Guess what, guys? A lot of people won't buy it because it's too expensive! It's really just that simple! I don't know if those people are Sony fanboys, or if they're just mad they bought it when it was 600 bucks, either way I don't see why anybody anywhere would be against a price cut, unless maybe you work for Sony. Let's give more people access to the console, right?

 

[Scrythe]

This guy is an analyst?

Seriously, I've managed to figure that out by myself. And that really is saying something about the small amount of brain power needed to come to this conclusion.

That's just to show that being an analyst must be a really easy job.

"Hmm, let's take common sense and apply it to a hot topic. Now let's type it up and post it on the ."

 

[KDR_11k]

It didn't hurt the DS.