Close
Report Comment to a Moderator Our Moderators review all comments for abusive and offensive language, and ensure comments are from Verified Users only.
Please report a comment only if you feel it requires our urgent attention.
I understand, report it. Cancel

Retail

Could rental give high-priced consoles a running start?

Fri 06 Jan 2012 11:02am GMT / 6:02am EST / 3:02am PST
RetailHardware

Smartphone retail model could make Vita and 3DS more attractive to consumers

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

Could a rental or hire-purchase model help secure a future for dedicated gaming handhelds like the PlayStation Vita and Nintendo 3DS?

It's an idea floated by Frontier Developments' David Braben, Codemasters' Jamie MacDonald, Boss Alien's Jason Avent, and Simon Oliver of Hand Circus in a roundtable discussion with GamesIndustry.biz.

One of the challenges the Vita faces is that, beyond the lower prices of smartphone games, mobile hardware is generally acquired through a hire-purchase model, effectively making it free to the consumer.

However, this approach - a common retail strategy for numerous consumer electronics devices - hasn't been attempted with game consoles.

"Maybe that's an idea," Avent said. "You get your PS Vita and pay a subscription for it and you get usage of one or two games that you can swap in and swap out.

"You join a club for 15 a month and you get really top games for that. And you get hire of the hardware. And then it's much more like an app store where you have to get your games through Sony."

In Braben's view, this could be a "workable business model" for handheld consoles, not least because it would open up new shelf-space with high-street mobile phone retailers.

"It would be a bit like a Sky subscription with telephone, internet and TV in one," Avent continued, "but you could have a small mobile phone with a contract, and then it's packaged up with the Vita and a subscription to games"

This view is consistent with comments made by industry analyst Nick Parker at the London Games Conference last month, in which he outlined the possibility of retailers like GAME eventually selling contracts and not hardware.

"I sat down with Ian Shepherd a couple of weeks ago and his vision is seeing GAME like Carphone Warehouse, whereby Carphone Warehouse doesn't actually sell anything at all, no product, no hardware, it just sells contracts," Parker said.

"And they see themselves doing the same thing - selling contracts for OnLive or any other technology provider or source of games and then hardware can eventually be offered for free."

The notion that the market for handheld consoles has been fatally disrupted by the growth of mobile gaming has been widely discussed over the last 12 months.

Slow sales of the 3DS only improved after Nintendo slashed the price by as much as 40 per cent, while the PlayStation Vita's performance has declined sharply since it launched in Japan before Christmas - it is currently 4th in the hardware charts, one place behind its own predecessor, the PSP.

To read the full discussion between Braben, MacDonald, Avent and Oliver, click here.

14 Comments

Lewis Brown Snr Sourcer/Recruiter, Electronic Arts

199 56 0.3
I certainly thinks it a good idea and with mobile contracts being the norm, most consumers will feel they understand the principal behind the business model. I wonder who will get there first the big games focussed retailers, general retailers or some bright spark in the mobile retailer space who gets ahead first. It could be a big change in the way we buy consoles expecially if it comes in before the next console hardware iterations.

Posted:2 years ago

#1
Definitely a good idea worth exploring.
(how is it praise and positive commentary tends to be short and brief)
:)

Posted:2 years ago

#2

Klaus Preisinger Freelance Writing

1,138 1,179 1.0
Instead of buying a 250 device, you buy a two year contract costing anywhere between 500 and 1000 (depending on the bandwidth included)? That does not strike me a s the smart thing to do.

Any decent hardware electronic store will offer financing on all its products. Nothing keeping people from paying that way. The Vita is as expensive as the first Playstation when it was released. That makes it more of a birthday or X-Mas present than an impulse buy. Wait, what.. ..no X-Mas in February you say? No golden week celebrations in Europe? Damn you western barbarians!

Posted:2 years ago

#3

Mark Raymond Gamer; Consumer; Blogger

40 0 0.0
The idea is fine but it's all down to pricing and how much perceived value resides in the contract.

Posted:2 years ago

#4

Lewis Brown Snr Sourcer/Recruiter, Electronic Arts

199 56 0.3
My mobile phone is about 500 at retail which I wouldnt pay as a one off under any circumstance but as a Contract offering including my calls,texts, internet etc ... it makes sense @25 p/m. I think to be successful its needs to be marketed and sold as a package with internet/games etc...or its simply a hidden HP offering. I am not buying a PS Vita currently but if for 15/20 a month plus internet or 1 game i'd be seriously considering it.

Posted:2 years ago

#5

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,271 2,440 1.1
Not likely a well received idea. Many portable gaming devices are gifts. Subscription electronics don't work as gifts very well.

I personally prefer to buy something and be done with paying for it. What happens if I'm late with the my 3DS payment? I can't play it? They repossess my 3DS?

Posted:2 years ago

#6

Neil Hall Senior Lecturer in Games Animation, Teesside University

22 16 0.7
@ Mr. Webb. If it's anything like my phone contract, you pay the remainder of your contract up-front and the contract is cancelled, keeping the phone. I couldn't afford to buy my phone with one payment. Yeah, it's a risk and it almost certainly works out more expensive over a couple of years, but I assume you have a mobile phone contract? Or maybe not, given the content of your post. What about car payments? A new sofa/settee over several years? You take the risk that you'll be able to pay for it... the company takes the risk that they think you'll be able to pay for it.

Don't get me wrong, I'm with you on this. I'd rather buy it outright, too. What about a higher-rate, monthly contract that you can cancel within a month's notice?

Posted:2 years ago

#7

Aaron Grommesh Community Manager, ThatGameCompany

8 0 0.0
When I was at the E3 press conference, I thought Sony would announce a plan for the 3G model where you get it for free and pay $40 a month for the service. No games included, but they do this with smart phones that otherwise retail for $500 or so.

The game service seems interesting, though. Plus seems to be working great for them.

Posted:2 years ago

#8

Kieren Bloomfield Software Engineer, EA Sports

93 79 0.8
There are two main points I see here:
1. You don't need a subscription to do anything with a games console (yet). I can just buy and play the games I want. If I want a phone then I need to pay for the phone service. You could argue that pre-paid phones are like current console usage and they're quite popular. Especially with parents buying for their kids.
2. The range of phones available to buy outright is quite small. Often various models are locked and are exclusive to various carriers. I'd have bought my new phone outright if it was an option and I didn't so much choose the carrier as the phone model.

Gaming services are a really nice idea but fixed term contracts should never apply to gaming.

Posted:2 years ago

#9

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,271 2,440 1.1
Neil, I have phone service and are familiar with how they work. My question was would that work well with a portable game device that could be given as a gift, as they so often are now.

Posted:2 years ago

#10

Bill Garrison Studying Student, DigiPen Institute of Technology

69 89 1.3
If I'm not mistaken, smart phone business models do not make the phone free for the consumer. You pay for the hardware through the service fees, which is why they make you sign a contract. If you were merely paying for the service you could cancel at any time.

Posted:2 years ago

#11

Daniel Chenoweth Editor, AusGamers

14 5 0.4
I think it's a terrible idea and has much more in common with the predatory loose credit practices of the big department stores and their '24 months interest free' deals than it does with smartphone plans.

Firstly, there's no realistic wide market for renting portable games devices. It would work fine for onLive obv because of the relatively low cost of the hardware, but vita and 3ds? Not a chance. By their nature they get handled heavily and would wear out too quickly - the way renters treat things -- to make it a worthwhile venture.

That being the case, I can only assume then that by 'get your PS Vita and pay a subscription' they are referring to selling it on a contract with an interest-free payment plan, loss leading with the hardware with an intention of turning a profit on software sales.

Phone carriers subsidise the sale of handsets over a contract term, because they can make that shortfall up in service access charges. Carphone Warehouse and the like are just resellers of contracts for those various carriers with coverage in the store's local area, who either receive a commission for each sale or can retail a carrier's wholesale product at a competitive rate.

But that situation isn't analogous to selling Vita and 3DS hardware, because unlike phone carriers, Nintendo and Sony control both the hardware and the service/software revenue of those devices, so they already have a much easier avenue if they want to loss-lead on those products -- simply sell them for less.

So the only thing selling a Vita on a contract would accomplish is letting someone that can't afford the full price to pay it off over several months. That's something you can already do at many department stores (an ethically questionable debt-trap for the fiscally irresponsible), so what kind 'running start' could possibly be created by console manufacturers or contract resellers thereof expanding this practice?

Posted:2 years ago

#12

Patrick Frost QA Project Monitor

400 196 0.5
I think that it is something that needs exploring. My first question would be about how comparable games and services for consoles are against text, calls and data for a mobile.

Games are higher value compared to calls and texts, making your decision on how you would spend the value in your monthly contract quite inflexible. Also think how the nature of the catalogue would change as the console develops and how it would have a huge impact on your choice. Who would want to get a console which they could get 2 games a month on at launch? There would be only a choice of probably 5 games that are worth getting.

On top of this, the entire structure of how games are bought is based on quality discrimination and your choice to opt out of not buying anything. In the current situation, if you are an early adopted, going on the faith that a console's catalogue is going to get better, you have the choice to buy only the games you like and even sell your console. In the contract situation you are trapped into owning a console that could end up having a catalogue full of shovel ware with no opt out at all.

Posted:2 years ago

#13

John Bye Senior Game Designer, Future Games of London

481 453 0.9
Kieren - "You don't need a subscription to do anything with a games console"

Xbox Live?

As long as the option's still there to buy the console outright for those of us who want to, I don't see why offering a console on a monthly contract including Xbox Live Gold / PSN Plus access would be a bad thing. It opens up access to consoles an even wider audience.

Posted:2 years ago

#14

Login or register to post

Take part in the GamesIndustry community

Register now