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Retail

$400 price point for next PlayStation, Xbox consoles

$400 price point for next PlayStation, Xbox consoles

Mon 14 Jan 2013 9:24am GMT / 4:24am EST / 1:24am PST
RetailHardwarePublishing

October launch for PS4, next Xbox in November, suggests Baird Equity Research

Having spent CES "with a number of companies involved in video game development and distribution", Baird Equity Research has suggested that new console hardware will retail for $350-$400 in the US.

While not a huge difference from Xbox 360's top end launch price of $399 for the 20GB unit in 2005, it's a significantly lower price than the two PlayStation 3 models that launched at $499 and $599 a year later.

"Our checks suggest that next-generation console hardware will be largely built from 'off the shelf' high-end PC components, along with hybrid physical/digital distribution models"

In a note to investors Baird's Colin Sebastian brought together various rumours about the new consoles that have been floating around the games business over the past year, and the assumption that both Sony and Microsoft will reveal their new consoles just prior to E3 in June.

"Given the fragile state of the console game market, we expect the E3 trade show in June will take on added significance, most likely providing the industry with the first public opportunity to examine next-generation hardware," he wrote.

"Our checks suggest that next-generation console hardware will be largely built from 'off the shelf' high-end PC components, along with hybrid physical/digital distribution models, enhanced voice controls and motion sensing (Kinect integration with every Xbox), and broad multi-media capabilities," he detailed.

"Moreover, a PC-based architecture (Intel chips in the case of Xbox) should have a number of advantages over custom-developed silicon: for one, the learning curve for software developers will be shorter than completely new technology. Second, the cost of production and retail price points should be lower than prior console launches.

"Third, it will be easier to build online services around PC chip architecture, including flexible business models (free-to-play, subscriptions) and multi-media (over the top) content offerings. For Microsoft, this design will also allow for more integration with Windows 8 and Windows Mobile devices," he added.

Sebastian expects an October launch for the new Sony console and a November launch for the next Xbox, although he warned through his "field checks" there "may be early production issues with Sony's PS4."

On the subject of Nintendo, Sebastian suggested the company may struggle to expand it's latest Wii U console beyond its loyal users, stating: "We remain concerned that Nintendo's innovative Wii-U console will lack broad appeal beyond the core Nintendo fan base.

"It will be easier to build online services around PC chip architecture, including flexible business models (free-to-play, subscriptions) and multi-media"

"Following a somewhat lackluster launch and holiday selling season, Nintendo will need to bring to market major first-party releases (Zelda) and retain the support of key third-party developers to reduce market share losses. In a negative scenario, Nintendo will be forced to prematurely lower the Wii-U price, and over the course of this cycle, we expect consideration will be given to extending first party franchises to other platforms."

2013 will be another tough year for the games industry, he predicted, with anticipation for next-gen consoles negatively impacting sales of current platforms - although he pointed to GTA V, new releases in the Skylanders, Call of Duty, Battlefield franchises and Bungie's Destiny as hits during the year.

"We expect that 2013 will also be remembered as the year that tablet games go mainstream," he added, stating that more companies will create big screen Android apps for Smart TVs.

33 Comments

Nick Parker Consultant

298 174 0.6
October 2013 for a PS4 launch is optimistic; I think there's a few more ducks to get in a row before then.

Posted:A year ago

#1
BER are far too optimistic.
Q2 2014 for a PS4 is more likely. Not to mention, there will be a need for games to showcase the next get platform, and those cant be made overnight...

Posted:A year ago

#2

Dan Howdle Head of Content, Existent

281 814 2.9
I agree with Nick.

Posted:A year ago

#3
Third, it will be easier to build online services around PC chip architecture, including flexible business models (free-to-play, subscriptions) and multi-media (over the top) content offerings.
How will it be easier?

Posted:A year ago

#4

Bruce Everiss Marketing Consultant

1,692 594 0.4
@ Brendan Tinnelly

Because all the tools, middleware, system software, networking software etc etc have been developed for the PC over decades. These will be tapped into.

If these consoles do not have an online app store business model dominated by FTP then they will fail. The market will ensure that.
The new Xbox will be a Win 8 media player optimised to buy all the online content a family needs. They will be competing with people like Amazon and Google.
Are Sony even positioned to produce a new console and attendant ecosystem that can compete?

Posted:A year ago

#5

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,012 0.8
That's right on my prediction but a while to go before we see if its true. Launch prices have so often completely surprised us...

Posted:A year ago

#6

Dave Herod Senior Programmer, Codemasters

528 788 1.5
Popular Comment
If these consoles do not have an online app store business model dominated by FTP then they will fail.
If they do, then I'm a lost customer.

Posted:A year ago

#7

Fran Mulhern , Recruit3D

863 707 0.8
Popular Comment
"If these consoles do not have an online app store business model dominated by FTP then they will fail. The market will ensure that."

I'm not sure FTP will decide the fate of consoles. They'll need an app store, sure, but frankly I can't imagine anything worse than a console "dominated" by FTP.

Posted:A year ago

#8

Klaus Preisinger Freelance Writing

1,158 1,220 1.1
If the Wii taught us anything, it was the fact of a large install base not being worth anything when determining where and how to do successful third party business. And that is what all non-Nintendo consoles are: third party software playback machines, with a few exclusives sprinkled on top. All those AAA games we would like to play in the future need a healthy platform of customers, not some box with 20 million f2p players who couldn't care less for a $60 game.

f2p is a powerful ally when it comes to making those initial purchasing costs of a console appear "cheap" because you can make a "free games" argument. A manufacturer can make his console look like a pretty cheap deal while not really having to give away something for free. Beyond a baseline of inhouse titles, why would Sony/MS play payment processor for third party f2p? Why would a third party f2p provider share their profits with some console manufacturer?

Posted:A year ago

#9

Dan Howdle Head of Content, Existent

281 814 2.9
Popular Comment
I'm with Fran here, Bruce. I think you misunderstand the console gamer.

To us, FTP is like leprosy; it's not a death sentence, but we'd rather not touch it anyway if that's all the same.

Posted:A year ago

#10

Bruce Everiss Marketing Consultant

1,692 594 0.4
But will there be enough "core" console gamers left to justify making the overproduced, AAA, $60 blockbusters?

So many core gamers have migrated to Steam.
People who are not core prefer FTP.
And even core players like World of Tanks.

Posted:A year ago

#11

Matt Walker Production Coordinator, Capcom

41 23 0.6
"We expect that 2013 will also be remembered as the year that tablet games go mainstream,"

Id say tablet gaming already is mainstream, but that tablets will never take over the hardcore market if they havent already.

Posted:A year ago

#12
As a console gamer, give me my unadulterated gaming experience.

No waffle, salami, salad or extra cheese with a rebate coupon please

Posted:A year ago

#13

Robin Clarke Producer, AppyNation Ltd

331 782 2.4
1. It's "F2P".

2. How many millions of participants are needed as a minimum for the console model to be viable, and is there any tangible evidence that we're anywhere close to approaching that number? BF3 has sold 13m units. Skyrim has sold over 10m before hitting budget. The 'disappointing' CoD BLOPS2 has racked up 20m sales and grossed $1bn in its first 15 days.

Posted:A year ago

#14

David Radd Senior Editor, IndustryGamers

359 78 0.2
I think it's stated here in the article (and it seems pretty likely) that the new consoles will offer a variety of paid products and free-to-play products. Right now, both fill different niches in the market and its a smart thing to do to reach as wide an audience as possible.

Posted:A year ago

#15

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,012 0.8
I gotta say Bruce, I don't get what you're saying.

I would have thought record sales of "AAA" (hate that term) productions would tell enough of a story. Do you think they will disappear by the end of the year or by next year? Even if we're mainly talking about established franchises, look how well Far Cry 3, AC3 and COD are still doing.

I haven't seen console gamers who buy these titles 'disappear to steam' unless I missed something. I think Valve's latest efforts also show that the living room still has a lot of potential when it comes to new entrants or growth in the games console market...

Posted:A year ago

#16
- The $400 price point on both PS4 and XB720 seems like what many at CES were repeating.
- I am amazed however that a high price will be proposed when the original rumors was that the consumer manufacturers were going to copy the mobile phone model and offer a special deal if you signed up for a subscription package?
- We in the amusement trade had the chance to see the hardware spec's for the PS4 based on the Namco System 359 hardware launched in the arcade platform back in 2011 - it is not as big a sea-change as the PS4 was and I wonder if the maturing customer base will be enticed, or look towards a PC solution?

Posted:A year ago

#17
I love analysts and future predictions:

"he pointed to GTA V, new releases in the Skylanders, Call of Duty, Battlefield franchises and Bungie's Destiny as hits during the year." yeah, erm, my mum could of predicted those titles and she still plays Wii Fit. :)

Posted:A year ago

#18

Jed Ashforth Senior Game Designer, Immersive Technology Group, Sony Computer Entertainment Europe

112 200 1.8
"So many core gamers have migrated to Steam.
People who are not core prefer FTP.
And even core players like World of Tanks. "

F2P is just a business model, consoles are a platform. Very different. F2P already exists in console games. You sound as if the idea of someone enjoying both F2P games AND $60 console games is inconceivable. What is inconceivable is your implication that there are plenty of players who only enjoy full-on, big screen, big production console gaming because they have never yet tried a F2P game. Which is precisely as nonsensical as it sounds.

- Steam has plenty of AAA games on there. It's great, and popular, precisely because of the level of variety. Plenty of people have a Steam PC box under their TV with a 360 controller attached. In fact, so popular is this that Valve are making a Steam Console!
- Some players (not 'people') who are not 'core' like F2P. Some players who are 'core' DO like F2P. Lots of players are just game players, enjoy a variety of games across different distribution models and business models, and defy such labels.
- LOADS of people who play World of Tanks like World of Tanks. It's a terrific fun game, and very likeable. That has everything to do with the game and very little to do with the business model. Until there's a like-for-like product that you can choose to either buy up front, in totalis, for $60, or piecemeal for however the heck much it adds up to through microtransactions, we're never going to know how much the business model really influences how much players like it.

Also, I'm sure you're not implying Kwalee's titles are less than 'AAA' in quality, and underproduced? ;)

Posted:A year ago

#19

David Spender Lead Programmer

129 54 0.4
Popular Comment
My experience with F2P recently has been mainly on Android. It has not been a good one. The cycle for almost all games is:

- Excitement for a new free game
- Fun for a short time
- Frustration caused by some limit in progression
- Disappointment when realizing that ongoing - to actually proceed - its going to cost a LOT of money
- Disillusionment the next time you see a F2P

King's Bounty for Android is a great example. I would pay a few dollars for this game. Maybe even 5. However after playing for some time, the limits on what you can do become frustrating without ponying up some cash. I would rather just pay up front for the game and not have my session held hostage.

There is a right way to do F2P, but those developers looking to make a quick buck will lean toward trying to limit play more quickly to squeeze that first dollar out as soon as possible. This tactic is what causes disillusionment. It only takes a few bad games doing it the wrong way to cause this feeling in a gamer and then they are set against F2P no matter how cool the game looks.

We're starting to see this happen with DLC which is turning more into a fad than a business model because so many companies abuse DLC with the total amount costing 3 times as much as the game or releasing the DLC already on the game disk or other such tactics. Thankfully DLC is starting to normalize with companies realizing they have to provide real value now with DLC - gamers aren't going to continue to drop tons of dollars on costumes and oufits. Will the same thing happen with F2P or will the gouging continue and how will gamers react?

Edited 1 times. Last edit by David Spender on 14th January 2013 5:58pm

Posted:A year ago

#20

James Verity

132 25 0.2
the only game players that will want free-to-play are pre-teens... subscriptions based games have a limited audience... gamers still want physical media, anyone who dosn't understand this is obviously grasping at straws... gamers like to HAVE, TOUCH, FEEL and OWN the games in their collections... digital media to most has no value...

when I look on iTunes for example to buy a game I also look at the box at the side to see what extras I am expected to cough up for to play the game... and thats just on games that want money up front... sorry but F2P is not really F2P is it in most cases its FREE to download and Pay us lots of money to continue... same titles I have noticed require between 30-60 additional payments to get everything the game has to offer... if you cannot see a problem with that to the gamer then you have a screw loose...

also I like the way they state the price for the new consoles is for the price in the USA... a heavily discounted market subsidised by the UK market...

Edited 2 times. Last edit by James Verity on 14th January 2013 6:43pm

Posted:A year ago

#21

Morville O'Driscoll Blogger & Critic

1,613 1,473 0.9
@ Bruce
So many core gamers have migrated to Steam.
People who are not core prefer FTP.
I was trying to work out what was wrong with this comment. Then it hit me.

Hats.

http://gamasutra.com/view/news/164922/GDC_2012_How_Valve_made_Team_Fortress_2_freetoplay.php

Posted:A year ago

#22
Sounds like its almost time for popcorn. People have such short memories, especially when it comes to console launches.

I wouldn't be at all surprised if both consoles launch *next* year. MS in particular has nothing to lose.

Posted:A year ago

#23

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,020 1,467 1.4
I doubt very much we'll see both this holiday and I would bet two chickens that neither come in under $400 and both are likely to come in at $500.

Posted:A year ago

#24

Paul Jace Merchandiser

945 1,433 1.5
@Kevin Williams
- The $400 price point on both PS4 and XB720 seems like what many at CES were repeating.
- I am amazed however that a high price will be proposed when the original rumors was that the consumer manufacturers were going to copy the mobile phone model and offer a special deal if you signed up for a subscription package?
I'm pretty sure Microsoft is going to do just that as one of it's options for it's new system. They obviously haven't announced it yet but this is most likely what they are testing that option on the 360 for right now. And because of this they could really max out their high end system at $300 but I have a feeling they still won't do that. But the contract version will definitely be between $99-$199....I think. As for Sony, who knows. I mean, I doubt they will start with a contract PS4 but like trophies and PSN+ I'm sure it's only a matter of time before they once again follow Microsoft's lead.

Posted:A year ago

#25
@Paul, thanks for the opinion and observations.
Seems to mirror what Bruce was saying about the 'walled garden' approach to the customer base.
If MS or SY try and lock players into a 'contract' system - they could be building the gallows for their demise - because to be frank these guys have not handled playing fair with the customer before.

Posted:A year ago

#26

Neil Millstone Director, White Bat Games

32 12 0.4
"Moreover, a PC-based architecture (Intel chips in the case of Xbox) should have a number of advantages over custom-developed silicon: for one, the learning curve for software developers will be shorter than completely new technology. Second, the cost of production and retail price points should be lower than prior console launches.

"Third, it will be easier to build online services around PC chip architecture, including flexible business models (free-to-play, subscriptions)[...]"

All of this is factually incorrect.

Building on Intel chips and PC-style architecture isn't going to happen (nobody writes in assembler anymore, everyone uses pre-built engines which are pretty much the same for both platforms, meaning there really isn't going to be any advantage to developers). Microsoft already tried this - the first XBox was built around Intel chips and PC-style architecture. It proved expensive to produce, partly because they were reliant on Intel's chip pricing. They could also run into problems if Intel decide to stop producing the chip in question. Six years down the line when your console is still selling, PCs certainly aren't still using the chip, so you become Intel's only customer for the product, keeping prices high.

Microsoft went the more traditional route and made their own custom PowerPC chip for the 360. I don't see them going back now, especially as it would make backwards compatibility much harder to acheive.

Online services and free-to-play have nothing at all to do with the choice of CPU/GPU or anything else hardware related. These services will be built on-top of the platform holder's existing services, XBox live or the PSN store, and being PC-like makes not a jot of difference to the difficulty of achieving this.

Once thing I do agree with in this report is the price. $400 seems reasonable in the current climate.

Edited 1 times. Last edit by Neil Millstone on 15th January 2013 1:51am

Posted:A year ago

#27

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Look i really dont know, what the rave is about FTP, I just know its not that big of a deal simply because I havent had any interest to play them. I buy and play lots a games, If FTP is the way foward, then why am i willing to pay for certain game expiriences. The only one that made me have any interest was ATB and The secret world. And even so, i wasnt willing to pay for anything. Id play to free as much as I could and quit the moment I had to pay for something. You know if games cost 30$ they would be easier to pick up. I picked up 2 copies of Anarchy Reigns, one for me and one for my girlfriends son's birthday. Which is tommorow. That means I picked up two copies of the same game at the same time. Something that would never happen if the game cost 60$. 120$ is just TOOO much... I think the 60$ price tag has got to go. I think FTP is a good alternative for people without to much cash to play, however the expirience isnt really the same as with AAA games. FTP is not the future, its just an alternative way of getting people to play games, it does have its draw backs and when the servers and game goes offline, then all that money you spent is gone. Its not like youhave a copy of a game you can go back to.

Posted:A year ago

#28

Steve Peterson West Coast Editor, GamesIndustry.biz

111 73 0.7
I think that the higher the console price, the more difficult it will be to sell. Perhaps having a lot of media functions will help, but I think it's going to be the game experience you can get that will sell the hardware in big numbers (or not). When you get into the $400 range, especially these days, customers will need to be convinced they're going to get some terrific games that will be significantly different than what current consoles can deliver.

Posted:A year ago

#29

Klaus Preisinger Freelance Writing

1,158 1,220 1.1
It will by Sony's and Microsoft's job in the coming months to give potential customers the feeling that the new consoles are worth the price they are asking for. If they manage to do that, then there will not be a problem.

Sure, Steam and the PC have the established market when it comes to f2p. But look no further than the game "State of Decay" to realize that Microsoft will take f2p and new digital business models serious enough to have something in the pipeline.

Posted:A year ago

#30
I guess if one looks at the affordability of Tablets,
then pricing it within the higher end spec of a tablet could be the golden sweet ratio

Posted:A year ago

#31

Craig Page Programmer

386 220 0.6
Two things:

1. I've only got 8 months to play through my PS3 and 360 backlog of games!!! :O
2. I've found a Free to Play game that doesn't suck, on my PC, called League of Legends.

Posted:A year ago

#32

Brian Lewis Operations Manager, Aeria Games Europe

139 90 0.6
The console market is about finding the right level of convenience for the customer, and the right level of lock in for the business. Things have changed a lot since the last generation of consoles, and any company that wants to put out a new console will have to adapt to the market. I believe that Bruce is both right.... and wrong. New consoles will need to have the TOOLS and SERVICES offered by F2P games (i.e. convenience level) but the games themselves do not necessarily need to be free.

There are multiple companies putting out 'console like' devices. They all want to lock customers into their approach, so that they can control the monetization. There is going to be a big shakeup on this front in a few years.. with everyone competing for the same customers... but with most of the companies involved not really willing to fully meet the customers needs. Whomever can find the sweet spot will do well, everyone else will struggle.

The era of the razor blade model for games is over. We are now in the era of entrainment (games) as a service. The games (themselves) are now the vehicles that are used to drive secondary sales, rather than the platforms/consoles. This change in model creates an opportunity for new players to enter the market, and for the established companies to be disrupted by this.

Posted:A year ago

#33

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