PlayStation 4: "$299 is the magic price point"
Analyst Billy Pidgeon talks about the challenges both Sony and Microsoft will face in transitioning to next-gen
Sony's PlayStation 4 presentation communicated a new, developer-centric message from the company and it seems to be mostly resonating with those of us in the media. The big piece of the puzzle that may take a long while to be figured out is price. This will be of critical importance to Sony's bottom line and to potential customers. Too high and PS4 will flop; too low and profit margins will be nonexistent.
Speaking with GamesIndustry International during the PS4 event on Wednesday night, Inside Network analyst Billy Pidgeon said that ideally Sony needs to come in at $299 to make the new console a success this holiday season.
"I'd like to see maybe two models, one under $300 and one under $400 would be ideal. $299 is the magic price point. I think this current generation took way too long to get there. It has to be under $400 and honestly if they could subsidize it further and take more of a hit, it might be worth their while in the long run," he commented.
For both Sony and Microsoft, Pidgeon believes that sales in the first 12 months will be slower than the last generation as more consumers now get entertainment from other devices. What that means for Xbox 360 and PS3 is that Microsoft and Sony will still rely on sales from the current-gen systems to boost their respective bottom lines.
"Uptake during the first year is going to be slower than people expect. And to keep a viable business in terms of profit margins, they're going to have to do their best to keep their current-gen platforms viable as they're perhaps moving into next-gen more slowly than they did last time," noted Pidgeon. "Historically, we've seen generational transitions where the previous generation just dropped off a cliff when the new console came out, but that would really hurt either Sony or Microsoft if that happened."
Wedbush analyst Michael Pachter recently predicted that Sony would price the PS4 around $400 or possibly as high as $449.
How Sony finalizes its plans may also depend on what reaction we see from Microsoft and its next Xbox. It's highly likely that we'll see the next Xbox at E3 and rumors are swirling that Microsoft could even unveil it as soon as late March during GDC.