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PlayStation 4: "$299 is the magic price point"

PlayStation 4: "$299 is the magic price point"

Thu 21 Feb 2013 10:01pm GMT / 5:01pm EST / 2:01pm PST
Hardware

Analyst Billy Pidgeon talks about the challenges both Sony and Microsoft will face in transitioning to next-gen

Sony Computer Entertainment

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

playstation.com

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.

19 Comments

Paul Jace Merchandiser

939 1,420 1.5
Um...I don't see that happening, not when Nintendo has a $300 model. I think the lowest Sony would go is $350 and that would be just for the controller and the social features. To get the actual console they will realistically start around $400. Then again, a stripped down model for $350 might serve them well. But they will definitely have atleast one sku going for no less than $400-$450.

Posted:A year ago

#1

Cameron Lourenco Studying Business Managemant, Conestoga College

21 16 0.8
Popular Comment
Yeah, from a consumer standpoint we want everything to be as cheap as possible. Sony will sell a boatload of PS4's at a $600 price point. If it means they can put more money into making better games, better marketing, better cash flow (so they don't go bankrupt), then I'm all for it. Early adopters are willing to pay more 100% of the time, you'll see tons of PS4's on Ebay selling for 1000 bucks for months on end.

There's no reason to lose money in the first year of release. Just because a particular group of consumers would much rather pay $299 doesn't mean they have to be catered to on day 1. There's a serious cash flow problem with selling cheap on day 1, and I wouldn't blame Sony for a second if they decided to sell high in the beginning to help with the cash flow issues that come with manufacturing all those consoles for a worldwide simultaneous release.

Posted:A year ago

#2

Dan Howdle Head of Content, Existent

280 810 2.9
Early adopters will pay more than that, a lot more, and there are enough of them to see this console sold out for months, so perhaps this is a conversation we should be having six months to a year after it's out, not six months to a year before before it's released?

Posted:A year ago

#3

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
"Wedbush analyst Michael Pachter recently predicted that Sony would price the PS4 around $400 or possibly as high as $449."

Wow. This might be the first time I actually agree with Pachter. Given Sony have opted for GDDR 5 RAM, and 8GB of it at that, the manufacturing price will have been pushed up. Unless Sony want to launch at a huge loss--and given the struggles the company faces, I highly doubt that--they'll launch for $400 or more, as Digital Foundry said:"What shouldn't be understated is the amount of extra cash this is going to add to PlayStation 4's BOM (bill of materials) - this is an expensive, massive investment for the company." And it's possible they'll be bundling PlayStation Eye in with the box, too, which would further jack up the price.

Have Sony just bet the farm on PS4 as the device that finally turns the company around?

Posted:A year ago

#4

Daniel Amofa Account manager

7 4 0.6
$299 lol! Yes maybe in 3-4 years.



I for one will buy one depending if MS become as ignorant as reports are stating.

Posted:A year ago

#5

Rick Lopez Illustrator, Graphic Designer

1,269 942 0.7
Id say anything between 299 and 450 would be ok. Im not interested in the playstation eye or move games, so Im hoping I dont have to pay for that and maybe they can offer a package without it. The whole social thing is cool, but I feel spooked at the thought of having a camera in front of me while I play. Im not particularly crazy about being filmed or people seeing me play and who knows what other information it will pick up.

I also want to ask a question, does anyone here know, if my current PSN account will be the same will be carried over to the new one or do I have to sign up again with a new account different name etc. I bought alot of stuff and I seriously would like it to be part of the same account. It would suck to have everything I purchased on an old unsupported network that might go defunked in a few years. Plus I like my gamer tag, I wouldnt want to lose it.

Also is backward compatability possible with Gaikai, running the emulation needed to run PS3 games using the cloud to process an app allowing SONY to do so in the future with a simple firmware update.

Thanx

Posted:A year ago

#6

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
@ Rick, it's been confirmed current generation PSN games will not work on the PS4: http://www.eurogamer.net/articles/2013-02-21-psn-games-wont-transfer-to-ps4

Posted:A year ago

#7

Jakub Mikyska CEO, Grip Digital

202 1,107 5.5
@Rick: I would be surprised if the PSN accounts didn't carry over. Trophy whores would eat Sony alive. But I remember reading that digital purchases won't be carried over to the Gaikai-powered backward compatibility stream service. It is time to buy Final Fantasy 7 again :-)

Posted:A year ago

#8

Caleb Hale Journalist

155 231 1.5
I can't see a $299 PS4 in the cards, when Sony is getting ready to sell a $350 500 GB PS3 "God of War" bundle.

Posted:A year ago

#9
My guess is the price is going to be more like $699.

Posted:A year ago

#10

Todd Weidner Founder, Big Daddy Game Studio

414 984 2.4
I agree, if there isnt a 299 model, after the initial month of die hard sales, I believe you will see dismal like WiiU sales numbers. The hardware is off the shelf stuff, I dont see why it would have to be anywhere over 400.

Economies around the world are in or close to recession, retail numbers at christmas were BAD, WiiU numbers are awful, If sony thinks they can sell this for a lot of money, I have an 3DO to sell to you, ask Trip how well that overpriced piece of hardware went over.

Posted:A year ago

#11

Rod Oracheski Editor, Star News

58 23 0.4
Sony will sell a boatload of PS4's at a $600 price point.
Looking at PS3 sales at $599, I would say that's one hell of a thing to gamble on.

Posted:A year ago

#12

James Verity

132 25 0.2


"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."

I suspect the PS4 wont be finalised until Microsoft show their hand...

Posted:A year ago

#13

Andrew Jakobs Lead Programmer

239 98 0.4
yeah, and look where the PS3 is now, almost 1.5 years later on the market, with a price waay higher than the xbox360, and now it's a tie (or if we must believe some reports even ahead)..

Personally I think this analyst with his $299 only said it to get his 15-minutes of fame... realistic speaking the cheap model would be something like $350 and the more expensive one around $399..

Posted:A year ago

#14


Posted:A year ago

#15

Kenneth Bruton Producer

38 8 0.2
Being from the "old school" the only way to justify a (slightly) higher price point is by packing in a game (or two). Remember when consoles used to have two controllers and a game, standard? The systems are becoming more and more piecemeal, and that makes things costly, but the rollout should at least have a pleasing configuration (we already know it is coming with a headset)...I, for one do not want to pay an arm and a leg. I also do not want to lose out (later iterations of PS3 with no PS2 backward compatibility, for example)
It looks like you have to keep your current console to keep from losing your games...I do not want to pay twice for the same game...

Posted:A year ago

#16

Craig Page Programmer

384 220 0.6
Early adopters always get burned, with higher prices and bad hardware. My 360 red ringed, and my PS3 got the 3 beeps of death. I assume my Wii still works, but don't know for sure since it hasn't been turned on in a year or two...

Posted:A year ago

#17

Bill Garrison Studying Student, DigiPen Institute of Technology

69 89 1.3
I don't think its about launch prices necessarily. $400 is probably the magic number, which the camera accessories standard. But the real culprit is price inertia in this gen, or the lack of price cuts after launch. 7 years in and the 360 and PS3 are skirting around the PS2's launch price.
In their scurrilous ambitions to "own the living room," Sony and Microsoft have taken consoles out of the hands of the mass market. Video games used to be a populist entertainment category that virtually any family could afford. Even a lower middle class families bought Playstation 1 and Nintendo 64 back in the day. Now though, the likes of Kinect, blueray, extraneous subscriptions, and digital sales that nickel and dime people have turned consoles' to an elitist tech vanity item.
With the transition to HD completed though, and a parity of features on the next gen, I'm hoping we'll see more competitive, sensible pricing strategies. Video games should be something everyone can enjoy, and developers really depend on that principle to make their games relevant and profitable.

Posted:A year ago

#18

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
In the time since the last one, I have an absolute beast of a PC. It'll be almost impossible to get me to spend money on one. Ill keep the PS3 for netflix and dvd's, and the PC for the gaming.

Posted:A year ago

#19

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