$400 price point for next PlayStation, Xbox consoles
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.
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...
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?
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.
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?
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.
So many core gamers have migrated to Steam.
People who are not core prefer FTP.
And even core players like World of Tanks.
Id say tablet gaming already is mainstream, but that tablets will never take over the hardcore market if they havent already.
No waffle, salami, salad or extra cheese with a rebate coupon please
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.
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...
- 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?
"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. :)
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? ;)
- 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
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
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
I wouldn't be at all surprised if both consoles launch *next* year. MS in particular has nothing to lose.
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.
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.
"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
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.
then pricing it within the higher end spec of a tablet could be the golden sweet ratio
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.
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.