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Xbox One price a "double-edged sword" says analyst

Billy Pidgeon would have liked to see a lower price, but he understands why Microsoft priced Xbox One at $499

Microsoft's E3 press conference earlier today was eagerly anticipated by gamers and the industry alike, as Microsoft came through on its promise and showcased a slew of games for the Xbox One after a disappointing hardware reveal that focused more on TV watching. While many reactions to the Xbox One E3 conference have been positive, the $499 price tag has drawn some criticism.

Speaking to GamesIndustry International at the E3 Expo today, veteran analyst Billy Pidgeon commented that he would have liked to have seen a lower price point but he also gets why Microsoft decided on $499. "It's somewhat understandable considering the parts that went into it. I think the economy is looking for lower-priced hardware but the economy also precludes a lot of companies from taking too much of a bath and subsidizing hardware, so it's kind of a double-edged sword at this point. $599 to me would have been a deal-breaker," he said.

Pidgeon added that even if $399 had been the official Xbox One price, the initial sell-through during the first several months probably wouldn't change much.

"I wonder how much of a difference it would make if it was $100 cheaper - I'm not expecting huge sell-ins at the beginning of the cycle. For one thing, there's still good software on the 360 and for PS3, etc. People will be less inclined to buy next-generation hardware. I'm sure [the platforms] will sell out at holiday but into 2014 we're not going to see the same kind of numbers that we saw in previous cycles. They will continue to support the previous gen and in that case a higher price point doesn't affect it as much because I'm not convinced a lower price point would induce that much more pickup," he said.

Speaking of supporting the existing Xbox 360, Microsoft began its press conference by showing off a new model for the current-gen system, but strangely there was no accompanying price cut on the hardware. "New form factor but now new price? It was very weird. They may introduce a price cut later on. I think it would be wise to do so," Pidgeon continued.

While Pidgeon was mostly satisfied with Microsoft's showing at E3, EEDAR analyst Jesse Divnich was a bit more enthusiastic, calling this year's media briefing "one of Microsoft's best E3 press conferences to date."

"Microsoft made it clear today that their attempts to make the Xbox One a truly integrated entertainment device that will service all members of a household will not come at the cost of alienating the core gaming community," he continued. "From Titanfall, World of Tanks, Quantum Break, Ryse, Dead Rising 3, to Sunset Overdrive, it's evident that Microsoft is investing more resources and capital than ever before to securing exclusive content and games from third-party publishers and developers while investing more resources to internally-developed titles."

Divnich declined to comment on the Xbox One's $499 price tag at this point.

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Latest comments (15)

Paul Johnson Managing Director / Lead code monkey, Rubicon Development8 years ago
It doesn't need sharp analysis. Here's the skinny in brief.

"Nobody seems to want this, so all we have are fanboys. Up to a point they'll pay anything, so gouge on..."
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Greg Wilcox Creator, Destroy All Fanboys! 8 years ago
@Paul - which is hi-larious because a few weeks ago it was "Hey you?! You want a new tee vee box? We got a new tee vee box for ya right heeeeere!" so I have to ask who the market is for this at the end of the day. Always connected sports and game-loving bros and bro-ettes who live with their moms who still can't figure out the cable box yet?
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Eric Leisy VR Production Designer, Nike8 years ago
I haven't met too many people who are feeling positive about the xbox. however it turns out in reality, they sure are going to have a uphill battle going into this thing.
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Show all comments (15)
Greg Wilcox Creator, Destroy All Fanboys! 8 years ago
Well, to steal and modify a line from the old Twilight Zone episode "A Stop At Willoughby", that "double-edged sword" just turned into a single edged straight razor complete with a chart of the human anatomy showing where all the major arteries are... *zing!*

Edited 1 times. Last edit by Greg Wilcox on 11th June 2013 7:10am

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$100 goes a long way to influence the hearts and minds of the casual and core gamer. A loooong way. A no brainer even (fitting with all these zombie titles having a breakout)
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Isaac Kirby Studying Computer Games Development, University of Central Lancashire8 years ago
Considering the lack of backwards compatibility for PS4 and XBoxOne there are only new games to stay Brand Loyal for. Price is a key war, and right now, Sony seem to have the bigger gun.
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Bruce Everiss Marketing Consultant 8 years ago
Each previous generation of consoles has brought something new to the party. Last time it was HD video.
Now we have three new consoles that only offer more of the same compared with their immediate predecessors.
And this at a time when the two biggest recent console launches, Vita and Wii U, both bombed.
And at a time where the gaming market share for consoles has eroded enormously, to the point of certainly no longer being mainstream. It doesn't take many units to chart a console title these days.
So the battleground for Sony Vs Microsoft will be in three areas. Price, services and exclusives.
This holiday season price will be no problem as the fanboys and early adopters don't mind paying a premium for their bragging rights.
After that it could be very hard work to become mass market at the current price points. Microsoft have a great advantage with an established easy payment system already in place.
Services will be incredibly important if they want to own the living room. People want to sit down and watch their sports match of choice live. Or time shifted if that works better for them. They also want every movie and every TV episode ever to be available on demand.
Then exclusives. Already it looks like MS understand this and are investing big bucks in it.

Personally I think that both consoles will fail compared to previous generations. They don't do enough for the average consumer for the money. And there are plenty of alternative spends that provide more utility. A Nexus 7 is just $199, for instance, with hundreds of thousands of games, both as apps and in the browser. It will drive your TV in HD and you can use it on the bus/plane/train.

But of the two companies MS may well have the upper hand despite the higher price point because they have full coffers and can afford to throw the billions necessary at the market.
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Adam Campbell Product Manager, Azoomee8 years ago
Xbox One price is dangerous. People should never underestimate its importance and see what happened when PS3 launched at 425... Consoles are so expensive these days compared to the past and its a shame, because the market could be increasing a lot faster and hardware better value for money.
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Its interesting to also compare the cost of a IPAD, mobile phone and console.
Imagine if the consoles could be sold via a bundled contract basis...
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Rick Lopez Illustrator, Graphic Designer 8 years ago
Its now confirmed that Xbox will be 100$ more than the PS4. I think SONY offers more for the price point. Its cheaper and with out all the issues surrounding always connected, privacy and used games. SONY is a day 1 purchase for me. And they seem to have alot to offer in terms of multimedia, like movies and music. It just doesnt have all the fancy motion and voice activated mumbo jumbo of the Xbox, which Im sure its capable of doing, but its not mandatory. I wouldnt call myself a fanboy, however at 399$ I think its an acceptable price point for what they offer. I was impressed with Killer Instinct, Quantum Break and Halo. But the new Xbox with its draconian DRM system was the deal breaker for me.
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Ben Gonshaw Game Design Consultant, AKQA8 years ago
Will the 100 price-gap with PS4 make a difference in the long run?
I doubt it. The PS3 launched $100 more than the 360 and Sony have caught up to the 360 in total units sold through.

Will the pricing affect the XB1 volumes at launch?
Absolutely - because when you combine that price with the poor positioning of the console for the early adopter, the PS4 comes out rosier. That's an outcome which Sony, in their tight financial position, really need. Sony needs to get a substantial attach rate to offset their hardware subsidy and carry them through into the next FY in better shape.

@ Bruce
There is no doubting the colossal leap in visual prowess that the new consoles bring.
Mobile devices are just starting to catch up with the 360/PS3 in terms of fidelity - but a 32GB iPhone 5 is 599 against 430 for an XB1.
However, people do need a phone, while they do not need a console.

In this sense Microsoft has grasped the importance of creating a multi-functional device that can be seen as an essential augmentation of the living room. This is what will help them to win out in the long term. Microsoft's mistake isn't in the platform they've built, but in the way they've chosen to focus their comms on those features now. It would have worked better for them to speak to the early adopter in their own language and then shift the message onto the media capabilities at a later time, in conjunction with the first price-drop.

There's a while left until November. Microsoft have time to create game centered campaigns tuned to early adopters and right their boat in time for launch.

Perhaps PS4 will win the first skirmish, but XBox One has entrenched its position for the next 7 year war. Sony has yet to reveal its hand...

Edited 1 times. Last edit by Ben Gonshaw on 11th June 2013 1:31pm

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Greg Wilcox Creator, Destroy All Fanboys! 8 years ago
Oh, come on now... Microsoft had grasped one thing well, but forgot that people aren't robots who buy by command. Yes, their model WORKS... but it works better in that perfect world scenario they thought would roll entirely into their court after the announcement, not the real one where people look at price first and decide on the spot.

Maybe Sony will fall on their faces in a few weeks as they come down from their high and interviews reveal more of the truth, but I don't think that will slow the momentum if that pricing model stays as it is. Microsoft's game-centered campaigns do NOTHING to help those who simply can't use the Xbox One and can tell you all here WHY:

But BOTH companies need to face facts, not drag in early adopters and lie later on to less savvy folks thinking the Xbox One or PS4 is for them because they sold so well and got on the news because of it as the latest hot tech thing. Well, Microsoft really needs to roll back before they roll forward off a cliff again and we hear this the next time they try to pull off too much all at once:
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Paul Jace Merchandiser 8 years ago
If the price were $100 cheaper and there was full BC with 360 content I'd jump in early. But right now theres just too much stuff that they aren't doing right and that price is just a big no-no on top of everything else. They need to make some serious modifications to their plans before this November.

Edited 1 times. Last edit by Paul Jace on 12th June 2013 3:58am

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Andrew Goodchild Studying development, Train2Game8 years ago
I'm wondering if on Xmas day, the increased load on the Xbox one servers means day long service outages. By now you would hope not, but the amount of launch bandwidth clangers we still see...
And the result may be a return to the shop to exchange for a PS4 to some families.
Every console that has launched with an above average price has stumbled off the block, and citing inflation is a red herring. Costs have increased with inflation, but in the west, wages for all but the highest paid have not risen with inflation. People have less money in the core launch markets (at least US and Western Europe, I don't know about the wealthier Asian countries like Japan) than they have in years, so saying that in real terms $499 is les than it was 7 years ago means nothing to most of us who have experienced pay freezes.
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Paul Johnson Managing Director / Lead code monkey, Rubicon Development8 years ago
I thought the Japanese were basically on their arses now as well. Truth be told it's a crap time to be launching a luxury product anywhere, especially when it /feels/ overpriced even if the manufacturing costs say not.

In a years time, does anyone think that either/or MS/Sony will have more money in their company after rolling these machines out than if they'd just kept on trucking with their current products? I really can't see it.
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