Microsoft "prepared to lower price" on Xbox One next year - Pachter
The Wedbush analyst does think Microsoft "can fully level the playing field with Sony" leading into this holiday, however
While we all weigh in on Microsoft's huge policy reversal on Xbox One, analysts have started sending out their investor notes. Wedbush analyst Michael Pachter is now much more optimistic for the Xbox One's chances this holiday season against Sony's PS4, but he also doesn't rule out a price cut on Xbox One next year if Sony gets out to a sizable lead with its $399 price tag.
"...the focus will shift from Microsoft's onerous policies to the price differential between the Xbox One (at $499) and the PS4 (at $399). The differential is due to the inclusion of Kinect (a high definition camera with a microphone array) with every Xbox One; Microsoft intends to offer a more robust hardware bundle than Sony will offer, and Microsoft is convinced that consumers will ultimately appreciate the value proposition presented by Kinect... Microsoft has not done a particularly good job of communicating the value proposition to consumers, but today's announcement will remove an impediment to the company's ability to get its message across," he noted.
"We are confident that with six months of focused messaging, Microsoft can fully level the playing field with Sony, and we expect the Xbox One to sell as many units as the PS4. If we are wrong, we think that Microsoft is prepared to lower price next year."
As long as the current-gen console cycle has lasted, Pachter said he thinks the next one should last about 10 years, and one of the biggest winners in the Microsoft reversal will be retailer GameStop. "While Microsoft still intends to offer digital downloads of new games on the same day they are released on DVD, the removal of restrictions on transfer makes it far more likely that the large number of consumers who value used games as currency will continue to buy them in physical form," he said. "Ultimately, we think that no more than 50 percent of game sales will be in digital format, suggesting that GameStop's used game business could be healthy for many years."
In an email to GamesIndustry International, Pachter clarified his 50 percent estimate. He's approximating that no more than 50 percent of AAA title sales, just on Xbox One, will be generated from digital. This does not count DLC or indie games. "Measuring what is currently sold in packaged form, I think that there will be a migration of 50 percent to digital in the next 5 - 10 years for Xbox One. It's a harder call on PS4, it's not as online friendly (yet)," he told us.
Edited 4 times. Last edit by Rick Lopez on 20th June 2013 5:12pm
Which incidentally is why used-game purchasers are a net loss for Microsoft if they buy a below cost system at launch. :)
When the 360 launched, MS broke the established conventions by setting a price based on exchange rate, at least in the UK. They could repeat this, rather than charging £430 they could use the current exchange rates, giving a price of £323 , or 378 Euros. So whilst they need to charge more than Sony in the US, they actually have room to come down in Britain and the Euro Zone, to less or equal to the PS4. They even set the precedent. Even with VAT, they could charge £380, and not lose rhat much on price.
Likewise, if Sony used this and realised $400 was £260/302 Euro (ok, £310 with VAT) they could bury MS in Europe.
I think its best to just say, Microsoft got the selection of those managing the development and launch of the XBone.....
Edited 1 times. Last edit by kevin williams on 20th June 2013 9:12pm
Anyways, maybe Microsoft could convince people that the Kinect is worth the added cost, but it's hard. The people most likely to be impressed by the Kinect are those that would only want to spend $100 or less for those sorts of features. The ones willing to spend $300+ on a game console? tougher to justify the purchase.
Price is a big problem and unless Halo is launching with the Xbox One (which its not) we could see slow initial sales. Perhaps not a bad as the PS3 mind you but there's still a worry there.
Xbox didn't have to launch this high (even with Kinect) and I would have thought for all the history and knowledge over the generations, we wouldn't see this happen. Sure, a price drop later would help but without a head-start and an aggressive price, its hard to see Microsoft dominate its competition.
Things will be quite interesting.