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.

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Latest comments (10)

Rick Lopez Illustrator, Graphic Designer 9 years ago
Well... when your competitor is selling more consoles, you gotta ask yourself what they are doing and do the same thing, which is what Im smelling from microsoft.

Edited 4 times. Last edit by Rick Lopez on 20th June 2013 5:12pm

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Aric Norine Animation, Next Level Games9 years ago

Which incidentally is why used-game purchasers are a net loss for Microsoft if they buy a below cost system at launch. :)
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Andrew Goodchild Studying development, Train2Game9 years ago
Micosoft are missing a trick in Europe.
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.
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Show all comments (10)
So lets get this straight - they got the reveal event wrong, the E3 launch wrong, the price wrong, the owned game policy wrong, and the online policy wrong!

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

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Jens Mogensen Game Reviewer, Geek Culture9 years ago
Why is the PS4 less online friendly? It will have same day releases on PSN (they've done it with Vita from the beginning). Their sales are better and more frequent than those on Xbox and PS Plus represents vastly better value than Gold does.
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Paul Jace Merchandiser 9 years ago
Microsoft has not done a particularly good job of communicating the value proposition to consumers
Beyond all the original restrictions this was also a key issue for me. They never said why having to check in online once a day was a benefit to the consumer. Samething for the used game restrictions. Why was that supose to be a benefit to us? Atleast with Kinect it can be turned off but the other two things didn't seem to have enough positives(if any) to outweight all of their negatives. And now Microsoft still needs to properly communicate why someone should choose an Xb1 over a PS4 or a Wii U. I know why they should but the casual consumer has no idea why. They need to get those marketing messages out ASAP.
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Tim Ogul Illustrator 9 years ago
Seeing used game sales as a potential net loss is - at least in my opinion - wrong, because people are selling games they originally bought as new games in order to buy other new games with the money they get, so no used games means lower sales for new games.
Not really. That's a lovely myth, but it's nonsense. Most people who are willing to buy new games at launch would buy them whether they could resell them or not. They might not be able to buy quite as many, but they could still buy the vast majority of what they get. Meanwhile, the people who buy games used, especially early on when the used price is barely a savings against the new, they would buy new if they had to, especially once the price of the new games falls a bit after launch. Some would say that ten people buying a game new, reselling it, and then ten people buying the used copies would represent ten lost sales, and that's nonsense too, but it would definitely represent some net loss, maybe 50% or more.

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.
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Adam Campbell Product Manager, Azoomee9 years ago
I still miss my 130 Gamecube... and I'll probably keep mentioning that frightening price for all eternity.

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.
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Jason Pullara Podcaster 9 years ago
I really wish GI would stop reporting on what this physical manifestation of "wrong" has to say.
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Alfonso Sexto Lead Tester, Ubisoft Germany8 years ago
Wish I could say something more elaborated but: nothing surprising here...
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