Sections

Connect with world renowned investors

14 - 16 April 2021

Join the event

Sony's PSP Go "ripping off" the consumer - Pachter

New handheld cheaper to manufacture, but Sony has "jacked up the price," claims analyst

Wedbush Morgan analyst Michael Pachter has said that Sony is deliberately ripping off consumers by pricing the new PSP Go at USD 249 in North America.

He claimed the current PSP-3000, which supports a disc drive and packaged goods, is more expensive to build than the new model which supports purely digital content.

"I'm sorry to say it, I don't want to get bad fan mail from the Sony fanboys, but Sony is ripping off the consumer until they sell a couple of million," said Pachter to GameTrailers.

"Disc assembly for UMD costs more than 16GB of Flash does," he added. "So this new device doesn't cost them as much to make as the PSP-3000 and they've jacked the price up USD 80. And if consumers don't buy it then the price is going to come down. They're making a lot more money on the PSP Go than the PSP-3000."

He also noted that both Sony and Microsoft announced new digital content delivery methods at E3 last week, suggesting these were more important than any game or hardware announcements at the show.

"PSP Go is a game changer for digital delivery and yet they're still going to support the PSP-3000, they've got to keep the retailers happy.

"This year's show is 'packaged goods are going away'. Half of all gaming purchases ten years from now are going to be digital. You can see it coming for the first time ever, the console manufacturers are behind it," said Pachter.

Earlier this week, Sony's Andrew House told GamesIndustry.biz that he didn't think the price of the PSP Go was too high, particularly in Europe where the unit will retail for EUR 249, because the region is "less price driven".

Connect with world renowned investors

14 - 16 April 2021

Join the event

More stories

New PlayStation update adds USB storage and cross-generation Share Play

PS5 owners will be able to save game data onto an external drive, but the games won't be playable from there

By Danielle Partis

PS3 was "a stark moment of hubris" - Layden

Sony Interactive Entertainment Worldwide Studios chairman reflects on last generation's missteps and how the company changed course for PS4

By Brendan Sinclair

Latest comments (13)

Dwain Hill11 years ago
249 dollars is ripping off American consumers... what about the rest of the world! 0_o
0Sign inorRegisterto rate and reply
Jonathan McEnroe Freelance 2D artist 11 years ago
I'm sorry but Michael also seems to forget that Microsoft are also ripping off consumers too with their expensive 120gig Hard-Drive. Practically a dollor/pound per gig? Crazy!

I'm sure the consumer backlash will have an affect on the price along with a PS3 price cut later this year. We'll need to see what happens.
0Sign inorRegisterto rate and reply
Richard Westmoreland Designer, SUMO Digital11 years ago
I wouldn't pay 249 for it. If they'd added a touchscreen and revamped the store to allow for smaller 'arcade' like games or homebrew content then I'd think about it.

For 150 it might be tempting, but with the current exchange rate then I doubt we'll get it for anything under 230.
0Sign inorRegisterto rate and reply
Show all comments (13)
Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.11 years ago
We all know why it's $250. To help offset PS3 hardware losses. It's the same logic behind having a really high end SKU - to offset the losses taken on by offering a below cost low end SKU. Sony is doing the same but across their entire Playstation brand.

If the PS3 hardware were already profitable the PSP Go price would be lower.
0Sign inorRegisterto rate and reply
Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
Over-charging for one product because another was an unmitigated failure doesn't appear to be either ethical or sensible Jimmy. Could they be in danger of a repeat of the slow uptake for the PS3? I should say so. This 'high end/low end' model has to be re-evaluated in today's climate.

Sony have built an established brand over the years, one which has netted them enormous revenues. However they for too long lived on the strength of this brand and its established customer base. They believed that the PS3 would be a success purely on the strength of the fact that they'd sold millions of it's previous incarnations and that it came equipped with a blu-ray player, and promptly priced it at a level totally out of reach of it's core consumer. It also was released with a ridiculously low amount of software support and when it's PSN was still in it's infancy. In today's market you simply cannot rely on brand strength and fanboys. The competition has moved on, and it smacks of desperation when a company attempts to reverse its fortunes by overcharging for it's new products.

Edited 1 times. Last edit by Alex Wright-Manning on 11th June 2009 4:08pm

0Sign inorRegisterto rate and reply
Mat Bettinson Business Development Manager, Tantalus Media11 years ago
Holy cow batman, it's come over all fanboy in here!

The PS3 an unmitigated failure? Bit strong for a platform with three SKUs in the top ten don't you think? You suggest that Sony banked on success through their brand alone which I think is a fairly disrespectful accusation to level at Sony's staff that have worked and continue to work in many other facets of the business. Placing any staff with SCEE at all Alex?

They've made some questionable choices and they've made some undeniable mistakes but I really cannot see the price of the PSP Go in any substantially different light than Nintendo's pricing policy for the DSi, eg *$170* at discounted retail. I tell you what, I'm looking forward to it and I'll have one at that price right away.

The price point chosen for a hardware launch is really just a *tinsy* bit more complicated than "Oh PS3 isn't doing as well as we liked, let's rip people off on PSP Go". They will have consulted retail and done extensive demand analysis. At the end of the day something is only worth that much if people buy it.

If Nintendo charges money for old rope then they're hailed for their innovative business model. Ultimately the market will decide if the price is right, not some unqualified analyst plankton.
0Sign inorRegisterto rate and reply
Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
Ouch! That's a little harsh Mat.

What I meant was at launch. Perhaps on reflection 'unmitigated' was a rather strong word. I wouldn't dream of levelling any accusations at any Sony staff, they continue to do a great job at producing high quality product. I have a great many friends at SCEE, and worked at Psygnosis/Sony many years ago, so if anything i'm a PS fanboy. Which i'd guess you would be too given Tantalus' platform focus. ;) Oh, and yes plenty thanks.

I for one hope that the PSP Go is a huge success, but being a UK resident have become all too familiar with having to pay more than the rest of the world for the same product - the car industry call the UK 'The Golden Isle' - and I don't like it one bit. Perhaps i'm being a little anglo-centric, but I can't help that can I?

I understand completely that it's a 'teensy' bit more complicated, having spent a good period of my career in the financial sector. However, extensive demand analysis means very little if your main demographic is teenage boys without expendable income. I'm sure that they ran the same demand analysis for the PS3 and got fantastic responses from a demographic that was happy for their parents to pay 400 for their next console - and look what happened with that.

Lets not get too personal in the future eh guys, let's leave that to the lesser portals. ;)



Edited 1 times. Last edit by Alex Wright-Manning on 12th June 2009 9:45am

0Sign inorRegisterto rate and reply
Jonathan McEnroe Freelance 2D artist 11 years ago
Now he regrets calling it a rip off. It is expensive, but then so is a 360 Hard-Drive and a Wii Console.
0Sign inorRegisterto rate and reply
Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.11 years ago
What exactly is a rip off? Is it selling your product above cost to make a profit but if so at what % above cost does it become a rip off? How does demand play into account? If gray market prices are above retail prices, can it be called a rip off at retail?

To me a rip off should be relevant to similar products in that at a lower price can you get the same product elsewhere with regard for demand?

The X360 hard drive. Certainly it is priced well above cost and is sold at retail far higher than gray market prices. Does demand warrant the retail price? Gray market says no so in this case it could be considered a rip off.

The Wii. It too is sold above cost though gray market prices are still close to retail. Gray market still has new unopened units going for $400. So it cannot be considered a rip off based on consumer demand.

Granted there is of course personal choice which will always have rights to claim products rip-offs to them personally due to their own product demand (or lack there of).
0Sign inorRegisterto rate and reply
Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
Has Pachter retracted his statement now Jonathan? Does he regret calling it a rip off? I've not seen anything about it. I think we should wait until we see the official launch price point, but personally, as a UK resident, I still think we'll get oiled and shafted in relation to other regions.
0Sign inorRegisterto rate and reply
Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.11 years ago
Alex, that seems to be an issue with the whole industry. I know the exchange rate plays some role but it does appear that the UK gets the ugly end of the price stick more often than not regardless of the exchange rates.
0Sign inorRegisterto rate and reply
Alex Wright-Manning Head of Recruitment, Splash Damage Ltd11 years ago
You're absolutely correct with your observation Jimmy. It's the same with pretty much everything, not just games. It harks back to Victorian times when we became the consumerist nation that we are today. Shopping for pleasure originated here due to the wealthy middle and merchant classes and the new world opening up due to our empire. It's kind of stuck and nowadays we are rampant consumers; you just have to look at our take up of plasma and lcd televisions when compared to the rest of Europe, or the fact that the government deliberately introduced two registration periods for new cars in a year, simply to drive our rampant desire for the new. It's hit us very hard now, but we've been taken advantage of for years by industries who realise it's burned into our cultural DNA. Not to make this a political forum or anything! :)

Edited 1 times. Last edit by Alex Wright-Manning on 12th June 2009 5:36pm

0Sign inorRegisterto rate and reply
Mat Bettinson Business Development Manager, Tantalus Media11 years ago
Sorry Alex! Wasn't trying to be personal. I was referring to Pachter as the plankton if that's what you mean :)

The idea of a rip-off is subjective isn't it? One man's rip-off is another man's bargain. What I've got issue with here is the simplistic view that something is priced well or it's a rip-off. The reality is that price points are set after modeling the whole business case.

I also doubt that Sony would seek to rebalance their profit/loss of the PS3 business with behavior in the PSP area. They'd simply be looking to maximize their profit in that business unit like any shareholder-responsible company does.
0Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.