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More Gaming Hardware Price Cuts, Mergers Needed?

Posted by simoniker on from the cut-slash-cut dept.

Thanks to Reuters for its article discussing game publishers' and analysts' lust for console hardware price cuts. According to the IDG-authored survey: "2003 proved disappointing to industry players because of a dearth of both blockbuster titles and significant hardware price cuts to stimulate demand", and Activision's Bobby Kotick expands on these wished-for price reductions: "Fifty percent of all hardware units on the (original) PlayStation were sold at $99... For some reason, this is one of those industries where that $99 is such a magic price point, and it's such a catalyst for that mass-market consumer." Mike McGarvey of Eidos also commented on the rise of the mega-publisher through continued mergers: "It's not far off, I think... six or seven (publishers) sounds about right."

21 comments

  1. Magic price point... by dmayle · · Score: 4, Insightful

    It's really a magic price point for consumer electronics of all kinds. DVD players hit really wide when the price point hit $99, as well.

    $99 is where people who would like one, but don't have any burning desire will pick it up. Also, $99 is price someone will pay for themself, or as a gift for someone really close.

    The next price point, $49, is where people who have a vague interest, but don't really care either which way will pick one up. It's a price point that many will pay for a gift for grandma, just so she can have one, too...

    1. Re:Magic price point... by wheresdrew · · Score: 4, Interesting
      $49 could also be referred to as the "where were you when we needed you?" price point.

      I had a ton of people coming into the shop I worked in after the Dreamcast was cut to $49.99, hoping to pick one up. By that time it was too late for the DC, and the price cut was just for clearing out inventory. If the "end of life" shoppers had taken a closer look at the DC earlier on, maybe it's life wouldn't have ended when it did.

      (Yeah, it wasn't a good enough value to them at $199, $149, or even $99, so they weren't going to pick one up without the price cut anyways - but still. To a DC fan who thought it was a great system for $199, it was really annoying to deal with the scavengers swooping in to pick at it's still-warm corpse.)

    2. Re:Magic price point... by Fuzzle · · Score: 5, Insightful

      I think the amazement at the 99 dollar pricepoint is hliarious. It's at that point where a PARENT can see it not being a waste of money to buy something for their child, and this carries through from those children to adulthood. It's been proven time and time again that 100 dollars is most people's limits for an extravagance. It just seems to me that it's basic economics and common sense that a 99 dollar item (with it's "sub 3 figure") price will sell better than a 149 dollar item, which can be seen as costing almost as 200 dollars.

    3. Re:Magic price point... by Anonymous Coward · · Score: 1, Interesting

      Good point, I knew that when I was a kid, the "big" gift I could ask for from Mom & Dad was somewhere around $50. Now this was a while ago, so I assumme it's about equal to $100 now.

      Now what my much younger brother and sister have been getting, that sort of irks me. Surfboards? Damn it.

    4. Re:Magic price point... by Deliveranc3 · · Score: 2, Funny

      Hey got any more dreamcasts? Mine broke :(

      But I have 400 pirate games...
      Hmm maybe that's why it went under?

    5. Re:Magic price point... by bofkentucky · · Score: 1

      The real question is, do the brits see it as a 100 GBP barrier, or (USD/GBP)*100 barrier. That wold tell you if it was psychological

      --
      09f911029d74e35bd84156c5635688c0
    6. Re:Magic price point... by jathos · · Score: 1

      I recently bought a PS2 because the used ones were selling for $99. $99 is easy to rationalize to my wife, because it just doesn't seem to be a lot of money (especially since she can easily spend $100 on a manicure, haircut, or new pair of shoes).

      Of course, the hardware isn't the sticking point. it's the software. I feel a lot guiltier when I plunk down $50 for a game than when I plunk down $200 for a new video card or hard drive. It's one of the reasons I bought a PS2 -- I can buy used games for about $10 that I would never have gotten to play otherwise (Kingdom Hearts, Metal Gear Solid, SSX, Jak/Daxter). It's much harder to find older PC games at the same price point at a local store.

    7. Re:Magic price point... by Fuzzle · · Score: 1

      Hmm.... I googled around for it, but gave up.

    8. Re:Magic price point... by nelsonal · · Score: 1

      I almost bought a Dreamcast at $50, but only while it was legal to run bleem. I ended up getting an XBox and several sega games (I'm sure they were happier with that). From what I've played on Orta and Sega GT (as well as SC2) I'm sorry that I didn't get one earlier.

      --
      Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
  2. Pricing structure & mergers by tod_miller · · Score: 3, Insightful

    It is all well an good talking about mergers, the gaming industry is going the way of the mobile phone industry.

    Publishers have a strangle hold on the gaming industry, games live and (more often) die by them.

    We need to use simple ditribution chains (downloads, amazon - heck, bit torrents) to send quality games at lower prices.

    Hardware has matured. Take a computer from 1 year ago, it can play Half Life 2, Doom 3, and CounterStrike Source (read a modded HL 2)

    Of course, anyone can change a 256x256 texture to a 1024x1024 texture...

    What we have is viable 3d engines, and many open and free... spark that with a true 'over the air' distribution method, and we can see many more companies producing more games.

    Of course, GTA:SA and Doom3 do require bigger budgets, because more money is spent outside programming.

    Art, directing, scripting, acting, stories are now more important in games than graphics etc... there is no break through in graphics in doom3, only detail.

    GTA:SA - detail detail detail. Lighting - detail. Handshakes - detail.

    There is a whole world where detail doesn't cost bucks, like motion capture bucks.

    Lets still have block busters, but let cheaper games be that - cheaper.

    --
    #hostfile 0.0.0.0 primidi.com 0.0.0.0 www.primidi.com 0.0.0.0 radio.weblogs.com
    1. Re:Pricing structure & mergers by Mr.Dippy · · Score: 0, Interesting

      So are you saying that the Phantom Game Console is the answer?

      --


      -Dipster
    2. Re:Pricing structure & mergers by Anonymous Coward · · Score: 0

      If it weren't a stock scam to capture the exitement that was all about gaming last year (nothing else was offering growth at the time) it would have been a great idea. For once I'm happy about the 2 minute limit (almsot forgot to post anon they'd probably sue).

  3. Hardware manufacturing. by nitrocloud · · Score: 1, Interesting

    I've heard a recent statistic about DVD players. The cheap low-end DVD players that cost $40 in China are for sell for $41 dollars in the US stores... A 1 dollar profit margin cannot be enough for anyone to not get the short end of the stick except the Chinese. Maybe we should all just buy domestic and Japanese high-end profits to protest the low prices? Who really knows, but what is the point where hardware is sold for a loss and why?

    --
    Karma: Good, or bust!
    1. Re:Hardware manufacturing. by MrRTFM · · Score: 2, Interesting

      yeh, you can understand game consoles doing it (market share), but it doesnt make sense for DVD player manufacturers to sell at a loss.

      Point is, they probably dont - they just say they do and get kickbacks from somewhere.

      --
      You can't expect to wield supreme executive power, just because some watery tart threw a sword at you
    2. Re:Hardware manufacturing. by Anonymous Coward · · Score: 0

      This thread is Twilight Zone - you think thin profit margins means a loss? Grandparent post talks about protesting low prices?

    3. Re:Hardware manufacturing. by svallarian · · Score: 1

      Like I tell my wife...

      You know if you sell a million for a $1 (net) profit apiece, you have a million dollars.

      Steven v>

      --
      I patented screwing your mom. But it got revoked for "prior art."