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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."

3 of 21 comments (clear)

  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.