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PS3 Japanese Price Drop 'Ridiculous'
Gamasutra reports on comments from a Japanese analyst group, characterizing the pre-launch price drop for the Japanese market as ridiculous. From the article: "Meanwhile, Naoki Fujiwara of Shinkin Asset Management suggested that the price reduction was 'negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut.' The PlayStation 3 was already expected to be sold at a loss, with Sony allowing up to five years to recoup the costs. Shares in Sony fell 1.9 percent following the announcement, although this coincided with a generally poor day for the Tokyo Stock Exchange and may not be entirely related to the price cut."
I have misgivings about Microsoft as much as the next Slashdotter but given the Xbox 360 has already seen price breaks in some of its games and it has a price that I more typically associate with something that I "play" with. I think I am going with Microsoft this time. I might get a Wii as well, because I find it offers much better multiplayer games for parties.
An Education is the Font of All Liberty
Ah, but in order to sell more units, they must order more parts to manufacture the extra units. A larger order for parts means a larger bulk discount, thus reducing the loss per unit. As component prices continue to fall over time, this can eventually become a profit per unit.
It may be a loss, but they make it up in volume, goddamnit!
Apology to Ubuntu forum.
The cheaper of the two hardware variations was originally priced at ¥59,800 ($515) but was reduced to ¥49,980 ($430), at the same time as a HDMI video port was also added to the unit.
That's an improvement, but $430 is still very high for a game system! Yes, yes, it's also a Blue Laser media player, but since I had no plan to buy one of those, I still think of the PS3 as a vastly overpriced gaming system.
As a side note, given that Dead Rising for the X-Box 360 apparently requires HD to dispay some of its text properly, the implication is that I'll need a whole new TV just to play some PS3 games. Since I had no play to buy an HDTV either, that's yet another cost. No thanks.
This may be the first generation of consoles since the 8-bit era that I don't jump into!
Revive the Constitution.
I still say they did this in response to Nintendo's new commercial comparing the Wii to the PS3... ;)
If that doesn't sell more Wiis, nothing will.
Tequila: It's not just for breakfast anymore!
1. Import region-free Japanese PS3s
2. Sell Japanese PS3s
3. ???^WPROFIT!!!
For me the selling point of the PS3 is that I can be pretty sure I will get some interesting games from Japnese developers, perhaps the next Ico or Katmari Damacy. And since the PS3 is region free (in regards to games) I am not even at the mercy of game developers to bring ports over to the US.
Also Blu-Ray is going to provide a much better display that DVD's even on lower end equipment - I have an 600x800 projector and 1080i content downsampled to that device looks MUCH better than DVD's. You don't have to buy a 1080p display to take advantage of the PS3 (or 360 for that matter), a 720p screen or even less will do quite well.
It all really boils down to games of course, but the Blu-Ray player is a powerful incentive and a reason I'll be getting the PS3. I don't think $100 players by next christmas is realistic; probably still more like $300 by then.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Why do people believe in these "region free" claims?
Both Sony and Nintendo(before Nintendo corrected their mispoken PR person) heads said that "region free" support was up to the developers/publishers. In other words, companies can decided whether or not to let their games work on -- still region encoded -- consoles from different regions.
Does that really sound like being REAL "region free" to you? Because it sure doesn't to me.....
Not sure what it should be called, maybe "region friendly"?
Tough isn't it? We in Japan got to play the system 1st as well. I've just gotten back from the Tokyo Game Show. Played a few PS3 demo's there. Nice graphics, reminds me of PC games. But to be honest, the thing I noticed most about the PS3 was that it felt and played almost exactly like a PS2. That isn't really a bad thing, the PS2 was a nice system, but the PS3 doesn't really offer that much more than the PS2 does as far as game experience goes.
Overall impression? I'll probably end up buying a PS3, it's a nice gaming machine, but not at launch. Even with the price drop, it's still more expensive than Wii with 4 games and a few extra controllers. I'll wait for the 1st or 2nd price drop before buying or until a killer game comes out. There were quite a few there that I'd like to play, but none that sold the system.
Back on topic, market share is everything at this stage of the game. Japanese have a tendency to follow trends. The console that gets the largest market share at the start will set the trend. This means Sony have thier work cut out for them because not only does thier closest competitor have a cheaper console, it's also smaller, cuter and it's controller has a larger 'wow' effect than the PS3's graphics do. This doesn't even take into account that Nintendo will probably out produce Sony. So every little helps I guess.
As for why Japan is important, well it's Sony's home market. It's also the home to the development teams for a fair number of core PS franchises. If it loses Japan the effect on the other markets will be significant.
No consol maker has ever made a profit by selling units at a loss. What exactly makes this tried and true?
Idiots keep quoting the razorblade thing. Guess what. The razor is just a handle. Its is the CHEAP part of the package. You can afford to give those away because the next time someone buys a blade you make a profit. Sony only makes about $10 per third party game sold. If they are loosing an extra $85 per consol sold that means they must sell an additional 8 games before they break even. This mean the consumer has shelled out more then $900 and you have yet to see any profit. Here is the worst part. The average attach rate for a consol is only 9-10. The highest attach rate has been the PS1 at 13.2 games per consol (as of June 2005 in Japan) and this is only after a decade of being on the market. What does this mean? If Sony losses $100 per consol they will probably NEVER see a profit. And we are only talking about hardware here. This does not take into account the cost of marketing, shipping, QA, or the initial development costs.
The dirty secret of the consol business is HAVING A LARGER INSTALL BASE DOES NOT SELL GAMES!
Here are a list of attach rates from the last generation.
GameCube (End of 2005)
Japan - 6.693
America - 9.838
Other - 8.550
Total - 8.945
PlayStation 2 (End of 2005)
Japan - 8.454
America - 11.222
Europe - 9.294
Total - 9.885
Xbox (Unofficial, End of 2004)
Asia - 4.706
America - 9.773
Europe - 8.200
Total - 8.945
What does all this mean? The average consumer will only buy 9-10 games! The time you own the consol makes no difference either. (The PS1 average attach rate is only 9.3, The NES rate was about 8, SNES 7) Each consol sold has a total expected revenue from games of only $100.
So what exactly are Microsoft and Sony doing?
Microsoft is simply trying to buy mindshare. They expect to eventually make money on selling services over Xbox live and software that ties your Xbox to your PC (running windows) and your set top box (running Media center). They are willing to pour money into the black hole because in order to sell you high margin item at a later date. Microsoft has the financials to support this indefinably by using their profits from Windows and Office.
Sony is a different beast. Sony intends to make money off of Blueray royalties. As it stands, if Blueray fails (like betamax, Memory Stick, Atrack, and UMD) Sony will be in deep financial trouble. On the other hand if Blueray takes off like DVD did Sony stands to reap huge profits.
Personally I do not see Blueray being the next big thing. Consumers are not going to shell out real money on HD yet. The players are expensive, the standards are confusing, and most people don't yet have a HDTV. It will be years before the number of households with HDTV reaches the critical mass needed to make Blueray a success. In that time, it is likely that there will be other options. Blueray may very well turn out like laserdisc and VCD did.