Actually I think Microsoft's intent for the bigger hard drive is to used with the XBL marketplace. Demos usually clock in around 1gb, a 1 hour tv show takes up about 0.5-2gb depending on if it's HD or SD, and an HD movie can be as much as 7gb. That 12gb of free space on the Premium's HDD fills up very fast.
I don't think Microsoft's margins are as good as you think they are. If they're turning a profit on any consoles at this point, it's probably only the Premium and it's probably still rather slim. For the time being there's not much reason for them to lower the prices as the $499 PS3 is virtually impossible to find and there is still a rather large price gulf between the Xbox 360 and the $599 PS3. My guess is that they will implement a price cut either A) after they sell through the black Elites, B)when they move to 65nm chips, or C)when the PS3 does. Most likely it will be either A or B and I would place it either immediately before the holidays or sometime next spring. Of course this is all supposition on my part, but I think it would have been foolish, from a business perspective, for Microsoft to cut prices now.
From an article I originally posted here:http://vgecon.blogspot.com/2007/03/purpose-of -xbox-360-elite.html.
The answer is that the Xbox 360 Elite is aimed at people who are willing to pay $479 for an Xbox 360. That may seem a little too simplistic, so I'll explain. One basic rule of economics is that a product's price is partially determined by how much the consumer values it. However, every individual has their own concept of what the product is worth. Ideally a manufacturer would want to sell to every customer at exactly what they're willing to pay, as long as it's higher than the cost of producing the product. Unfortunately this is just not practical in the real world, especially with a large volume product. Just because someone is willing to pay a certain amount doesn't mean that they won't pay less if they can. People would find out that you're selling the product to others for less and demand that price even if they would have been willing to pay more.
There are two alternatives to this. First, you could set a single price; but this is a gamble. If you price too high you will lose sales to people who valued the product less. If you price too low, you lose profit margins from people who would have been willing to pay more. The other alternative is to still set your product at multiple price points but vary each version slightly. An excellent example of a company that uses this tactic is Starbucks. A regular coffee at Starbucks is only around $1.60; but a double foam mocha latte... whatever can cost you upwards of $4.00. In truth, both products cost Starbucks approximately the same amount of money to make. Price sensitive customers will choose the regular coffee, and people who are willing to pay more may spring for the more extravagant drink.
This is what Microsoft is doing with the Xbox 360. Sure, the Premium costs Microsoft more to make than the Core, and the Elite costs them more then the Premium; but it's less than most people think. Microsoft may still be losing money on the Core, but they're probably breaking even on the Premium at this point. At $479, the Elite might even turn a small profit.
Some people have pointed out that the new price tag erases Microsoft's price advantage over the $500 PS3. From a marketing perspective, it may seem that way. From an economics perspective though, things are still very different. The key point is that Microsoft is going to be ready for a price cut far sooner than Sony will be. Before the Elite, a price cut would have meant that they would have to sacrifice any profits from people who were still willing to pay top dollar for a system. A new high end model allows them to maintain their position in the $400 range, while extending their market by dropping the low end of their price range.
I am no marketing expert, so I can't really say what the effects will be there. Economically though, this is a smart move by Microsoft.
If by key you mean some random arbitrary metric of the success of the format, then I suppose the title is accurate. If you mean a milestone with actual meaning, then I think the title is a little misleading.
There is always a direct correlation between the cost to produce a good and the price of a good. The only reason games were generally set at $50 previously was because it was an agreed upon price by the developers, publishers, etc... If developers were not able to recoup their cost at that price then they would not have agreed to sell at that price, plain and simple. Even still there were plenty of games sold at "non-standard" prices. Limited editions went for $55 and $60. Do you think they put those out just to make you happy? They're there to help recoup costs from people who were willing to pay the higher price. Likewise, games that were easier to develop, like Katamari Damacy, often went for $40, $30, or even $20. Furthermore, games were almost never sold at $50 for their lifetime. Once publishers have exhausted the amount of people who are willing to pay $50 they generally drop the price to attract customers who are more price conscious. Lastly, the $50 price point does not exist overseas. In Japan, "non standard" price points are much more common.
Also, you're analogy is flawed. The reason you pay the same ticket price for the movie that costs $200 million to make and the one that costs $5 million dollars to make is because:
a. More people will usually see the summer blockbuster and more sales = more profits.
b. The people who want to see the indie movie do not regard it as having less entertainment value than the bluckbuster. Thus they are still willing to pay the $8.99 to go see it. Decreasing the ticket cost for the indie movie would not likely attract much of a larger audience.
It's only irrelevant for blockbuster games, where the added sales far outweigh the cost of porting to a second system. For games with more marginal sales it's a valid consideration. Porting a game to a second platform may increase the overall sales of the title, but the added cost of moving to that second platform might decrease your rate of return on your investment. From a business perspective it might be better to invest that money in another game instead of in porting an existing game. It's something that has to be calculated on a case by case basis.
Regardless, we're now moving away from the point of the argument, which was that higher costs of development for games on high end PCs and next gen consoles is a legitimate cause of higher game prices. While the cost of development for Oblivion may indeed have been mitigated by releasing it on two platforms, it was still higher than the cost of development for Morrowind which was also released on two platforms. When you compare apples to apples, games cost more to make today across the board, which is why game prices have gone up. The parent's assertion that the reason Wii games cost less because Nintendo doesn't charge a royalty is patently false. They cost less because they require fewer assets because the platform doesn't have the power to produce high end graphics, end of story.
First of all, Oblivion wasn't a port, it was developed for the PC and the Xbox 360 at the same time. However, developing a game for multiple systems is even higher then simply developing for one system, since in addition to the usual costs there's the cost of coding the game for the second system. Obviously, the benefit is that you get a larger install base to sell your game to, but the total cost of development is still higher.
You can disagree all you like, but you'll still be wrong. Take a character model from Wii Sports and a character model from Gears of War, which one cost more to make? You can give Epic the best tools in the world and all the experience they could want with the XBox 360; it's still going to cost more to make Gears of War. You need more designers, more coders, more artists, better equipment, etc... That's just the way it works. That's the way it's been for the last 2 decades.
Nintendo takes just as much a cut of the game as Microsoft and Sony do. The reason Wii games cost less is development costs, plain and simple. A game like Wii Sports, or even Twilight Princess, costs substantially less to make than something like Gears of War or Oblivion.
Source? Unless you've got something to back it up, I think I'll believe the story from a reputable business magazine over an anonymous message on the Internet.
Did I say anything factually incorrect anywhere in my original post? Did I espouse any kind of pro Sony point of view in any way in the post? Were any of the statements prefacing my question in any way not connected to the question I asked?
The answer to all of those questions is no. Bluray sales are, in fact, higher than HD-DVD sales and they have, in fact, increased (or surged) since the PS3 was released; I begin the post by noting that the PS3 is struggling against the Xbox 360 and Wii as a gaming machine; and whether or not Bluray is successful as a format is inherently important to my question of whether or not Bluray will eventually bring down the price of the PS3. Furthermore, I merely stated these facts because people in positions like Harrison's tend to give very diplomatic answers to questions. Should he actually read my question and answer it, I want a real answer not just a PR line about how well Bluray is selling. I preempt this by stating these in the question. This keeps him from answering my question with something I already know.
Just what exactly do you protest against in my question? The entire post is completely neutral throughout and completely factual. I realize that standard/. dogma dictates that I must hate Sony vehemently with every word I type. However, since I want an actual answer to my question, not just to offend Harrison by asking "why the hell should I buy a PS3" like so many others in this topic, I figured it would be OK to forgo the/. customs and phrase my question in a halfway civil manner.
I am more than aware of that. I'm also aware that this is the most ignorant, pointless argument in the whole "console wars" debate. I've said it many time before, but you've apparently never seen it, so I'll say it once more. Sony is not competing against Microsoft a year and a half ago. Sony is competing against Microsoft today, a company that has sold 5 times more consoles and is selling them at a faster rate. Sony can outsell what Microsoft sold during launch until the end of time and it still loses the "console race" if it's not selling more than Microsoft is selling today.
Of course all of this is entirely moot now, since your argument was only true up through the end of January. The newest NPD numbers give Sony a mere 127,000 units in North America in Feb. As opposed to the 160,000 units the Xbox 360 sold the Feb. after its launch. No matter what way you look at the numbers, the PS3 is losing the Next Gen console "wars".
I wasn't suggesting that they make a separate console with a DVD drive. If Bluray is successful then economies of scale might kick in. This would reduce the price of Bluray hardware making the PS3 cheaper to produce. My question was essentially if they would be passing those savings on to the customer in any way.
Congratulations on assisting them in taking over the mindshare of the world on Sony's behalf. A bit over dramatic are we? All I wanted to know was if Bluray is successful, does that make the PS3 cheaper. I'm not foisting some kind of marketing hyperbole upon unsuspecting/.ers. Bluray outselling HD-DVD is an actual, real life fact supported by actual, real life numbers. One that I am not happy to cite given, as I already mentioned, that I have sunk several hundred dollars into HD-DVD. However,
If you're suggesting that I'm somehow just toeing the Sony party line you're completely wrong. As an owner of an HD-DVD player, I have absolutely no interest in seeing Bluray become a success. However, I can't deny that pretty much every news outlet that covers the issue places HD-DVD as the underdog. With so much of the PS3's price involved in making the bluray components, I want to know if Bluray is a success will that bring down the price of the PS3 for someone like myself who only wants one to play games on.
No offense intended, but for someone of your age and with your career, I don't expect that you play many videogames yourself. If I am correct, then what do you draw on to make decisions regarding the direction of the PS3, a product directed at customers who are notoriously passionate about their hobby?
It seems to me like a lot of questions here pretty much boil down to "why should I buy a PS3" or "why aren't you doing this to make me buy a PS3". I agree with you and I wish that people would ask some deeper questions when given an opportunity like this.
Much has been made of the potential impact of Home and Little Big Planet on the public perception of the PS3. However, both titles are far from ready for public release. Likewise, few expect the PS3's most high profile titles, Final Fantasy XIII and Metal Gear Solid 4, to make it to US shores by the end of the year. Meanwhile, both Microsoft and Nintendo have some very high profile titles slated for release throughout 2007. What does Sony plan on focusing on as the PS3's main strength in the face of such strong competition through the end of 2007?
While the PS3 has struggled against the Xbox 360 and the Wii in the gaming arena, its success with Bluray becomes more apparent every day. Sales of Bluray have quickly surged past those of HD-DVD with the PS3 receiving most of the credit. How will the PS3's success with Bluray impact those who want a system purely for games, specifically in terms of cost of ownership?
You're dreaming if you think games like Metroid Prime and Wind Waker aren't that expensive. Sure they might not be Gears of War expensive, but they still fall on the high side of game budgets. And all 5 of those games did actually sell a lot of units.
Secondly, you, like the analyst in the article, seem to be focusing on 1st party titles. First party titles have been and always will be exclusive. There's just really no reason to port them to a competitor's platform. The real question should be around third party titles. For the last two generations the PSone and PS2 have provided natural platforms for developers who did not want to deal with the complexities of developing for multiple platforms. There was more than enough of a user base to assure that a game would have potential to reach its sales goals.
Without a single dominating console though, the economics of developing for a single platform are markedly different. If you're a third party developer what possible incentive do you have for limiting yourself to only 1/3 of the market? Unless a game is unusually difficult to port to other consoles, there really is none.
According to your linked Wikipedia article, Fable was the 4th best selling game on the Xbox. That's definitely a franchise that Microsoft wants to hold on to. Furthermore, the list you linked only gives US sales for Fable while most of the others are worldwide sales. Given that Lionhead is a European developer that could mean a significant margin of error. Something else worth pointing out is that Fable is the only game on your list that was an original IP. Every other game is either a sequel or based on some other established IP.
Wow, what deep insights you have. Here are mine
Fable 2 will end up being what Fable was supposed to be but not everything Molyneaux says Fable 2 will be. It will be a solid game but thousands of people who got their hopes up will proclaim it as one of the worst games ever made.
Shadowrun will suck on the PC and in single player, but as an online console FPS it will be good, maybe even great.
Mass Effect will be a masterpiece but will suffer from a slow frame rate.
I'm playing on the second difficulty. The Los Muertos bosses are still pretty easy, but the Volk and Shai Gen bosses get pretty tough. You're forced to adopt more hit and run tactics and you'll find yourself taking cover a lot. If you just rush in guns blazing, you'll get mowed down pretty quick. The key here is that the gang leaders aren't really the bosses in the game. The real boss fight is getting through the base to the gang leader.
um... I'm pretty sure the default character is Black. According to the game's creators, the look of the default character, as well as many of the abilities, was inspired by the Blade movies. People who look for racism everywhere will find racism everywhere, even where it doesn't exist.
As far as stereotypes in sandbox games go, Crackdown is incredibly mild. If you're really that set on being offended by a game perhaps you should take a look at GTA: San Andreas or Saints Row.
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Actually I think Microsoft's intent for the bigger hard drive is to used with the XBL marketplace. Demos usually clock in around 1gb, a 1 hour tv show takes up about 0.5-2gb depending on if it's HD or SD, and an HD movie can be as much as 7gb. That 12gb of free space on the Premium's HDD fills up very fast.
I don't think Microsoft's margins are as good as you think they are. If they're turning a profit on any consoles at this point, it's probably only the Premium and it's probably still rather slim. For the time being there's not much reason for them to lower the prices as the $499 PS3 is virtually impossible to find and there is still a rather large price gulf between the Xbox 360 and the $599 PS3. My guess is that they will implement a price cut either A) after they sell through the black Elites, B)when they move to 65nm chips, or C)when the PS3 does. Most likely it will be either A or B and I would place it either immediately before the holidays or sometime next spring. Of course this is all supposition on my part, but I think it would have been foolish, from a business perspective, for Microsoft to cut prices now.
From an article I originally posted here:http://vgecon.blogspot.com/2007/03/purpose-o
There are two alternatives to this. First, you could set a single price; but this is a gamble. If you price too high you will lose sales to people who valued the product less. If you price too low, you lose profit margins from people who would have been willing to pay more. The other alternative is to still set your product at multiple price points but vary each version slightly. An excellent example of a company that uses this tactic is Starbucks. A regular coffee at Starbucks is only around $1.60; but a double foam mocha latte... whatever can cost you upwards of $4.00. In truth, both products cost Starbucks approximately the same amount of money to make. Price sensitive customers will choose the regular coffee, and people who are willing to pay more may spring for the more extravagant drink.
This is what Microsoft is doing with the Xbox 360. Sure, the Premium costs Microsoft more to make than the Core, and the Elite costs them more then the Premium; but it's less than most people think. Microsoft may still be losing money on the Core, but they're probably breaking even on the Premium at this point. At $479, the Elite might even turn a small profit.
Some people have pointed out that the new price tag erases Microsoft's price advantage over the $500 PS3. From a marketing perspective, it may seem that way. From an economics perspective though, things are still very different. The key point is that Microsoft is going to be ready for a price cut far sooner than Sony will be. Before the Elite, a price cut would have meant that they would have to sacrifice any profits from people who were still willing to pay top dollar for a system. A new high end model allows them to maintain their position in the $400 range, while extending their market by dropping the low end of their price range.
I am no marketing expert, so I can't really say what the effects will be there. Economically though, this is a smart move by Microsoft.
If by key you mean some random arbitrary metric of the success of the format, then I suppose the title is accurate. If you mean a milestone with actual meaning, then I think the title is a little misleading.
There is always a direct correlation between the cost to produce a good and the price of a good. The only reason games were generally set at $50 previously was because it was an agreed upon price by the developers, publishers, etc... If developers were not able to recoup their cost at that price then they would not have agreed to sell at that price, plain and simple. Even still there were plenty of games sold at "non-standard" prices. Limited editions went for $55 and $60. Do you think they put those out just to make you happy? They're there to help recoup costs from people who were willing to pay the higher price. Likewise, games that were easier to develop, like Katamari Damacy, often went for $40, $30, or even $20. Furthermore, games were almost never sold at $50 for their lifetime. Once publishers have exhausted the amount of people who are willing to pay $50 they generally drop the price to attract customers who are more price conscious. Lastly, the $50 price point does not exist overseas. In Japan, "non standard" price points are much more common.
Also, you're analogy is flawed. The reason you pay the same ticket price for the movie that costs $200 million to make and the one that costs $5 million dollars to make is because:
a. More people will usually see the summer blockbuster and more sales = more profits.
b. The people who want to see the indie movie do not regard it as having less entertainment value than the bluckbuster. Thus they are still willing to pay the $8.99 to go see it. Decreasing the ticket cost for the indie movie would not likely attract much of a larger audience.
It's only irrelevant for blockbuster games, where the added sales far outweigh the cost of porting to a second system. For games with more marginal sales it's a valid consideration. Porting a game to a second platform may increase the overall sales of the title, but the added cost of moving to that second platform might decrease your rate of return on your investment. From a business perspective it might be better to invest that money in another game instead of in porting an existing game. It's something that has to be calculated on a case by case basis.
Regardless, we're now moving away from the point of the argument, which was that higher costs of development for games on high end PCs and next gen consoles is a legitimate cause of higher game prices. While the cost of development for Oblivion may indeed have been mitigated by releasing it on two platforms, it was still higher than the cost of development for Morrowind which was also released on two platforms. When you compare apples to apples, games cost more to make today across the board, which is why game prices have gone up. The parent's assertion that the reason Wii games cost less because Nintendo doesn't charge a royalty is patently false. They cost less because they require fewer assets because the platform doesn't have the power to produce high end graphics, end of story.
First of all, Oblivion wasn't a port, it was developed for the PC and the Xbox 360 at the same time. However, developing a game for multiple systems is even higher then simply developing for one system, since in addition to the usual costs there's the cost of coding the game for the second system. Obviously, the benefit is that you get a larger install base to sell your game to, but the total cost of development is still higher.
You can disagree all you like, but you'll still be wrong. Take a character model from Wii Sports and a character model from Gears of War, which one cost more to make? You can give Epic the best tools in the world and all the experience they could want with the XBox 360; it's still going to cost more to make Gears of War. You need more designers, more coders, more artists, better equipment, etc... That's just the way it works. That's the way it's been for the last 2 decades.
Nintendo takes just as much a cut of the game as Microsoft and Sony do. The reason Wii games cost less is development costs, plain and simple. A game like Wii Sports, or even Twilight Princess, costs substantially less to make than something like Gears of War or Oblivion.
Source? Unless you've got something to back it up, I think I'll believe the story from a reputable business magazine over an anonymous message on the Internet.
Did I say anything factually incorrect anywhere in my original post? Did I espouse any kind of pro Sony point of view in any way in the post? Were any of the statements prefacing my question in any way not connected to the question I asked?
/. dogma dictates that I must hate Sony vehemently with every word I type. However, since I want an actual answer to my question, not just to offend Harrison by asking "why the hell should I buy a PS3" like so many others in this topic, I figured it would be OK to forgo the /. customs and phrase my question in a halfway civil manner.
The answer to all of those questions is no. Bluray sales are, in fact, higher than HD-DVD sales and they have, in fact, increased (or surged) since the PS3 was released; I begin the post by noting that the PS3 is struggling against the Xbox 360 and Wii as a gaming machine; and whether or not Bluray is successful as a format is inherently important to my question of whether or not Bluray will eventually bring down the price of the PS3. Furthermore, I merely stated these facts because people in positions like Harrison's tend to give very diplomatic answers to questions. Should he actually read my question and answer it, I want a real answer not just a PR line about how well Bluray is selling. I preempt this by stating these in the question. This keeps him from answering my question with something I already know.
Just what exactly do you protest against in my question? The entire post is completely neutral throughout and completely factual. I realize that standard
I am more than aware of that. I'm also aware that this is the most ignorant, pointless argument in the whole "console wars" debate. I've said it many time before, but you've apparently never seen it, so I'll say it once more. Sony is not competing against Microsoft a year and a half ago. Sony is competing against Microsoft today, a company that has sold 5 times more consoles and is selling them at a faster rate. Sony can outsell what Microsoft sold during launch until the end of time and it still loses the "console race" if it's not selling more than Microsoft is selling today.
Of course all of this is entirely moot now, since your argument was only true up through the end of January. The newest NPD numbers give Sony a mere 127,000 units in North America in Feb. As opposed to the 160,000 units the Xbox 360 sold the Feb. after its launch. No matter what way you look at the numbers, the PS3 is losing the Next Gen console "wars".
I wasn't suggesting that they make a separate console with a DVD drive. If Bluray is successful then economies of scale might kick in. This would reduce the price of Bluray hardware making the PS3 cheaper to produce. My question was essentially if they would be passing those savings on to the customer in any way.
If you're suggesting that I'm somehow just toeing the Sony party line you're completely wrong. As an owner of an HD-DVD player, I have absolutely no interest in seeing Bluray become a success. However, I can't deny that pretty much every news outlet that covers the issue places HD-DVD as the underdog. With so much of the PS3's price involved in making the bluray components, I want to know if Bluray is a success will that bring down the price of the PS3 for someone like myself who only wants one to play games on.
No offense intended, but for someone of your age and with your career, I don't expect that you play many videogames yourself. If I am correct, then what do you draw on to make decisions regarding the direction of the PS3, a product directed at customers who are notoriously passionate about their hobby?
It seems to me like a lot of questions here pretty much boil down to "why should I buy a PS3" or "why aren't you doing this to make me buy a PS3". I agree with you and I wish that people would ask some deeper questions when given an opportunity like this.
Much has been made of the potential impact of Home and Little Big Planet on the public perception of the PS3. However, both titles are far from ready for public release. Likewise, few expect the PS3's most high profile titles, Final Fantasy XIII and Metal Gear Solid 4, to make it to US shores by the end of the year. Meanwhile, both Microsoft and Nintendo have some very high profile titles slated for release throughout 2007. What does Sony plan on focusing on as the PS3's main strength in the face of such strong competition through the end of 2007?
While the PS3 has struggled against the Xbox 360 and the Wii in the gaming arena, its success with Bluray becomes more apparent every day. Sales of Bluray have quickly surged past those of HD-DVD with the PS3 receiving most of the credit. How will the PS3's success with Bluray impact those who want a system purely for games, specifically in terms of cost of ownership?
An actual reason to buy a PS3. Hopefully they'll have had a price drop by the time this hits too.
You're dreaming if you think games like Metroid Prime and Wind Waker aren't that expensive. Sure they might not be Gears of War expensive, but they still fall on the high side of game budgets. And all 5 of those games did actually sell a lot of units. Secondly, you, like the analyst in the article, seem to be focusing on 1st party titles. First party titles have been and always will be exclusive. There's just really no reason to port them to a competitor's platform. The real question should be around third party titles. For the last two generations the PSone and PS2 have provided natural platforms for developers who did not want to deal with the complexities of developing for multiple platforms. There was more than enough of a user base to assure that a game would have potential to reach its sales goals. Without a single dominating console though, the economics of developing for a single platform are markedly different. If you're a third party developer what possible incentive do you have for limiting yourself to only 1/3 of the market? Unless a game is unusually difficult to port to other consoles, there really is none.
According to your linked Wikipedia article, Fable was the 4th best selling game on the Xbox. That's definitely a franchise that Microsoft wants to hold on to. Furthermore, the list you linked only gives US sales for Fable while most of the others are worldwide sales. Given that Lionhead is a European developer that could mean a significant margin of error. Something else worth pointing out is that Fable is the only game on your list that was an original IP. Every other game is either a sequel or based on some other established IP.
Wow, what deep insights you have. Here are mine Fable 2 will end up being what Fable was supposed to be but not everything Molyneaux says Fable 2 will be. It will be a solid game but thousands of people who got their hopes up will proclaim it as one of the worst games ever made. Shadowrun will suck on the PC and in single player, but as an online console FPS it will be good, maybe even great. Mass Effect will be a masterpiece but will suffer from a slow frame rate.
I'm playing on the second difficulty. The Los Muertos bosses are still pretty easy, but the Volk and Shai Gen bosses get pretty tough. You're forced to adopt more hit and run tactics and you'll find yourself taking cover a lot. If you just rush in guns blazing, you'll get mowed down pretty quick. The key here is that the gang leaders aren't really the bosses in the game. The real boss fight is getting through the base to the gang leader.
um... I'm pretty sure the default character is Black. According to the game's creators, the look of the default character, as well as many of the abilities, was inspired by the Blade movies. People who look for racism everywhere will find racism everywhere, even where it doesn't exist.
As far as stereotypes in sandbox games go, Crackdown is incredibly mild. If you're really that set on being offended by a game perhaps you should take a look at GTA: San Andreas or Saints Row.