Sony: Console price wars can be dangerous

Sony is in the middle of a price war with Microsoft right now in the UK, where both companies have lowered the price of their consoles, trying to offer the best value for new gamers.

[SpaceRanger]

Finding the best range for the most competitive price has always been tough on gaming companies.

The PS3 came with BluRay (something that is now revolutionary to the gaming and movie business) which is why it came out so expensive.

The Xbox one came with Kinect at $500 which is why it came out so expensive.

Price is highly dependant on the actual value of what is being sold. You can sell a toaster for $1 million, but it doesn't mean it's actually worth that if it doesn't have something that actually values it at that. But devaluing your product is just as big of a concern. There's no point in lowering it just to gain popularity of you don't gain profit.

[andibandit]

BUT...... what if it's a 4-slice toaster?

[Yi-Long]

I'd rather see them competing on the prices of the controllers. If the XBO controllers would only be 30 or 40 euro, while the PS4 controllers are 60 euro, I would consider buying an XBO. And vice versa.

The console is (hopefully) a 1-time investment, but usually you buy/need 1 new controller a year, so that adds up.

They should also compete on HDD space and controller bundles.

[kraenk12]

@Yi-long The DS4 features much more technology than the X1 controller.

[Deividas]

@Yi-Long

" but usually you buy/need 1 new controller a year"

...what the hell you doing to your controllers?.....

[T900]

Retail sales in the western part of the world are floundering. When i say retail i mean consumer purchase power in general not to do with gaming. I still think we are in deep recession despite what the media tells us of a recovery.

Hence price wars when the consumer is strapped for cash is normal and a trend that will probably continue.

[freshslicepizza]

sony shouldn't worry too much about price wars against the xbox one. it is selling very well as it is and it's microsoft who needs to be aggressive, not sony. however sony should also translate savings (if there are any) back to the consumer and not keep prices high just because it's selling well.

[Genuine-User]

Care to share your findings for the floundering sales?

[T900]

@Genuine-user

Just check all the retail outlets shutting down in the US or better yet look at the number posted by the government etc. They all show a weak ecnomy.

[KnowledgeIsPower]

Blu Ray is far from revolutionary, it is next to dead with the rise of digital media and it is looked at as a bad investment on Sony's and others behalf, just because Gamers clamor for Disk based media doesn't mean the rest of the world does and it does not make Blu Ray revolutionary or relevant in most entertainment media based industries

[MrSnrub]

Next to dead? It'll have up 10 years minimum in it with the upgrades to the format coming out. I for one am not going to pay the ridiculous fees on the Playstation or Xbox stores

[Why o why]

What a myopic and shortsighted point of view... people still like hard media and right about now blu ray fills that gap. Both can coexist. Sometimes some people have to accept they're in the minority. It wont be that way forever but as of now, tangible media is relevant especially in the console world with the size of sone of these games and the hdd sizes given. Personally, I like the digital push but not the digital only push.. I still appreciate selling my media if I choose to.. I still appreciate borrowing to and from the things called friends and family. The infrastructure isn't in place.

[savaroth]

Blu Ray is next to dead? Good to know.
* continues to play Mumford and sons on vinyl *

[nucky64]

blu dead???? you don't know what you're talking about.

[The_Sage]

KnowledgeIsPower,

Are you high right now? Non compressed movies and games can push very near the 50gb limit of Blu-Ray. I have about 50 Blu-Ray movies and nearly as many games. Considering 4k is coming next and will be on layered Blu-Ray, you could be looking at 100gb, or more for movies. I don't know about you, but I don't want to have a hard drive farm in my house for movies and games.

[uth11]

Really? The lines I see at every Redbox would disagree with that.

Not everybody has or can get internet speeds to make HD streaming or even digital distribution desirable.

[rainslacker]

uh huh. You know people say the same thing about music CD's, and music CD's still make up about half of the revenue for all music sold. Go to any big box store, and they have huge sections dedicated to physical blu-ray discs, and large displays right as you walk in of movies that have recently released. I can't see why they'd dedicate valuable floor space if people weren't buying it.

Streams are no where near the quality of blu-ray. Even 1080p streams with HQ sound don't look as good as a 720 blu-ray. So yeah, there are plenty of people still buying blu-ray and even DVD's, because they actually prefer to pay quality, and some people realize that it's actually cheaper in most cases to simply buy the physical format instead of getting a digital version which they may not even be able to use in a few years.

Streaming is great for rental, and I can see it's merit with music for convenience, but physical is still the way to go for those that care about picture and sound quality. Even with music, the physical is better if you want a full album, because you can always just rip the CD itself, and own it perpetually.

[Magicite]

I can get brand new PS4 here in Latvia for 300 euros or sometimes even less. Cant imagine what price will be here if Sony decides to make permanent 100$/euro price-cut.
So Ill just finish my PS3 backlog this year and get PS4 when its in range of 200-250 euros (hopefully this fall).

[MasterCornholio]

Isn't it the retailers that are at a price war with each other and not Sony with Microsoft?

[raWfodog]

That is true as well but the MSRP is there for a reason to keep the prices relatively in line with what the manufacturer suggests.

From http://smallbusiness.chron....

Role of MSRP

The MSRP is a suggested price that retailers might decide to use, without pressure from the manufacturer. This price is largely established by the manufacturer to indirectly control retail prices and maintain brand equity. The price itself already has sizable markup calculated into the price structure, so retailers have flexibility to decrease or increase the price. Although manufacturers cannot force retailers to adopt their MSRP, manufacturers have the right to deny retailers the ability to purchase and distribute their products if proposed prices radically differ from MSRP.

Edit: BTW, I did not disagree with you (if that matters to you).

[MasterCornholio]

From what I understand can't stop them from lowering the price however they can stop them by not selling consoles to them.

I'm guessing that since this isn't affecting Sony negatively they are allowing retailers to drop the price. Sony isn't behind the price war but they also are not against it. If that makes any sense.

[rainslacker]

These things tend to work out. Most retailers aren't going to sell a product for less than their cost for a long period of time. Usually you see this kind of thing when retailers want to drive people into the store and hopefully make money on other secondary purchases. The market tends to regulate itself, and the MSRP just acts as a guide on what the manufactuer feels is a good selling price.

The markup on consoles is only about $30-50 or so. It was less on release. Retailers for consoles usually make their money off game sales and accessory purchases. That $30-50 doesn't give a lot of wiggle room to drop prices and still make a profit.

There are times when there may be overstock they have to get rid of, or the manufacturer can offer rebates to get more sold, and that can be reflected in the price at the store.

I doubt Sony or MS would be too concerned if one retailer was running a limited time promotion dropping the price down to a level that was far below MSRP. If a lot of stores decided to do that to devalue the product overall, then they would probably go to more drastic measures, but for their part, they are still selling consoles. For the Xbox, so many retailers were discounting it heavily and for so long because it wasn't selling, that MS eventually just had to drop the MSRP anyways, because they couldn't just start refusing to sell to every store out there.

[Gamer1982]

UK is the only place in Europe MS has had a fighting chance and Sony is slowly taking it away from them. Ms though is fighting strong and that means great deals for gamers as so far Sony has been outselling MS worldwide even with a more expensive console but it had to start catching up with them eventually and it was always going to start with UK and US.

[OB1Biker]

Just seen in shops bundles PS4 + Witcher 3 and Xbone +Witcher 3 are both £299

[RosweeSon]

Tesco or at least Sony were promoting a discount code at one point bringing their bundle down to £279! May have only been for the weekend and they may have put it back up to a still reasonable £299 but Sony are all over their pricing hence why is pretty much still the same as day1 Microsoft have already knocked off a fair bit but if Sony officially announce £50-100 (100 unlikely but you never know) but even an official £50 price cut from Sony would cause huge problems for Microsoft as they would again be most expensive console specially as retailers insist on doing some pretty good deals.

[Shonuff]

This is so hypocritical of Sony because they cut their price right after Microsoft. If price cut hurts so bad why did you cut the price on the PS3 when it wasn't selling?
I guess Sony get the JA award for the day.

[Spotie]

Not one line of what you just said makes ANY sense.

[rainslacker]

It was selling actually. They couldn't supply more than they could sell when they cut the price less than a year in. The price cut came to clear out older SKU's of the PS3(40 and 60GB BC versions) and they came out with versions that didn't include the full hardware BC. The ones that came out that weren't full BC were still the same price as the PS3 was on launch, with the exception of not having a $600 model. I think most people are ignorant of the fact that a $500 model of the PS3 existed since day one, but the new SKU was indeed $500, which eventually got dropped down to $400 when they came out with an even newer SKU that dropped all BC except software PS1. That happened about 18 months into the PS3's life, and is the point at which Sony started selling a lot more PS3's.

Sony isn't saying that dropping the price is a bad thing, just that when companies start dropping the price drastically really quickly, and then that price drop goes back and forth between the competitors in a short time frame, it devalues both products. Sony is also referring to retailers being in a price war, not the console makers. So I fail to see where the is any hypocrisy in their statement.

[No_Pantaloons]

"If there is a race to zero, who wins from that?"

...gamers!