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colafitte on 28 November 2019
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drkohler said:
colafitte said:

One has to wonder how much profit do Sony really get with PS4 at 200$ instead of the usual price...

At $199, no current gen console is profitable on the hardware level. Like last year, Sony limits the number of units available at this price simply in order to limit the losses on hardware. The idea that "selling more units even at a loss is good because software" isn't really an argument anymore at this stage of the console cycle.

I agree. I already said the example was innacurate just to make things easier to understand. This proves my point even more if at 200$ you are not even profiting at all.

DonFerrari said:
colafitte said:

One has to wonder how much profit do Sony really get with PS4 at 200$ instead of the usual price...

Oversimplifying things to prove a point....If a PS4 costs, as an example, 190$ to produce, distribute and market it, that will give you 10$ profit per unit at 200$ instead of 110$ profit per unit if you sell it at 300$. You need to sell waaaaay more units at 200$ to reach the same profits than if you sold the console at 300$. In my opinion, those bundles at 200$ are more a marketing tactic than anything else and that's why the stock is always so small. And this is without counting the games you're putting in the bundle for free.

I know is a cheap and a innacurate example of how things really work but it's the easiest way to explain my point, and why Sony is not going to drop the price for PS4 if they still keep a comfortable pace of sales at 300$. Sony learned a lesson with PS2 and PS3 back in the day:

Profits > Sales.

they receive about 20USD per game sold and each console will make at least lets say 10 games sold on average that is 200USD.

They receive 60USD per year and 40% attach ratio for a 5 year period = 60*0,4*5 = 120USD.

So each PS4 sold gets then additional 320USD. Even if they forfeit 110USD with the promotion they would still make additional 220USD.

The question is how much sales would change with this cut.

Let's say they can sell 1M at 300USD and 1.5M at 200USD.

So it's 1M * 430 vs 1.5M*320, which means 430M vs 480M (or additional 50M revenue). So yes they would need much more sales to justify the cut.

Yup.

JRPGfan said:
colafitte said:

Yeah, of course, but that user that buys this late a PS4, needs to spend at least 200$ in games (because Sony must get around half of that or even less) to get the same level as profits as the other way....and i don't think that is happening with PS5 launching in a year.

If we assume these consumers will act likes others, then yes 200$ in games should be doable.
If you go get 11 games + a PSplus sub (~1year?), Im sure you ll be spending that most of the time.

Imo Sony should have cut price to 200$ long ago, to keep sales numbers up.

I think you are very optimistic with a new PS4 user at the end of 2019 spending so much....From my experience, the guy that buys a console this late..., yes it's possible he/she can spent 200-250$ in the future but it will take a lot of time, because the reason why he/she waited that long to buy a ps4 is basically for 2 reasons: a) Doesn't want to spent money in videogaming and always looks for the cheapest solution or b) already has another console and just buy the ps4 just for a few exclusives he/she really wants to play. And this kind of user is usually the 60% of PS4 consumers that do not buy ps plus either...

If Sony is doing things this way is because is the more profitable way for them, i'm pretty sure of that. Nintendo is going to do the same with Switch in the next few years.

PS4 is going to end this year around 14'5M sold to consumers..., the same numbers it did in 2014, and at 14'5M it will still be better than any PS3 year during all last gen. They're happy with this sales for a console ending its 6th year. They didn't need at all to cut the price to 200$. It would've cost them money....

Last edited by colafitte - on 29 November 2019