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Forums - Gaming Discussion - Theory on why Sony couldn't drop price on the PS4 last holiday

cutzman25 said:
MS lost around 50 million dollars on the price drop, not to mention looking desperate and pissing early adopters off. I really don't think Sony could afford that nor i don't think they needed it because they still outsold X1 world wide and still have a strong hold in the US

If you're an early adopter you can't get pissed because the product is cheaper a later on. As for the desperate part, that's more of an opinion. Most people I know that purchased an Xbox One were happy there was a price cut. I don't think any of them were saying "My god MS must be desperate" when they were at the store.



Love the product, not the company. They love your money, not you.

-TheRealMafoo

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ICStats said:
SWORDF1SH said:
ICStats said:
SWORDF1SH said:


True but you have to also balance it out.

They know how many games the average consumer buys, they the percentage of consumer that sign up to PS Plus. They know what he average consumer spend on movies from their store and PS Now. Basically they know how much profit they can gain after they sell a PS4.

They then have to weigh up if dropping the price to make less profit per unit will bring in enough profit with the increased install base to make it worth it.

eg.

PS4 sells 1M at $400 for the year (small number to keep it simple). Sony make $50 profit per console, average consumer spends x amount to profit Sony $50 a year= So they will make $100M for that year.

PS4 sell 2M at $350 but make no profit per unit. Average consumer spends x amount to profit Sony $50 a year= $100

That extra install base will also continue to profit Sony $50 a year per unit sold. That 1M extra gained from price cut will give Sony $250M profit over 5 years for the sake of losing $50M on price cut.

Yes, your example shows that it CAN be a good idea to cut the price, if the numbers add up.

However your example is a bit contrived, in particular a console that's already selling so well would not get 100% bump from a $50 price cut.

It's a loose example. I don't even know what the average consumer spends and how much profit they make. The $50 a year per person could be way to low. If the PS Plus subs numbers are to be believed then I can see it being a lot higher. If the software ratio is also to be believe on VGC the we are looking at 5 games sold to 1 console. What do they make off of software, 10%, 15% 20%? Then you have sales of DLC and movie rentals and sales. You will sell more of this the more consoles you sell and more people you have spending money year on year. The sooner you increase your install the sooner you have people spending money. Not quick enough to get them and you loose the valuable consumers to your rivals.

The numbers were did in the way I did it to make it simple and not to complicated.

PS Plus is not going to be all profit, and not everyone subscribes.  Average console attach rates are 10:1 for lifetime, so on average people buy ~2 games a year.  Peripherals are where they can make high margins.

As of the end of the end of the year there were 11M PS Plus subs. That's 11M people paying $50 a year. I think it shot up from 3M since PS4 launched so about 50% sign up. Again I do not know what they profit. They have to pay publishers and invest into PSN. Could be anywhere from 10% to 50%. But it adds up when people pay year after year. Peripherals are, like you rightly suggested, also great way to make a bit of profit.

Anyway, some guy has to crunch the numbers and work out if they can lose money on console sales to make more. Maybe the time isn't right but maybe they don't have the stock.



spemanig said:

Why are people still over analyzing this? The PS4 didn't get a price drop because it doesn't NEED one. That's it.


^^ THIS..............



They weren't expecting the MS price drop and when it happened, they realized there was no need to drop the price since the PS4 will still sell well at $399.



    

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spemanig said:

Why are people still over analyzing this? The PS4 didn't get a price drop because it doesn't NEED one. That's it.


/thread



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arcane_chaos said:
spemanig said:

Why are people still over analyzing this? The PS4 didn't get a price drop because it doesn't NEED one. That's it.


/thread

On yor say so?!?

People that keep saying that they didn't need one. Please explain why because you're not really adding to the discussion.

If Sony had spare units, then why is it ok to loose 600k of their lead, allow your competitor get a foot hold and now a have almost just as many units in the biggest single market, the US. Yes they outsold the X1 worldwide but why does that mean they can allow their competition gain ground in some markets? Why would a company allow the competitor take market share?

Permanent price cut? no. But they needed to stop the X1 taking so much market share. Hell even a $20 holiday price cut would of shifted a lot more. Or a bundle that lasted the whole holiday. $380 TLOU bundle anybody. Even a $400 TLOU/inFamous bundle for the whole holiday would of done something. It's also a first party games that wouldn't cost them anything to bundle.

Instead of just throwing out the argument and saying /thread, add something, explain why you think they didn't need to, have a debate, stay a while. Forums should be a place to respectfully point your point across.



This is the whole "If it isn't broke, don't fix it," argument. They didn't drop the price because they have a lead of almost double the Xbox Ones. People are buying what Sony is selling, so they don't need to mess with the price.



 

SWORDF1SH said:
arcane_chaos said:
spemanig said:

Why are people still over analyzing this? The PS4 didn't get a price drop because it doesn't NEED one. That's it.


/thread

On yor say so?!?

People that keep saying that they didn't need one. Please explain why because you're not really adding to the discussion.

If Sony had spare units, then why is it ok to loose 600k of their lead, allow your competitor get a foot hold and now a have almost just as many units in the biggest single market, the US. Yes they outsold the X1 worldwide but why does that mean they can allow their competition gain ground in some markets? Why would a company allow the competitor take market share?

Permanent price cut? no. But they needed to stop the X1 taking so much market share. Hell even a $20 holiday price cut would of shifted a lot more. Or a bundle that lasted the whole holiday. $380 TLOU bundle anybody. Even a $400 TLOU/inFamous bundle for the whole holiday would of done something. It's also a first party games that wouldn't cost them anything to bundle.

Instead of just throwing out the argument and saying /thread, add something, explain why you think they didn't need to, have a debate, stay a while. Forums should be a place to respectfully point your point across.


why becasue they still sold over 18.5 millions PS4, thats why.  



Don't forget that Sony is mainly a worldwide company. They'll do a price cut when the global situation (in accordance to their plan) will justify it.

Maybe a price cut in US would have gained them 200k more customers during the holidays, (if there was enough PS4 to sell of course).

But a price cut in the other countries would have being completely counterproductive because anyway people will still buy mostly their console, even in UK during the holidays.

Anyway I think they'll do a price cut when they'll be able to make cheaper consoles.



SWORDF1SH said:
arcane_chaos said:
spemanig said:

Why are people still over analyzing this? The PS4 didn't get a price drop because it doesn't NEED one. That's it.


/thread

On yor say so?!?

People that keep saying that they didn't need one. Please explain why because you're not really adding to the discussion.

If Sony had spare units, then why is it ok to loose 600k of their lead, allow your competitor get a foot hold and now a have almost just as many units in the biggest single market, the US. Yes they outsold the X1 worldwide but why does that mean they can allow their competition gain ground in some markets? Why would a company allow the competitor take market share?

Permanent price cut? no. But they needed to stop the X1 taking so much market share. Hell even a $20 holiday price cut would of shifted a lot more. Or a bundle that lasted the whole holiday. $380 TLOU bundle anybody. Even a $400 TLOU/inFamous bundle for the whole holiday would of done something. It's also a first party games that wouldn't cost them anything to bundle.

Instead of just throwing out the argument and saying /thread, add something, explain why you think they didn't need to, have a debate, stay a while. Forums should be a place to respectfully point your point across.

to your first paragraph: the answer is why do they need to cut the price when the demand for the Ps4 is so High? The PS4 is selling near Wii/PS2 terrritory and neither of those cut their price despite beacause of having such a demandng lead over their competition in their first year(discounting BF) why cut the price(temporarily) when they would still sell the same amount in just a timely manor and reap more profit. If we use VGC numbers: the PS4 has a 7.5 mil lead over XB1 and a 8.5 mil lead over Wii U, there's simply no need for Sony to cut the price. through out the year despite the Titanfall launch/ $400 XB1 SKU/ Mariokart Bundle/ Super Smash Bros/ the Ps4 still came up top(WW basis). Sony doens't need to lead in every market to sustain their dominant lead, sony would gladly take worldwide market share over simply america market share which MS and the XB1 are trying to do, and even if they somehow did, there is no way MS could close a 7.5 mil lead with america alone as this gen will much closer to Sony's favor.

for the second; Why are you so fixated on the fact the Sony should've sold more if____ it simply didn't need to, Sony won 10 out of 12 months of 2014 NPD(correct me if I'm wrong) XB1 had to cut the price to stay competitive in the only market it still has a chance(maybe UK), Sony did very well during the holiday season, just beacuse the XB1 did better doesn't mean Sony should've cut the price, every system has it high and lows if the big 3 cut their price everytime one of them had a burst in sales all three would be in the red. Sony beat the XB1 during TF and the $400 SKU months, it took MS to slash all bundle  another $50 with free games and a $329.99 BF Deal to win Nov. and Dec. if we look at amazon/best buy/gamestop which recently have become the barometer for predicting the NPD the PS4 is leading the pack for Jan despite the XB1 again going back to $350; if Sony outsells the XB1 10 out of 12 months and still mantains their lead I'm pretty sure they will have no problems with that.

when we say the Sony and PS4 didn't need a price cut, it didn't need it...