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Is the market ready for a $500 console yet?

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What should the PS5 & Xbox 4 cost at launch?

$500 (high specs) 45 60.81%
 
$450 (moderate specs) 8 10.81%
 
$400 (low specs) 21 28.38%
 
Total:74

Bofferbrauer2 said:

SNES only $200 at launch???

Yup.

Of course, $200 was worth a lot more back then here in the U.S., the equivalent of about $372 today.

Conina said:

SKMBlake said:
500/600$ PS3 and 500$ Xbox One already proved there is a symbolic pricing ceiling.

No, they didn't prove anything for 2020.

The only thing the PS3 proved in 2006/2007 was that the PlayStation brand and exclusives and the PS4 advantages (f.e. Blu-ray drive) were strong enough arguments for many people to justify a 50% higher price tag compared to the (at that point even better performing) Xbox 360.

The only thing the Xbox One proved in 2013/2014 was that the Xbox brand and Kinect 2.0 weren't strong enough arguments for many people to justify a 25% higher price tag compared to the (to this day better performing) PS4 with a lot more exclusives.

That's it.

Movie tickets have more than doubled since 1995. Has the number of sold movie tickets halved since then because "entertainment dollars aren't affected by inflation"? No, they have gone slightly down in the last years, but are still above the 1995 numbers:

Even though there are less and less reasons to go to the cinema with much improved and affordable home cinema/entertainment solutions in the last decade: bigger TV screens, 4K TVs, sound bars, Netflix, 4K streaming, very popular TV shows which are better than most new movies...

@bolded: Y'know, I was actually planning an article about changes in viewing habits at the box office. My preliminary research indicates that the Top 30 films of each year have generated steady ticket sales, with the losses all happening in films below #30. Also, the types of movies people go to see are different in terms of genre. I plan on starting the actual writing later this year.

SKMBlake said:
Oh gosh, stop comparing to other things and show inflation-related charts, that's all you do

At this point, there are only four possibilities:

1) Economics is not your strong suit.
2) There has been no inflation where you live in a long time (unlikely, as, if you are from France as your bio says, the Euro's value has declined due to inflation).
3) You simply haven't been working a job to buy your own stuff for a long enough period of time to notice the effects of inflation (I have been part of the workforce for 21 years now, and I have noticed it).
4) You're deliberately ignoring a basic reality of economics because it disproves your argument.



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Alby_da_Wolf said:
haxxiy said:

AFAIK both the X360's and the PS3's more expensive models sold better than their cheaper counterparts, though.

XB360 premium launch version was actually priced $400, while the core version, while cheaper, was too poorly equipped, anybody wanting to add a HDD, necessary for downloaded games and proprietary, so a lot more expensive than standard HDD, would have ended up spending more than buyin a premium.
PS3 "cheap" model wasn't cheap at all at $500, so people preferred the better equipped one, but sales for PS3 really took off when the revised model, decently equipped and at $400, was launched.
$400 is good, but while nobody will ask for a princely equipment at that price, most will ask at least for a decent one.

That's part of the point. What would happen if a gimped version sells for $400 and a fully realized one for $500? Is the price point really making the console more accessible, if the later outsells the former? It happened before with consoles priced both cheaper and more expensive, after all.

Besides, I don't think I quite get your PS3 argument. The difference between 400 and 500 matters, but between 500 and 600 suddenly doesn't, anymore... because it crossed an arbitrary threshold of expensiveness, beyond which people can afford to shell out more money?

Anyway, that discussion is moot. Market analysis nowadays is much more advanced, complex and deep than it was 10 or 15 years ago. Sony and MS should know what they need to do (and how to price their stuff) better than any of us can argue.



 

 

 

 

 

I think that the Xbox One could have been successful at 500$ back in 2013 - but it would have needed to perform better than the PS4 (without going too far, a faster CPU + GPU combo, and memory fast enough to feed them).

Let's say it would have come out with enough CPU power to run games that are 1080p 30FPS on the PS4 close to locked 60, with similar details.

All in all, I think that if the games are back-and-forward compatible they should price the new consoles like the "PRO" consoles, maybe even a little more, I'd rather spend more on something I want, than less on something I'm lukewarm about.



OTBWY said:
I don't think this price has ever been attractive. It seems to me the right pricing most consumers are willing to take the leap for is 400.

History has shown this to be correct repeatedly.  Base SKUs over $400 struggle every time.  And, while inflation is a thing, it simply hasn't been a factor in gaming.  In many respects, this hobby costs less than it ever has.  So, I see no reason to believe that $499 will magically work better this time.



SKMBlake said:
I did justify the reason at least 3 times, you don't wanna read it, fine, but that's not my fault.
Your only argument is "inflation" and nothing else. Well, guess what, people don't give a bread about how consoles cost 20 years ago. Parents won't buy a 500$ device for their kids which only does gaming (which they already consider to be bad for kids anyway).

But yeah, go to every wallmart you can see when the 500$-Nex gen consoles are released and show them your charts, I'm sure they will convince them

I don't know about America, but wage increases over the last 20years have been WAY slower than inflation in Australia.

People aren't spending money on luxury items that they do not need on a daily basis.



 

 

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OTBWY said:
I don't think this price has ever been attractive. It seems to me the right pricing most consumers are willing to take the leap for is 400.

Pretty much this.  While I feel a lot of us gaming enthusiasts would be fine dropping that on a new console, we have to remember that we are the vocal minority when it comes to overall sales.  Growing up, I never got new consoles until they were two years old and they dropped in price.  Even the PS3 was on hold until MGS4 came out.

Now that I am set in my career, sure now I get them out of the gate.  But it was not until the PS4 and Switch that this became the case for me.  I plan on getting the PS5 out of the gate regardless of the price, but I highly doubt most people will pay anything over 400 for another console, let alone 500.  If consoles go up too much, I will just finally make the plunge and get a gaming PC as cheaper hardware has always been a selling point for consoles in general as well.

Last edited by Shiken - on 20 April 2019

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Alby_da_Wolf said:
$400 is the right price at launch for the entry level version. If that model is offered, and it will do the majority of sales, nothing wrong about offering a premium model too at $500 or even more. But a $500 version alone wouldn't sell enough.

I think this pretty well nails it. And, considering the fact that at least Microsoft is rumored to be developing two SKUs, I think they understand this.  It is possible to have both a premium device for the enthusiast, and a lower price device for the mass market. We're seeing it right now, with both Xbox and PlayStation.  I am nearly certain it will continue in the next generation. The only question is will there be two versions available at launch, or will one come a bit later

Last edited by VAMatt - on 21 April 2019

haxxiy said:
Alby_da_Wolf said:

XB360 premium launch version was actually priced $400, while the core version, while cheaper, was too poorly equipped, anybody wanting to add a HDD, necessary for downloaded games and proprietary, so a lot more expensive than standard HDD, would have ended up spending more than buyin a premium.
PS3 "cheap" model wasn't cheap at all at $500, so people preferred the better equipped one, but sales for PS3 really took off when the revised model, decently equipped and at $400, was launched.
$400 is good, but while nobody will ask for a princely equipment at that price, most will ask at least for a decent one.

That's part of the point. What would happen if a gimped version sells for $400 and a fully realized one for $500? Is the price point really making the console more accessible, if the later outsells the former? It happened before with consoles priced both cheaper and more expensive, after all.

Besides, I don't think I quite get your PS3 argument. The difference between 400 and 500 matters, but between 500 and 600 suddenly doesn't, anymore... because it crossed an arbitrary threshold of expensiveness, beyond which people can afford to shell out more money?

Anyway, that discussion is moot. Market analysis nowadays is much more advanced, complex and deep than it was 10 or 15 years ago. Sony and MS should know what they need to do (and how to price their stuff) better than any of us can argue.

The difference matters in the sense that a decently equipped $400 console sells well, while a poorly equipped $500 one doesn't. Gimped versions rarely sell well.
The lowest priced amongst the at least decently equipped versions is usually the best seller. BTW, for its price, the $600 PS3 didn't sell too bad, its sales became bad for Sony because they were launch versions PS3 main sales, while the gimped and expensive entry level sold poorly. If those sales were instead in addition to a higher selling entry level, then total sales would have been good enough.
About your last point, I totally agree.



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Bofferbrauer2 said:

The problem is, that we have a very gradual increase in price here, something we didn't have for Video games. Nobody seems to want to exceed the 60$ pricetag for a new game. And the 600$ is considered a similar mark. But the way hardware goes, that one will have to fall some day.

Inflation is also a bad parameter when you have other things that go against it. If you exclude Tetris and Mario, what games even made it past the 1 million mark before the turn of the century? During the 6th and 7th generation, especially with PS2 and Wii, video gaming exploded in numbers, more than offsetting the inflation with sheer sales numbers. Nowadays, A game selling less than 1M is a huge disappointment unless it's an indie title, but 20 years ago, selling over 100k was already a big success.

You also have to consider that publishers at the time released up to 30 games a year to have something for every quarter; now with the microtransactions, DLC, and so on, they got those covered with a stable baseline and release half a dozen a year at best, which also cuts down on development costs. They don't have to raise the prices with their in-game sales, further cementing the notion of fixed pricing in the videogame scene.

Average sticker prices for games came down in Gen 5 as the CD format allowed for lower manufacturing costs. The N64's carts were still normally priced $60-70, while most PS1 games starting around 1997 ran from $40-50. Then at the start of Gen 6 we saw a price hike for disc-based games (by then the only format), with $50 becoming the standard. Then another hike to $60 at the start of Gen 7 for PS3 & 360 games, with Nintendo making the leap to $60 with the Wii U. Then game prices just kind of stayed like that, with digital add-on content making up the shortfall.

Also, a great many games in from Gens 3, 4, & 5 were million-sellers, and not just Mario and Tetris. Wikipedia has multiple lists of best-selling games by platform. The NES alone had at least 75 million-selling games. Two gens later, the PS1 & N64 had at least 159 million-sellers between the two of them.

Mnementh said:

OK, this is ridiculous. While I think ignoring inflation is wrong, you can't compare bread with a luxury item like video game consoles. People need to buy bread, even if they can't afford luxury. In fact increasing prices on basic items like food might cut short expenses for luxury.

Also looking at inflation alone is outright wrong. If inflation grows slower than incomes, then people have more moeny to put on luxury items. If it is the other way around, the people stop  buying luxury stuff.

The comparison with past consoles is also faulty, because most of them were bought by a small amount of people. Exactly as you would expect of expensive items. As I said before, intensive gamer like us pay pretty much everything for our hobby, but other people prioritize it lower. Each higher pricepoint leads to lost sales. How much is hard to gauge. But this fight about bread and inflation and stuff does really not help to answer this question.

@First bolded: Most basic necessities like food, clothing, and electricity have remained relatively constant and in many cases even declined over time when adjusted for inflation, at least in the U.S.

@Second bolded: Average household incomes in the U.S. in every quintile below the top have remained relatively stagnant when adjusted for inflation over the past 40 years, with no clear upward or downward trend. Seeing as basic necessities aren't consuming a larger portion of income now as they did 10-20-30 years ago, then the amount of money the average person has to spend on luxuries hasn't declined, either. Hell, even during the Great Recession spending on gaming accelerated instead of declining (total PS3+360 hardware sales alone increased almost 27% from 2007 to 2009), so even a major downturn didn't dissuade consumers from buying game consoles.

@Third bolded: Except it wasn't a "small amount of people." The NES and PS1 both sold roughly 30M units in the U.S. The SNES and Genesis were something like 38M between the two of them. Those aren't small numbers. Yes, the market has expanded from what it was 20-30 years ago (the PS3 & 360 sold 70M combined in the U.S.), but not because of anything to do with the costs of gaming. Consoles just got more mainstream.

VAMatt said:
Specs aside, history has proven time and again that a base SKU cannot exceed $399 and achieve widespread adoption. I suppose if both Sony and MS launched at $499, it would be interesting to see how that played out. But, if one of them is at $399, and the other at $499, I suspect the $399 will win handily. We've seen it over and over again.

And, yes, inflation..... But, inflation in video games has not been a thing.

Because history only goes up to just before right now, and by the start of Gen 8 the value of a dollar declined enough to allow a $400 console to succeed.

I suppose 18 years ago someone might have said "a base SKU cannot exceed $299 and achieve widespread adoption" based on the observation that the NES, SNES, and Genesis debuted at under $200, the PlayStation didn't achieve widespread success until it dropped to $199 (actually not even then, that first cut from $299 to $199 boosted sales in the U.S. from Wii U levels to GameCube levels; it wasn't until FFVII that the PS1 really took off), and the Saturn failed miserably at its $399 launch price. In the 90s, $399 was a deal-breaker. Now? Not so much.

Despite your assertion to the contrary, inflation most certainly does matter in the video games market. A sticker price that was exorbitant 25 years ago is reasonable today, and one that was reasonable is now bargain basement prices (the SNES, Genesis, and PS1 were all under $150 after two years, which would be dirt cheap for a two-year-old console today). $500 really ought not to be considered outrageous for a next-gen console at launch in 2020. The dollar has lost 8.3% of its value already since the PS4 came out. $400 in 2013 will be the equivalent of around $440-450 by the end of next year. $500 isn't excessively more than that.

And let's not forget price cuts are a thing. Even if the PS5 and Xbox 4 launch at $500 instead of $450, they'll get permanent price cuts and temporary deals. Within two years, their base price ought to have been cut by as much as 20%, and Black Friday deals will knock another $50-100 off. They won't stay $500 forever.

haxxiy said:

That's part of the point. What would happen if a gimped version sells for $400 and a fully realized one for $500? Is the price point really making the console more accessible, if the later outsells the former? It happened before with consoles priced both cheaper and more expensive, after all.

Besides, I don't think I quite get your PS3 argument. The difference between 400 and 500 matters, but between 500 and 600 suddenly doesn't, anymore... because it crossed an arbitrary threshold of expensiveness, beyond which people can afford to shell out more money?

Anyway, that discussion is moot. Market analysis nowadays is much more advanced, complex and deep than it was 10 or 15 years ago. Sony and MS should know what they need to do (and how to price their stuff) better than any of us can argue.

You're right that the more expensive 360 & PS3 SKUs sold better. This article explicitly states that the 60GB PS3 sold better than the 20GB SKU. http://www.gamepro.com/news.cfm?article_id=129068">This old article states that 80% of 360 owners at the time owned a hard drive; it doesn't say whether or not they bought a Core SKU and got the HDD separately, or they just went ahead and bought the Pro SKU, but it's clear that the vast majority of 360 owners saw the value of a hard drive, just as a majority of early PS3 owners were more willing to shell out an additional $100 for a hard drive three times larger than the $500 SKU's HDD. It does demonstrate that, in principle, people will pay more for a thing if they feel there's a good value proposition that comes along with the higher sticker price.



VAMatt said:
OTBWY said:
I don't think this price has ever been attractive. It seems to me the right pricing most consumers are willing to take the leap for is 400.

History has shown this to be correct repeatedly.  Base SKUs over $400 struggle every time.  And, while inflation is a thing, it simply hasn't been a factor in gaming.  In many respects, this hobby costs less than it ever has.  So, I see no reason to believe that $499 will magically work better this time.

I missed this one because you posted it right after I started my other reply.

I already explained that inflation is a factor. $400 was a deal-breaker 25+ years ago. Now it's reasonable. In 20 years, $400 will be a bargain basement price for a new console.

I also explained the struggles of past systems that debuted at over $400, but to reiterate:

The PS3 struggled at $500 because A) a dollar was worth 26% more in Nov. 2006 than it is now (so $500 then is equal to $630 now), and B) the 360 offered performance that was just as good and it did so at a lower price. The PS3 was more expensive at launch because of the Blu-ray drive (and the Cell CPU, to a lesser extent), not because it was more powerful. The average gamer didn't view Blu-ray capability as something that justified the higher price point, so Sony lost a ton of market share.

The XBO struggled at $500 because of forced Kinect (also, $500 in Nov. 2013 translates to $545 in current dollars). The average gamer simply didn't care for Kinect anymore, plus the PS4 was more powerful than the XBO (not vastly, but enough to where many third-party games performed better). The Kinect was clearly not something that justified the higher price in the eyes of the average gamer, hence why MS was quick to unbundle Kinect from the XBO.

Not only will $500 not be unreasonable next year because of the effects of inflation, but Sony & MS could totally justify the prices if the PS5 and Xbox 4 are powerful enough.