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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
Mnementh said:
Dulfite said:
Consumers: Everything else has gotten more expensive, but we will riot if game consoles and video games become more expensive!

Companies: Well everyone, looks like we have to cut some people from their jobs because we didn't sell ludicrous numbers that we need to make a profit off our game because the consumers don't understand inflation, good luck on your future endeavors!

Consumers: Why did you fire those poor people? We riot!

Companies: Ok, Ok! We won't fire anymore! We will release DLC after games to make up for the lost profit on ya'll not understanding inflation. Sound fair?

Consumers: No! NO DLC! That just means you didn't put in enough effort into the game in the first place! We will only buy game of the year editions at 87% off on Steam sale now! Take that you capitalist pigs!

Companies: Uh...

You failed to mention the main problem: explosion of cost in developing games. In 1990 Monkey Island was made by ten people. In 2018 God of War was developed by 270 people over four years. The costs are just incomparable, and number of gamers didn't grow in the same way as the costs. That is the core of the problem.

And you fail to mention with your example, that Monkey Island was a success by selling over 100k copies, while GoW sold 5M copies. That is 50 times more sales, and in a shorter amount of time, too. And yet both are about equal size of hits for their time.

Also, those 270 were not all the time on the project, as it includes everything from 2D artists, 3D artists, Programmers, Musicians, and so on. Some were only on the project for a couple months before moving on the next project in line.

Videogame development has become much more expensive, no doubt. But the market grew bigger even faster. Selling one million copies of a game, outside of Mario or Tetris, was exceptional until the late 90's. Nowadays, only selling a million would most of the time be considered a massive flop, unless it's an indie title.

Lastly, You fail to acknowledge what was in the box of a videogame at the time. What is nowadays sold as special or limited editions were the normal editions in the heyday, especially on PC.



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Bofferbrauer2 said:

Lastly, You fail to acknowledge what was in the box of a videogame at the time. What is nowadays sold as special or limited editions were the normal editions in the heyday, especially on PC.

Oh boy... I remember some games having manuals that were hundreds of pages long...



Pemalite said:
Bofferbrauer2 said:

Lastly, You fail to acknowledge what was in the box of a videogame at the time. What is nowadays sold as special or limited editions were the normal editions in the heyday, especially on PC.

Oh boy... I remember some games having manuals that were hundreds of pages long...

These alone would probably cost about 10$ in production... and that's just the tip of the iceberg.

So yeah, the games were more expensive, but you got much more with them. Might want to compare the price of the games back then with the special editions today, and then you'll see the price didn't really drop all that much.



RaptorChrist said:
I think the reason that the PS3 -> PS4 jump wasn't that great was due to the fact that Sony released the PS3 at $599 (and wasn't that at a loss of $150 per box initially?), compared to the PS4 which launched at $399, and was supposedly estimated to cost $381 at launch, according to enGadget.

An extra $100 investment on the internals of the system at launch could go a long way into making a better console in the long run. Now I'm not sure whether or not it's a good idea in terms of profitability and sales, but for me personally, $1000 could disappear from my bank and I probably wouldn't even notice, so I'm all for Sony making the best console they can afford.

Source: https://www.engadget.com/2013/11/19/ps4-costs-381-to-make-according-to-hardware-teardown/

PS3 costed 800 USD (at the time, so over 1000 USD at today money) to make and sold for 499-599 depending on the model at launch.

So yes having the console in 2020 for 399 in cost would likely be a smaller jump than PS3 to PS4.

ptofhearts said:
RaptorChrist said:

Until reading through this thread, I had no idea that people would look at $499 as such a high price point. For me, as a consumer, I want to see Sony release the PS5 with super powerful hardware that costs more than what the average consumer would be willing to pay.

Money is relative to the person spending it, and for some people, $499 is steep. Me ten years ago would have had concerns over the price, back during a time when the price of something played a much bigger role in my ability to buy it. Today, however, at the end of the month, once all the bills are paid, my wife and I usually have upwards of $1000 leftover, maybe more.

But those situations are always changing, and maybe ten years from now I'll be broke again, so it all depends on one's situation.

To put it in perspective: I am from Brazil and here, when the PS4 was released, it cost us around U$1000 to buy one officially, which is very, very steep, specially considering our minimal monthly wage at the the time would be around U$229. I bought mine only on February of last year, and I was fortunate enough to be able to afford one at it's U$399 price tag (since the price had been cut by then), which is still steep, as most people here still can't afford it.

A console at U$499 will have a surreal price here in Brazil, and I believe Sony would lose a lot of ground. Besides, there are other things to consider, like is it going to be advantageous for developers to invest more money to develop a high end game to sell it on a console that could potentially have a much smaller userbase, specially at launch?

Hey man, PS3 also launched here for R$6000,00 (but not officially, it was greyshops at the time), PS4 at 4k was a mockery. X1 launched for much less. PS5 launching for 500 USD in US wouldn't translate to official over 4k here.

From what we had discussion on forums at the time of PS4 release Sony Brazil tried negotiation with government and Sony JP to have the console here near 400 USD at launch but government wanted all the same taxes and JP didn't care to send many units here, so VP in Brazil decided to put pricetag very high to make the stock keep up.

Just see that games themselves Sony have kept at launch for first parties 199 official price when exchange rate was near 2 (2,67) and near 4 (3,8-4,2). And that when PS4 started being manufactured here the price dropped a lot.

So if PS5 is manufactured here near launch, within 1 year it should be near 600 USD instead of 1000.

Mandalore76 said:
DonFerrari said:

Why bother doing small jumps?

For someone minded like you would be better that they at the time PS5 launch cut PS4 basic to 149 and PS4 Pro to 249, so for the next couple years due to the crossgen (and also BC) you have very cheap HW. And then when you are going to upgrade to PS5 the 499 became 299-349.

I don't think you realize the irony in how much your statement mirrors 2 major marketing PR flops by Sony and Microsoft from recent memory:

Sony wants you to earn that PlayStation 3!

"During a recent interview with Japanese economic website Toyo Keizai, ever-charming Ken Kutaragi had this to say about Sony's goal for the PS3: "for consumers to think to themselves 'I will work more hours to buy one'. We want people to feel that they want it, irrespective of anything else." In other words: Get a job!"

https://www.engadget.com/2005/07/06/sony-wants-you-to-earn-that-playstation-3/

Microsoft: No Internet? We have a product called the Xbox 360

"We have a product for people who aren't able to get some form of connectivity," says Microsoft's Don Mattick, "it's called Xbox 360."

https://www.cnet.com/news/microsoft-no-internet-we-have-a-product-called-the-xbox-360/

I guess you tried to spin my point out of context, but ok.

Plenty (most) of console buyers come after the price cuts in HW and when there are used games for cheaper. So for someone that is very price conscious it is much better to wait. That is very simple concept.

Cobretti2 said:
Zoombael said:
Some act like it is the difference between affordable and putting a loan against a house.

If 500 is too much for you then so is 400.

It is not about being affordable or not and only a difference of $100.

It is a mental thing, people set a price what they think a gaming box is worth. Don't matter what you put in it, they won't buy it.

Now a dedicated gamer in general does not have those kind of stupid mental limitations because they know the value of the specs.

In this scenario we are talking general market. Your common casual gamers.

Compare this to mobile phones, some of them are what $600-1000 now? A lot of people upgrade them every new model release. They believe that the upgrade is justified.

In their head they probably thinking.

- I must have the latest for my social media posts

- Oh latest camera better pictures of my ass to put on Instagram, must have the best to get more followers.

- Oh i can listen to music whilst traveling

- Watch netflix or whatever

- Oh I guess i can still make calls

For me it's very strange the though people make to have real specs that will deliver better stuff being to expensive increase, but paying 1000 USD for a phone that the 100 USD would really have been enough.

SKMBlake said:
Shadow1980 said:

This is an incredibly unsound argument that ignores basic realities of economics and economic history.

A new Toyota Camry started at about $16,400 25 years ago. That's about $28,000 today. To rephrase your argument for a car buyer from 1994, "Inflation has no effect whatsoever on what people are willing to put in an automobile. $20,000 is way too high." Except $20,000 isn't way too high by historical standards, and a new Camry starts at about $25,000 now, a bit less than a 1994 model.

Inflation matters.

$300 is dirt cheap for a console today. It was a bit exorbitant 30 years ago, because a dollar was worth twice as much. Assuming inflation stays about constant, a $500 PS5 will be only 11% more expensive than the PS4's adjusted launch price. Hardly bank-breaking. It's not like going from the PS2 ($438 adjusted) to the PS3 ($631 adjusted, 44% higher than the PS2 and 45% higher than the PS4).

You can't compare consoles to other stuff. That's my main point. Of course inflation matters. But it's irrevelant when it comes to consoles and general gaming.

Consoles have almost one and only purpose, which is gaming, and peoples doesn't want to spend more than 400$ just for gaming, because the games are already expensive enough (+game as a service stuffs). If the minimum you can get is 500$ + 60$ for one and only (AAA) game, that's way too much.

Remember, it's only for gaming. Not other purposes. You can access Hulu, Netflix, Prime Video and stuff on other devices almost everyone own.

Why AAA games doesn't cost 80-100$ then ? Because publishers know people won't buy it

People really don't understand inflation, but they surely understand that price keeps increasing and that is by comparing stuff.

Regular person that found NES for 100 at launch a good price was on a context of other stuff costing on a bracket that would put today console at 500 good price.

Shadow1980 said:
SKMBlake said:

You can't compare consoles to other stuff. That's my main point. Of course inflation matters. But it's irrevelant when it comes to consoles and general gaming.

Consoles have almost one and only purpose, which is gaming, and peoples doesn't want to spend more than 400$ just for gaming, because the games are already expensive enough (+game as a service stuffs). If the minimum you can get is 500$ + 60$ for one and only (AAA) game, that's way too much.

Remember, it's only for gaming. Not other purposes. You can access Hulu, Netflix, Prime Video and stuff on other devices almost everyone own.

Why AAA games doesn't cost 80-100$ then ? Because publishers know people won't buy it

That's special pleading: Citing something as an exception to a generally excepted rule without justifying the exception.

If it were irrelevant to consoles, then nobody would have bought a PS4. The $400 sticker price isn't anything new:

But as I've stated on multiple occasions on this thread, $400 is reasonable today, but was outrageous 25-30 years ago, because inflation has gradually reduced the value of a dollar. Nintendo and Sega wouldn't have even attempted to sell their 8-bit or 16-bit systems for $300, much less $400 (that $200 launch price for the SNES is $372 in current dollars). By 2000, though, $300 was perfectly reasonable, and by 2013 $400 was affordable.

We can easily see that the $400 Saturn and especially $400 Neo-Geo actually cost a lot more than the $500 Xbox One X when adjusted for inflation. In fact, the One X is only marginally more expensive than the PS1 was at launch, the same as the 20GB 360 was. Meanwhile, the PS4's launch price makes it the least expensive PlayStation system ever at launch, and right at around the long term adjusted average for all consoles from the Big Four.

If inflation were really irrelevant for consoles, then $400 now would be just as unreasonable now as it would have been 20-30 years ago. Clearly it is no longer a deal-breaker. Consumers are still very cognizant of the declining value of a dollar over time. That applies just as much for consoles as it does for any other consumer electronic item or other good. A reasonable sticker price for anything today would have been considered too high when my parents were my age, and obscene when my grandparents were my age. And even in the shorter term, people notice.

Now, let's assume inflation remains relatively constant, with a net change of 3% from now to Nov. 2020. Let's further assume that the PS5 costs $450 and the rumored high-end "Scarlet" model of the Xbox 4 costs $500. This is what the price chart would look like (sans Neo-Geo):

A $450 launch price for next-gen consoles would be right on par with the adjusted prices of the PS4, PS2, and OXbox, and only $67/17.5% more expensive than the SNES. $500 would be only $50 more than that. Even $500 would be imminently reasonable for a non-Nintendo console. And the price will go down over time! By the 2022 holiday season, we ought to see standard prices no more than $400, and we'll see the usual big Black Friday deals that would knock $50-100 off the price. Within two years, consumers will be able to buy a PS5 or Xbox 4 for less than $400.

As for software, games did used to have sticker prices of $70 on occasion back in the 90s. The various versions of Street Fighter II and many JRPGs had that price point. And when you adjust for inflation, even the more common price points that where in the $50-60 range would be $80-100 or more now:

Software has gotten a lot cheaper, despite the growing costs of development. Even if you ignore the higher costs of cartridges, we can see that disc-based games have gotten cheaper. While none are on the chart, Sega CD and TurboGrafx-CD games retailed for $50-60 in 1993 ($88-106 in current dollars), thus putting them on par with the cartridge-based titles of the time. PS1 and Dreamcast games have adjusted prices well north of $70. Even $50 PS2, Xbox, GameCube, and earlier Wii games are more expensive than $60 games now. But instead of a price hike to $70, we've seen increasingly aggressive monetization schemes in games, where DLC has mutated from substantial chunks of content to modern microtransactions.

Oh, and you don't have to buy games at the full $60, either. You can go on Amazon right now and buy some of the biggest hits of 2018 for less than $40 already, in new condition. If you're willing to wait, most games go down in price quite a bit. It typically took a lot longer to see declines that sharp back when I was a kid, and even the reduced prices were still comparable to a brand new title today. Even by 1993, when the NES was already well on the way out, Nintendo's budget "Classic Series" line of games were not significantly cheaper than current games. In the spring of 1993, the original Metroid was still going for $30, which is about $53 adjusted.

Buying games is quite simply a lot easier on the wallet than it used to be. The laws of economics have quite honestly spoiled us rotten. And while it doesn't excuse what many AAA publishers have done in regards to monetization in recent years, it does explain it.

Your post is perfect. I would just disagree on one point, people don't really understand inflation. But they certainly have the feeling of "stuff is getting more expensive", this is a complain almost everyone have.

So the guy that earned his wage on 1980 compared price of other stuff to decide if 100 USD for NES was good, will today compare PS5 at 500 to other stuff to see if it is good. It is exactly because gaming doesn't exist in a vacuum and people compare stuff that inflation is a thing that affects all (but differently, each person experience it different based on what they consume).

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

You are just being stubborn.

No one here is saying that a 399 PS5 wouldn't sell better than a 499 PS5 for similar spec, because the lower the price the smaller the barrier and more people would like to purchase it. What you are ignoring is that it would also happen if PS4 were 299, or Switch 199. That doesn't mean that PS5 at 499 wouldn't be a major success.

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 guess you just ignored the plenty of excellent posts by Shadow 1980.

To Summarize, NES was a success launching at 100, SNES at 200, 

Bofferbrauer2 said:
Pemalite said:

Oh boy... I remember some games having manuals that were hundreds of pages long...

These alone would probably cost about 10$ in production... and that's just the tip of the iceberg.

So yeah, the games were more expensive, but you got much more with them. Might want to compare the price of the games back then with the special editions today, and then you'll see the price didn't really drop all that much.

Would love if the games came with metal box, manuals an all, but yes I don't value it enough to pay 10USD more for it.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

haxxiy said:
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.

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

The Xbox 360 Elite model released at $479 and was discontinued in just under 3 years.  So, no.  



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I'm going to say no.

Sure, the people on this site and other video game forums know what we'll get. Personally, $500 for high specs is worth it to me.

However, it seems that the general public isn't budging on console price points.

Console Launch Prices-
PS1 - 299
PS2 - 299
PS3 - 499/599
PS4 - 399

Notice the only system which didn't completely annihilate the competition was PS3 and a huge reason for that was the launch price.

And then we look at the competition. Nintendo always has been at the forefront of innovation, but innovation is only a piece of its strategy. Its biggest hits console wise were both innovative AND inexpensive (the motion gaming of the Wii selling at $250 and the combination handheld/console Switch coming in at $299).

I think it's worth it to Sony to keep the fans happy and maybe even sell at a small loss in order to not be so behind in terms of tech. I don't think the competition will be investing too much into tech that Sony will be way behind (unless we're comparing PC to console which appears to be a bigger disparity in tech with each generation). Console buyers seem to care most about influx of great games and preserving value from what I've seen of the last few generations, so I don't think Sony should raise the price now that they are ahead.



danasider said:
I'm going to say no.

Sure, the people on this site and other video game forums know what we'll get. Personally, $500 for high specs is worth it to me.

However, it seems that the general public isn't budging on console price points.

Console Launch Prices-
PS1 - 299
PS2 - 299
PS3 - 499/599
PS4 - 399

Notice the only system which didn't completely annihilate the competition was PS3 and a huge reason for that was the launch price.

And then we look at the competition. Nintendo always has been at the forefront of innovation, but innovation is only a piece of its strategy. Its biggest hits console wise were both innovative AND inexpensive (the motion gaming of the Wii selling at $250 and the combination handheld/console Switch coming in at $299).

I think it's worth it to Sony to keep the fans happy and maybe even sell at a small loss in order to not be so behind in terms of tech. I don't think the competition will be investing too much into tech that Sony will be way behind (unless we're comparing PC to console which appears to be a bigger disparity in tech with each generation). Console buyers seem to care most about influx of great games and preserving value from what I've seen of the last few generations, so I don't think Sony should raise the price now that they are ahead.

For about 2 years Wii were sold much higher than MSRP.

And also you haven't seem the good posts regarding inflation and console price.. PS1 at 299 in 1994 is more expensive than PS5 at 499 in 2020.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

DonFerrari said:
danasider said:
I'm going to say no.

Sure, the people on this site and other video game forums know what we'll get. Personally, $500 for high specs is worth it to me.

However, it seems that the general public isn't budging on console price points.

Console Launch Prices-
PS1 - 299
PS2 - 299
PS3 - 499/599
PS4 - 399

Notice the only system which didn't completely annihilate the competition was PS3 and a huge reason for that was the launch price.

And then we look at the competition. Nintendo always has been at the forefront of innovation, but innovation is only a piece of its strategy. Its biggest hits console wise were both innovative AND inexpensive (the motion gaming of the Wii selling at $250 and the combination handheld/console Switch coming in at $299).

I think it's worth it to Sony to keep the fans happy and maybe even sell at a small loss in order to not be so behind in terms of tech. I don't think the competition will be investing too much into tech that Sony will be way behind (unless we're comparing PC to console which appears to be a bigger disparity in tech with each generation). Console buyers seem to care most about influx of great games and preserving value from what I've seen of the last few generations, so I don't think Sony should raise the price now that they are ahead.

For about 2 years Wii were sold much higher than MSRP.

And also you haven't seem the good posts regarding inflation and console price.. PS1 at 299 in 1994 is more expensive than PS5 at 499 in 2020.

I don't know how much above MSRP it was selling for, but I doubt Wii was selling higher than $400.

And yeah, I'm aware of inflation. When I use the numbers to show the history of launch prices, I am aware that 299 in 1994 means something completely different than the same price today. However, just like box office, people still seem to compare them as if they're the same (Gone with the Wind sold many times more tickets than Avatar but Avatar is number 1). I believe these launch prices stay with the consumer despite inflation. They've stayed with me since being a kid and buying consoles, but that's just my experience.

Also, $299 may be well above what we're paying for in terms of value at its time, but things like manufacturing costs, adoption rate of consoles, etc. go into why we were willing to spend more.

I personally would pay $500 for something with a little more beef under the hood, but I think pricing determines which console maker sells more so I don't think it'd be in Sony's best interest.



danasider said:
DonFerrari said:

For about 2 years Wii were sold much higher than MSRP.

And also you haven't seem the good posts regarding inflation and console price.. PS1 at 299 in 1994 is more expensive than PS5 at 499 in 2020.

I don't know how much above MSRP it was selling for, but I doubt Wii was selling higher than $400.

And yeah, I'm aware of inflation. When I use the numbers to show the history of launch prices, I am aware that 299 in 1994 means something completely different than the same price today. However, just like box office, people still seem to compare them as if they're the same (Gone with the Wind sold many times more tickets than Avatar but Avatar is number 1). I believe these launch prices stay with the consumer despite inflation. They've stayed with me since being a kid and buying consoles, but that's just my experience.

Also, $299 may be well above what we're paying for in terms of value at its time, but things like manufacturing costs, adoption rate of consoles, etc. go into why we were willing to spend more.

I personally would pay $500 for something with a little more beef under the hood, but I think pricing determines which console maker sells more so I don't think it'd be in Sony's best interest.

People may make bad comparisons and ignore inflation in some situations.

But when purchasing people don't go straight for comparison of previous system plus inflation, they compare to other items they are buying at that period.

That is why NES @100, SNES @ 200, PS1 @299, PS4 @ 399 and PS5 @499 could be considered reasonable prices at the time they launched even if PS4 is 4 time more expensive than NES.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

People may make bad comparisons and ignore inflation in some situations.

But when purchasing people don't go straight for comparison of previous system plus inflation, they compare to other items they are buying at that period.

That is why NES @100, SNES @ 200, PS1 @299, PS4 @ 399 and PS5 @499 could be considered reasonable prices at the time they launched even if PS4 is 4 time more expensive than NES.

Good point.