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New Business Model for console

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Which combination of console price and gaming price would you prefer?

399 USD console; 60 USD game 11 47.83%
 
599 USD console; 40 USD game 12 52.17%
 
Total:23

This has been suggested forever and 3DO tried something similar without any success. Not to say somebody can't crack it but it'll be hard to sell a $600 dollar console that is no better than a $400 one, even if there is a slight difference in game prices. It'd save me money since I buy a lot of games but the average consumer only buys about 10 games for PS4/Xbox, they wouldn't really see a saving overall, plus sales already regularly let people get a game for less.



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Ka-pi96 said:
"would have to sell for 20 bucks less than the version on the competitor"

Nope. They could do that and still make the same profit.... but they certainly wouldn't have to. They'd probably just continue selling at the same price and enjoy the extra profit they make instead of passing the savings onto consumers. That's what businesses usually do. I mean, just look at Steam! I think they charge 30%, yet despite console games having to pay console royalties and a % to retailers for physical copies too (which probably adds up to more than Steam alone charge), new games are often listed at a higher price on Steam than they are on console.

I guess you are also not considering that this hypotetic scenario the publisher won't be able to sell without that price difference. Because they need authorization from the platform holder for all games launched and they would receive the same profit per HW so it isn't a draconian measure.

EricHiggin said:

Cheaper console. An affordable entry cost is super important. The problem with cheaper games, are those who aren't buying 10-12 games. For all the buyers who are only going to get 5 or 6 games over the lifetime of the console, if that, they aren't going to buy the more expensive unit on the shelf, even if they know the games are cheaper than the competitions. Many won't know that though.

If they want to try something like this, they could go with $499 and $50 for games, which will work if the competition also does $499, but keeps games at $60. I really don't see much point in this if you're PS though. MS could try this but PS doesn't have to.

I don't know if most people would know how many games they will buy on a gen, but they will know that one HW is more expensive with cheaper games than the other.

Landale_Star said:
This has been suggested forever and 3DO tried something similar without any success. Not to say somebody can't crack it but it'll be hard to sell a $600 dollar console that is no better than a $400 one, even if there is a slight difference in game prices. It'd save me money since I buy a lot of games but the average consumer only buys about 10 games for PS4/Xbox, they wouldn't really see a saving overall, plus sales already regularly let people get a game for less.

The idea would be that regular folk would end up paying about the same amount he does today, difference being between paying upfront or more down payments (this would also diminish a little the pressure of the price drop on the SW few weeks after release).



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

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DonFerrari said:
Ka-pi96 said:
"would have to sell for 20 bucks less than the version on the competitor"

Nope. They could do that and still make the same profit.... but they certainly wouldn't have to. They'd probably just continue selling at the same price and enjoy the extra profit they make instead of passing the savings onto consumers. That's what businesses usually do. I mean, just look at Steam! I think they charge 30%, yet despite console games having to pay console royalties and a % to retailers for physical copies too (which probably adds up to more than Steam alone charge), new games are often listed at a higher price on Steam than they are on console.

I guess you are also not considering that this hypotetic scenario the publisher won't be able to sell without that price difference. Because they need authorization from the platform holder for all games launched and they would receive the same profit per HW so it isn't a draconian measure.

I guess you're not considering what happened to Nintendo's 3rd party support when they tried to dictate what 3rd parties could and couldn't do. It went elsewhere...



Bet Shiken that COD would outsell Battlefield in 2018. http://gamrconnect.vgchartz.com/post.php?id=8749702

DonFerrari said:
EricHiggin said:

Cheaper console. An affordable entry cost is super important. The problem with cheaper games, are those who aren't buying 10-12 games. For all the buyers who are only going to get 5 or 6 games over the lifetime of the console, if that, they aren't going to buy the more expensive unit on the shelf, even if they know the games are cheaper than the competitions. Many won't know that though.

If they want to try something like this, they could go with $499 and $50 for games, which will work if the competition also does $499, but keeps games at $60. I really don't see much point in this if you're PS though. MS could try this but PS doesn't have to.

I don't know if most people would know how many games they will buy on a gen, but they will know that one HW is more expensive with cheaper games than the other.

This will benefit the hardcore considerably more than it would benefit the casuals. That's a terrible business model for a company looking to move 100 million units over the lifetime of the device. It's basically the opposite of what we've been hearing whispers about, in that MS is thinking about having you pay affordable monthly fee's for the hardware as long as you're subbed to their online services. If you were to put a program like that up against what you described, the monthly hardware model is going to see much greater success in terms of moving hardware. Paying for things up front is not the future, let alone the present, it's the past.



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Cheaper console.  The more expensive console would only cost less money over time if I buy a fair amount of games.  I probably would buy a lot of games, but it's still usually easier to justify a $60 purchase over a $40 one, than it would be to justify a $600 purchase instead of a $400 one.  

600+40x<400+60x

200<20x

10<x

For people who buy less than 10 games, the 400 console is cheaper.

At exactly 10 games, they're equal.

For people who buy more than 10 games, the 600 console is cheaper.

Based off the attachment rate for the vast majority of systems, the current model is cheaper for the average gamer, the proposed model would cost them more.

Only 4 systems have that high of an attach ratio: http://www.vgchartz.com/analysis/platform_totals/Tie-Ratio/Global/

Even for the "above average" gamer, there's no guarantee that they would end up buying more than 10 games.  So even for the people that would benefit, the benefit is dependent on them for sure buying at least 10 games.  I am someone who usually buys alot more games, but life's been pretty busy, so it's been much lower than usual.  



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I'd prefer a $200 console with $60 games. Basically the Switch next year or so, is where the sweet spot is going to be. Hardware is not terribly exciting for most people. Games ARE exciting. Gaming is about games.



So you're suggesting them sell a console that is expensive not because of its hardware but because of deferred licensing? So not only would fewer people buy the console but the manufacturer will also get zero from game sales? How the fuck do you think that business plan will work? Literally no one would win in this scenario.



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Ka-pi96 said:
DonFerrari said:

I guess you are also not considering that this hypotetic scenario the publisher won't be able to sell without that price difference. Because they need authorization from the platform holder for all games launched and they would receive the same profit per HW so it isn't a draconian measure.

I guess you're not considering what happened to Nintendo's 3rd party support when they tried to dictate what 3rd parties could and couldn't do. It went elsewhere...

There is a big difference between limiting the number of games a publisher could put from what is being proposed, that they get the same profit on the game but selling at a lower tag.

EricHiggin said:
DonFerrari said:

I don't know if most people would know how many games they will buy on a gen, but they will know that one HW is more expensive with cheaper games than the other.

This will benefit the hardcore considerably more than it would benefit the casuals. That's a terrible business model for a company looking to move 100 million units over the lifetime of the device. It's basically the opposite of what we've been hearing whispers about, in that MS is thinking about having you pay affordable monthly fee's for the hardware as long as you're subbed to their online services. If you were to put a program like that up against what you described, the monthly hardware model is going to see much greater success in terms of moving hardware. Paying for things up front is not the future, let alone the present, it's the past.

I didn't propose it, but it is also possible to have the same 600 USD paid monthly for those who want. That isn't the most critical part of the idea.

But yes the biggest benefit would come to people that buy the games new and perhaps 2 years after launch (so new games cheaper and the console already discounted). People that buy very few games certainly would perceive as it being less interesting idea.

the-pi-guy said:

Cheaper console.  The more expensive console would only cost less money over time if I buy a fair amount of games.  I probably would buy a lot of games, but it's still usually easier to justify a $60 purchase over a $40 one, than it would be to justify a $600 purchase instead of a $400 one.  

600+40x<400+60x

200<20x

10<x

For people who buy less than 10 games, the 400 console is cheaper.

At exactly 10 games, they're equal.

For people who buy more than 10 games, the 600 console is cheaper.

Based off the attachment rate for the vast majority of systems, the current model is cheaper for the average gamer, the proposed model would cost them more.

Only 4 systems have that high of an attach ratio: http://www.vgchartz.com/analysis/platform_totals/Tie-Ratio/Global/

Even for the "above average" gamer, there's no guarantee that they would end up buying more than 10 games.  So even for the people that would benefit, the benefit is dependent on them for sure buying at least 10 games.  I am someone who usually buys alot more games, but life's been pretty busy, so it's been much lower than usual.  

Yes the idea is that the break point is on the "average costumer". And yes for some people it is easier to justify the 20 for each purchase than the 200 for one purchase, and that is the part that is always strange to me. For me it's quite easier to justify a 400-1000 HW purchase that I'll have and use for 5-10 years than it's to justify 60 for each game that I'll play for a couple dozen hours. That is even the reason why I buy very few games new on launch, most I'll buy when they are sub 10 couple years later.

vivster said:
So you're suggesting them sell a console that is expensive not because of its hardware but because of deferred licensing? So not only would fewer people buy the console but the manufacturer will also get zero from game sales? How the fuck do you think that business plan will work? Literally no one would win in this scenario.

Fewer people getting the console is a projection you make, there is no assurance (but yes we could say it is a bigger risk) less people would buy it, it all depends on how you explain the concept to the customer to make he see that they are not paying more for less, they are paying it differently. One way to sweeten the pill was already gave, that you have monthly payment together with the sub. Let's say you make a contract for PS+ and a PS5 for 5 year, so you pay 10 per month on the HW plus 5 for the PS+ so a 15 bucks on the HW and a cheaper game to purchase (15 is close to what stadia is charging without you having the HW).



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

vivster said:
So you're suggesting them sell a console that is expensive not because of its hardware but because of deferred licensing? So not only would fewer people buy the console but the manufacturer will also get zero from game sales? How the fuck do you think that business plan will work? Literally no one would win in this scenario.

Fewer people getting the console is a projection you make, there is no assurance (but yes we could say it is a bigger risk) less people would buy it, it all depends on how you explain the concept to the customer to make he see that they are not paying more for less, they are paying it differently. One way to sweeten the pill was already gave, that you have monthly payment together with the sub. Let's say you make a contract for PS+ and a PS5 for 5 year, so you pay 10 per month on the HW plus 5 for the PS+ so a 15 bucks on the HW and a cheaper game to purchase (15 is close to what stadia is charging without you having the HW).

The consumer is too stupid to do math and those who will do the math are the ones the manufacturer will lose a shit ton of money on. This is a massive lose situation for the manufacturer. And if the manufacturer loses, everyone who bought the console will lose because of held back investment. To make this a win for the manufacturer you'd have to pay a lot more up front which makes everything even worse. Lowing the general price of games is also a terrible idea because it gives publishers room to increase the price again.

It's just overall really really terrible. Stores make their money off of game sales and there is nothing wrong with that.



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