| dtewi said: That won't work steven787, viper1 explained it well "That does absolutely nothing to 'grow' the market. This is what many people, including Sony, fail to realize is what Nintendo is doing. Simply releasing games that the current consumer market is already waiting is simply feeding the same people you've been feeding for years. Those are just second (or 3rd, 4th, etc...) helpings for the same people. Nobody new to the table. The Wii is bringing new people to the table. If you feed the same people, you stagnate. You don't grow the industry. Profit margins shrink considerably as the return on investment shrinks due to diminishing returns" |
Wii has not increasd the number of people buying home consoles, mostly correct (10% are new buyers).
Sony is not going to expand the market with a $500 console (that cost 600 to play, once you buy the right cables and a game). They can't lower the price anymore right now because they will face more losses. It doesn't do anygood for them to sell 100mil consoles and lose $10 billion ((-100/console)*10^6). That would not be made back. So they should keep the price high, sell into early '09 at 450-500 and possibly make money than as more people adopt to own HD TV's and production cost go down you lower the price, there will also be a big library to entice people by then.
Sony and MS are not going to "win" this gen, unless it stretches past five years. If they suffer 10 digit losses this gen both companies should eliminate their gaming divisions and fire the all of the top executives. Their best option is to do what Nintendo did during the N64 and GCN days, keep first party software and accessories expensive and top quality to tap into their niche and generate profit with out being the market leader. Basic business: Not at the top of your market, two ways to make a profit 1. Qulaity Niche (stated above) and 2. Mass Market.
HD Video Game consoles are not mass market so #2 is the only option. This model applies to Electronics (Coby (model 2), Bose (1)) , PCs (Alienware (1), Acer (2)) , Auto Makers (Luxury Brands (1), Kia-Hyundai (2)), Food (Dr. Browns or Jones (1), Store Brand-Manufacturers (2). For some reason game companies think that they can ignore basic business principles, and they lose money because of it. Sony has to face reality and adapt quickly to make a profit not being the leader. MS needs to get their act together and take advantage of their lead and lower price.
(EDIT: Innovating is good as long as it is done with in the structure of a good business. Nintendo innovated with the Wii and DS, and kept grounded during this time. They make a profit off of every console, every peripheral, marketed strongly and intelligently, and maintained customer satisfaction. MS has done terrific marketing and has an innovative network, but customers are unhappy with hardware performance and potential customers are afraid to buy. Sony has not innovated yet (six-axis is poorly implimented), the marketing is horrible (crying babies, rubik's cubes, off-beat featurettes that don't mention the PS3), but the public percieves that the hardware is reliable. MS and Sony both built their business around being the Market Leader, unfortunately at least one (both?) will not be the leader and lose lots of money.
I would cite regulation, but I know you will simply ignore it.
