@RPG: What we're doing here is a cost/benefit analysis. You take the cost of the price cut ($100 times the number of consoles sold after the price cut), and the benefit (increased software sales only from those people who buy the PS3 due to the price cut). That's why I only count the 4 million on that part (the assumption is the price cut takes PS3 sales from 9 million to the 13 million predicted by Sony).
I don't think there's any solid proof of the $27 per first party game... There have been many estimates, including some Forbes article, and I think it's probably not very far from $30 per game (probably even less, since I've heard that retailers alone usually take half from retail price; yeah, it's quite a lot if you think about it that way).
Anyway, we could be discussing this for a very long time... but if price cuts were such an easy way of increasing long-term profits, companies would do them much quicker and more often. I think most (but not all) price cuts are a costly way of increasing market share.
My Mario Kart Wii friend code: 2707-1866-0957
