Natal less than $50

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sieanr said:

wiifan75 said:

nordlead said:

They can easily sell Natal at a loss, they will get their money back very quickly from what they will make on Natal games. This is, after all, part of the traditional console pricing model.

stupid analysts. This isn't the traditional pricing model at all. It is the new one that has only worked with limited success for Sony. Overall the model has been horrible for them due to the huge losses posted by the PS3. Microsoft is also yet to make any money on this model (in gaming).

I couldn't agree with you more.  You beat me to that punch.  I can't believe some fool thinks losing money up front is "Traditional".  That is exactly why Nintendo is always in the game and relevant.  They priced out a product that was affordable to make.  They make money on every console.  That's a traditional model.  Only fools lose money up front to make it on the back side.  It's too risky and it's very evident now.  The jump this generation for graphics was too much I think.  It should have been stepped into slowly.  I just don't think this should have been the HD generation.  If PS360 would have been a little more conservative and gradually increased it's power and graphics over another generation, then I think Sony would have remained #1 and Nintendo might have been contemplating software sales only on PS4 & 360.5.  Just a thought.

Because it exactly what most video game companies have done?

Its called the razor/razorblade model of business, and its what Sony did during the PS1 and PS2 gen, not just with the PS3. Most other companies, Nintendo and SNK excluded, have also sold their hardware at a loss for atleast a while. At the start of the Genesis era the head of Sega of America insisted on following this model, much to the anger of Sega of Japan. Eventually SOA had virtually 50% of the US market, while SOJ was far behind Nintendo and NEC/Hudson.

But its not just video game companies that have profitted, and flourished off this model. Besides the aftermentioned video game and razorblade industry, ommunication companies do essentially the same - free installion and DVR/modems/phones up front, then the money is made back through a subscription. Basically you can think of the costs for the hardware being subsidised by the people who buy games and accessories, or subscribe to a service.

No. Sony didn't do it with PSX. With PS2 and 3 it did (except that PS3 still haven't sold the blades), but not with the first one.

And the "razor and blades" Sega did with Megadrive, wasn't to sell it at loss, it was just bundling software, that you could sell separetely, with the hardware.

Also, Nintendo has never sold its hardware at a loss, well the cases whe currency fluctuates so, that the marginal drops to negative, are the only cases i'm aware of.

The reason why the console companies traditionally haven't sold their hardware at loss, is because the consoles have traditionally been made of cheap hardware.