Q4 2012 Hardware Analysis (VGC Exclusive)

[Squilliam]

Michael-5 said:

Squilliam said:

Well from the perspective of Microsoft which would you prefer? Either $500M less in revenue and a 2nd place console or $500M to spend on the launch of the next console/profit but your console is in 3rd place? So why isn't the Xbox 360 $129? The division has a lot of loss leaders in it and the Xbox 360 is just paying back its' dividend I guess. They tried the 'semi' price cut by doing the subscription thing so what they do in the future is pretty uncertain simply because they have a lot more good options than Sony does so they don't have to make any moves until it comes down to the wire if they even intend to keep the PS3 in third place.

The problem with the people who buy consoles now is that they are really really sucky customers. Why should they take a loss in revenue in order to attract the worst people? If you've waited 8 years and won't pay more than $150 you can't really be that profitable to sell consoles to and you're probably not going to buy many/any full price games. In the end it may not even make up for the loss in revenue from the people who would have paid $200 because the extra customers, that 20-30% of people who will buy the console at $150 only aren't going to rush out and fill their cart on new $60 titles.

I prefer honorable buisness edicuit, and a devotion to quality. First of all Microsoft should admit to defects in original marker 360's, replace consoles to those who have replaced their console with their own money more then once. This keeps consumers devoted, this is one reason why Toyota and Valkswagen are the two largest car industries in the world, they make reliable products (Note VW's in USA are outsources so reliability is crap in this region specifically)

Second, I prefer MS sell a system at a reasonable rate, not scale up the price to maximize profits. MS can afford not to do this, if people start to abandon MS, then MS could just throw money on the X-Box and fix it, but at least if you're going to make the system so expensive, make some games which justify the price. Then they can generate 500 million and then some more.

Subscriptions were smart on MS's part, a lot of people are bad with saving money and can't save a large amount at once. This I think is a great buisness strategy, and a good idea. However I wish XBLG wasn't a forced subscription, I wish you could play per hour because I really don't play online much, but with the 360 I'm banned from it.

At the bold, you're 100% right, I didn't think about that. Then maybe MS should make a $200 bundle, with the 4GB 360, and two games. Not much of a loss, not much of a price cut, but real attractive to late generation gamers.

Also not all late generation gamers are sucky customers. I bought a Wii 2 years ago in 2011, and I have over 20 games for it. Several I bought new, and in the case of XenoBlade and Last Story, I bought them new day 1.

IMHO I think MS's policies will come and back lash at them. Making poor quality products will deter those who don't buy a 360 simply because it's domestic. Keeping a high price for a low quality product will really annoy the hardcore gamers, the type of people who buy consoles early in their life and go on forums to talk about it.

I mean, most people here know I'm a MS fan (because of the exclusives), but look how shitty I talk about 360. I tell everyone to go Sony instead, and next gen the MS console will be my third.

I doubt I'm alone in this, I know analogies suck, but the US car industry is the same. Chevy and Ford used to dominate the American car industry, and they did so with methods called "planned obselence" which is still practiced today. Basically they engineered the cars to work flawlessly for 3 years (Old cars aren't as reliable as current ones), and then have everything fall apart so it's not worth fixing. Then the Japanese came in with cars that could last 10 years and now Chevy/Ford compete for first place in their domestic region, with heavy taxes on foreign cars. WW Ford and Chevy aren't common names.

My point is, if you give people crap products, and keep a high price on it, people will notice and MS will loose loyal fans. You can't always attract new gamers and maintain a stable platform. You need to hold onto the hardcore, and if you're going to make expensive shitty consoles, then make games that people will play to make up for that.


However you are right, from a short term buisness standpoint, MS has no reason to make a price cut when the console sells moderatly well.

Microsoft already admitted their problem and put in a 3 year warranty and Sony likewise recognised their problems too and also replaced defective original PS3s.It wasn't so much poor quality as it was bad luck because a lot of companies got caught out by the transition to lead free solder.

Microsoft isn't trying to attract every person they can possibly attract, they want to attract people who value the services they offer not the people who want to pay as little as possible. Other companies can have different strategies but the way they have added value between Live, Kinect and their high selling exclusive games has been very good to them. Their top 4 franchises have sold better than the top 11 franchises of Sony which makes them the second best first party this generation.

The major problem they have is how to keep the subscription relevant for people who play only a few titles or who are really mostly interested in online content. This is the greatest failure of their strategy, it is with the marginal person who isn't that into online gaming for instance and who won't throw down $50 or subscribe for something they aren't sure about. They need to evolve their service in such a way that their offering justifies the money by somehow making their content delivery worth the added cost and if they include say 5-10 hours of free online with every new game purchase then they can easily give people the option of playing their titles online when they buy them whilst incentivising some new game purchases.

I think the echo chamber of the stuff said online has really clouded a lot of people as to what the real value of Microsofts offerings are. Whilst you may not appreciate it, things like effective moderation and skill ladders improves the experience a lot of people have online. Whilst the hardcore gamers on these forums who pwn noobs left and right have fun the people they pwn aren't so much and they make up a larger proportion of the population. So whilst it probably is less fun for a lot of people to always be matched with people near their level on these forums the wider population appreciates such things.