February 2015 NPD Thread! 3DS: 395k, PS4: 342k, XBO: 276k, WiiU: 96k

[ReimTime]

SWORDF1SH said:

Intrinsic said:

Just get this, the only thing that could stop or delay Sony from dropping the price is if from their internal projections they realize they wouldn't be able to meet demand. 

This is ultimately not about making more from each console unit sold, or about "selling more" than the XB1, its about increasing your user base as quickly as possible. Look at it this way, If Sony sells 15M PS4s this year at $400 or 20M if they drop the price to $300 at some point, those extra 5M gives their overall user base a massive boost. Those are 5M more people to sell games to or buy PS+ sub's. Basically, they stand more to gain getting as many consoles out there rather than making a profit on each console sold but selling less of them. 

Of course install base is important but thet have to find that balance.

Using your example (I know it's a very loose example) and persuming they make $50 on each console (probably not, maybe more)

15M at $400 with $50 profit = $750M profit

20M at $350 with no profit = $0 profit

20M at $300 with $50 loss = $1B loss

So by having a $100 price cut they would have to make back $1.75B. So in this case it wouldn't be smart to drop price. PS Plus and software sales will never sell enough to make the difference up.

Again these are very very rough figures but the outcome is always the same. Sell less at higher profit or more for less profit but you will only want to cut price if the end results means making more profit.

Yes but production costs fall as a console generation goes on. Materials become cheaper and manufacturing can always be placed more heavily on companies like Foxconn. I don't think they'd lose out too badly on a price cut, and I agree with intrinsic that an install base is very important