Shadow1980 said:
Much of the PS4's near-record LTD sales were due to having the strongest launch of any system ever. But 2014 sales were far from record-breaking. It sold 4.7M in the U.S. last year. Compare that to the PS2, which sold 6.17M in 2001. But you know what? Even though the PS2 was the most dominant console in history it still got a 33%/$100 price cut 19 months after its U.S. launch, and that caused sales to grow by 40%, making it just that much more dominant. I think Sony is well aware of the effects price cuts typically have on sales, and they're well aware that sales will not grow without price cuts, and sales need to grow. The PS4 is doing well, but not well enough. Sales are at best flat from last year in NA and Europe, and they'll stay that way until it gets a price cut. If it doesn't get a price cut this year, it will fall behind the PS2 by a considerable amount. But except for the Wii, no console released in the past 26 years has gone more than two years without a price cut. I have history on my side. The PS4 will get a price cut this year, and $50 may not be quite enough given the observed effects of price cuts. Based on monthly NPD data that I have going back to the fifth generation, initial price cuts that have provided significant, persistent boosts to sales were all at least 25% reductions or more. The 360 is the only exception, as until recently it was the only system whose initial price cut didn't boost sales significantly, and incidentally it had the smallest initical price cut percentage-wise, declining from $400 to $350 in August '07, a 12.5% reduction. The only other systems released in the past 20 years whose initial price cuts were $50 instead of $100 were Nintendo systems, and they all launched at lower prices than the competition. Regarding the XBO growing YoY, early signs aren't encouraging. So far it's up only 8% YoY in the U.S. Of course, it's worth pointing out that the XBO had a generally strong Q1 2014, selling 711k units, more than the 603k the 360 sold in Q1 2006, thus giving the XBO one of the best first Q1s of any system in the U.S. this century. A lot of that was likely leftover demand from the launch quarter bleeding over into tax season as well as the limited edition Titanfall bundle. The XBO is now 15 months old (so no left over demand from launch) and there's no major games this quarter for the system, and those are variables that are tough to correct for. So, the real test will be the spring quarter. XBO sales dropped off a cliff after tax season last year, selling only 115k in April last year. Overall, Q2 2013 sales for the XBO totaled 311k, which is not very good. That's less than what both the GameCube and original Xbox sold in Q2 2002. Sales did rebound after the Kinect-less SKU was introduced, with the XBO pulling 575k units in Q3. If Q2 sales this year for the XBO are up significantly over last Q2, then we can say that the price reductions have had a lasting, non-trivial effect on sales. But if sales are still only barely up, then the XBO's problems may run much deeper than we thought. As for the XBO getting more price cuts, at most the XBO will decline by another $50 this year, or they may just do more bundles. If the PS4 gets a $100 price cut, the XBO may not be able to win Q4 unless MS drops it by $100 in November. I don't see them doing that. The soonest I see the XBO reaching $250 is November 2016. |
Most of what you said I agree with. THe only difference is that Sony as a company was in a whole different dimension as far a profitability back when the PS2 launched. They didn't need the games division to turn a ton of profit to keep investors happy. They were buying up large buildings, not selling them. THe Sony brasnd meant something in all areas of electronics. THey also were dominating the US market. Today, not so much for any of those things.
So, their ability to do massive price drops to increase sales is less attractive to not only them, but to their investors. I agree that they will do price drops, to keep sales going and to keep the pressure on Microsoft. The problem is, they are no longer the giant pushing down on the little guy like they were back then. THey could drop the price $100 today, and Microsoft would drop the price of the XB1 to match it and do some pack ins to make it even better. At that point, Microsft would lose some on every console and Sony would too. What is to be gained by that? They end up at the sme 55% of the US market as they have now and make no money doing it...
It is near the end of the end....
