Sega: Sony likely needs substantial PS3 price cut

[Bodhesatva]

davygee said:

Bodhesatva said:

Or maybe the Japanese simply don't care very much about the console. Honestly, the PS3 is out of spare lives in Japan: it's lowered its price (Which was already lower than the US price), Japan has a solid HDTV adoption rate (Japan has the highest in the world), it's had major Japan-centric title released (Gundam Musou and now Folk Soul), and it faces much weaker competition from the 360 in Japan than it does in the US/Europe (where both the 360 AND the Wii are beating it), and yet the system just can't gain any traction.

At some point you have to stop looking for excuses and simply say that the system isn't doing well in Japan. The launch gate has closed, all of the maneuvering has been tried, but the PS3 just keeps falling farther and farther behind.

You can't just disregard the price of the system as being it's problem....of course it's a huge problem of the PS3.

The PS3 although cheap in Japan at around $400 is still double the cost of the Wii which is around $200.

The price isn't an excuse...it's primarily the reason IMHO. And this is why Nintendo are running away with all the gold. The PS3 isn't just expensive...it's ridiculously expensive in all 3 markets. Although if a PS3 was priced around $400 in the UK...they WOULD be sold out, seeing as that makes in come in at not much over £200...it is currently double this in the UK.

I absolutely agree that the price is a big factor for the PS3's troubles, Davey, I'm just saying it's already been addressed in Japan.

The price was lower in Japan than in EU/US to begin with, and it's already seen sales and markdowns to 400 dollars. So it has, compared to the US, effectively already seen two price cuts. This is hundreds of millions of dollars in losses we're talking about here, if not billions (if the system took off as we may want it to). You can't just keep slashing the price, hoping that sales will pick up.

As I've often said, Sony could drop the price to 150 bucks tomorrow in Japan. I absolutely agree that this would help sales; it would also bankrupt Sony in a matter of weeks, and that's the problem. As end users, we're not particularly concerned with such financial decisions as long as our system sells well, but for the companies involved and their shareholders, it's a huge deal. Sony has laid out their financial goals for the year, and any significant price drops in any of the three markets would dramatically effect those projections in an adverse manner. This is a much, much, much bigger deal than most of us realize or even care about, because we aren't Sony stockholders. We just want the system to sell better.

Using this same logic, Nintendo could drop the price of the Wii to 1 dollar tomorrow. Sound absurd? They'd be losing about the same money per Wii as Sony is losing per the PS3 right now, let alone after a price cut.

Here's the simplest way to put it, Davey: every price cut is a potential loss of hundreds of millions of dollars in profits. They've already marked the system down in Japan, to little effect. Are you really willing to lose hundreds of millions more in the hopes that this time, this price cut will be different, and it will turn the PS3 around in Japan? Again, as a system owner, I'm sure that sounds fine. As the actual executive in charge of handling the welfare of the company and its owners, not so much.