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Intrinsic on 24 October 2018
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Shadow1980 said:


I'm still doubtful of the effects of permanent price cuts to have a massive effect. After correcting for the effects of system-sellers and other short-term boosts that affected only a single month, it appears they've made modest impacts. The initial cut to $350 for the PS4 produced a roughly 13% YoY boost for the Jan.-May period of 2016, with the boost completely vanishing by July (which was down significantly from July 2015; its effect on June cannot be determined because of Batman: Arkham Knight's impact on sales in June 2015). 13% for a five-month span is not a huge boost. The Slim and corresponding permanent drop to $300 produced only a 10.25% YoY increase in weekly average sales for the Jan.-Aug. period of 2017 (June 2017 was excised from the data set because of the short-term boost of the $250 Limited Edition Gold PS4). Again, that's quite modest, especially compared to price cuts from previous generations, and, interestingly, most of that YoY growth was from July (+34.8% YoY) and August (+18.75% YoY) for reasons I cannot be sure of (perhaps a drop in 2016 sales ahead of the Slim's launch). The Jan.-May period of 2017 was up a meager 3% YoY.

 

Now, a cut to $199 for the PS4 Slim (and possibly XBO S), if it's even in the cards, would be a deeper price cut than any of the others, and thus potentially capable of more. However, as I mentioned, no price cut that deep has come this late in a generation before, and, when taking into account how late we are in this generation and other factors like market share and the historical effects of late-gen price cuts, I'm skeptical of the ability of such a cut to create significant sales growth. I'm even more skeptical that we'll even see it in the first place. Historical precedent doesn't bode well for any of it. I think there would be more to gain sales-wise from cuts to the Pro and X1X, assuming Sony & MS decide that it's in their best interests to do so at this juncture.

Yes, I agree that smaller price drops don't really do that much in the long term, but I think thats expected. How many people really are holding off from buying a console because of a $50 difference in price? The way I see it, there are a shit ton of budget buyers that would prefer to buy at $150 but are willing to go up to $199. Then there are a fewer number of people whose sweet spot is $199 but are willing to do $249 but that larger number of $149 buyers are not going to go up $100 more.

Same can be said of all price drops really. If sony drops to $199, they are effectively getting the $150, $200 and $250 crowds all at once. Thats why that will have a bigger impact than a smaller drop in price.