There are no doubt a tonne of consumers, young and old, who are dying to get their hands on a PS4, but they just can't afford anything more than $249 or $199. That's also another reason why the PS3 was only able to sell as many units as it did, because it never really got cheap enough to cater to the cash strapped audience. By hitting a $50 to $100 cheaper entry point, PS4 could capture anywhere from 10-50 million more consumers by it's EOL. This also doesn't take into account the flat out super late adopters, SKU replacers, upgraders and collectors, competition switchers and PS exclusive justifiers, etc.
Even if PS could only get the manufacturing costs down to $249, it should be worth it to sell PS4 for $199 and take the $50 loss. Not only would your console be affordable to a whole new market of buyers, but it would have an absolutely massive library with many must have games. GOW for example, which would likely be down to $20 physical at that point in time and part of the greatest hits. Software is where the money is made, and subsidizing $50 means by the purchase of the third game, PS is making money. Most of these customers, especially the younger audience, ends up being a gamer to some degree, who will likely be partially swayed to purchase a SNY product in the future.
There is another side to this however in terms of profit and membership. Consumers who are forced to wait for a $199 model, likely don't have great internet, if they have high speed at all. This means it's more unlikely they will be buying from the PS Store, paying for PS Plus, and no online play means no spending money on MTX. It also means it's more likely they are going to buy less, cheaper games, and finally, they won't really be tied much into the ecosystem, aside from future hardware BC, so they very well could jump ship next gen, especially if the competition has the lowest priced hardware.
Same goes for XB for the most part, especially with it's push of affordable services. The only big difference I see there is that XB likely wants to put this gen behind them, so pushing their "One" branded hardware may not be the best idea. The fact that the SAD edition is what it is overall, makes me wonder whether MS thinks this as well, and is looking to progress starting next gen with a fresh proper kick off. If there is truth to this, it's all the more reason for PS to push for a super cheap PS4, so that these customers will hopefully prefer to buy a PS5 when the time comes in the future.
*There is also the fact that poorer people are typically going to respond better to being catered to as compared to wealthy people, so you've in a way bought their respect and possibly loyalty. There is also the point that these people, may very well always be on the poorer side, and it may take them a very long time to save up enough for another console, so once you've got their purchase, they are in a way tied into your ecosystem and making you some extra money buying your cheaper last gen games, which at the very least means they aren't tied to the competition at all.Last edited by EricHiggin - on 26 April 2019