javi741 said:
It's not just about hardware profit. Any profits made by selling hardware is very small and in many cases in the past most console manufacturers were willing to lose money on hardware. Software sales is what matters the most to these console brands so companies are more than willing to lose more money on hardware with a price cut in order to get their hardware to more consumers who'd be willing to purchase plenty of software for it, which overall would still turn more of a profit than selling less units/software by not cutting the price for more profit on hardware. Price cuts are becoming less common nowadays however cause there's less competition amongst the big 3. Back in the 6th Generation when Nintendo,Sony & Microsoft directly competed against each other price cuts were super common since any price advantage any one of those companies had could've significantly shifted the tide when it came to marketshare and sales since they were all very similar competing for the same market. Sony's goal was to attempt to force Microsoft and Nintendo out the console business by making sure pretty much the entire market went only to Playstation for games which is why Sony kept dropping the price of the PS2 despite the already high sales it had. Microsoft and Nintendo were just trying to stay relevant and dropped the price of their consoles as soon as PS2 would receive a price cut. Nowadays that's alot less common since all 3 companies are not really as competitive anymore and are satisfied with their own market they created. Sony realized that they weren't gonna force Microsoft & Nintendo out the console business so they have less of an incentive to use price cuts and Sony is pretty much the only 3rd party system now that still cares about hardware sales and they're dominant in that department so they aren't as competitive as they were before. Microsoft doesn't care about hardware sales as much anymore to use price cuts, and Nintendo created their own market with their blue ocean strategy where people go to them for a unique experience that makes them stand out and doesn't directly compete with PS/Xbox anymore so price cuts aren't used as much by Nintendo. Also, all the companies realized what's a good price point for consumers and profitable price point for them based on their experiences with their prior consoles where Sony & Microsoft realized that its unnecessary to make a system super powerful and expensive to produce and sell their consoles at a major loss when most consumers don't care about specs and aren't willing to spend a ton of money just for high specs. So as a result in the two more recent generations Microsoft/Sony scaled back on offering high end hardware in order to price their consoles at a cheaper cost at launch and make the hardware more profitable, and since the launch prices of those consoles are much cheaper & profitable nowadays their isn't a ton of room for multiple price cuts to occur that would significantly increase sales. |
15-20 years ago maybe ... Nintendo and even Sony at least have likely gotten used to making large profit margins on Playstation and Switch consoles.
It's not that there's less competition, it's that's generally price cuts don't work that well. Nintendo massively slashed the price of the GameCube for example which did cause Sony to have to respond, but ultimately the GCN price cut surge only lasted a short while and really all of the companies got stuck making less on hardware for no real dynamic change in the hardware race. GameCube wasn't really able to compete any better with the PS2, even the XBox they couldn't beat with a $99 price.
Price cut is most effective when you are earlier in your product cycle and need to accelerate your userbase quickly to get enough users out there for software releases, like the panic price cut Nintendo had to make on the 3DS or if you've started at an extremely price point for weird reasons (like Playstation 3 being $600 basically 15 years ago because of the Blu-Ray disc drive).
If price cuts could push the XBox above the Playstation, Microsoft would do in a hot second, the problem is it wouldn't work and in the long run would just make them less money overall.
It's not worth losing hundreds of millions of dollars just to sell 2 million extra hardware units for 1-2 years. It's not a great business proposition. Could Nintendo do it? Maybe, but I suspect they are quite enjoying a $350 pricing tier, the profit margin of selling like even 12 million OLED Switches would destroy what they were making on even 20-22 million regular $299 Switch systems.
Remember when Sony probably sold an extra 8-10 million PS2s by selling them for $99.99-$129.99 for years on end? What does it tell you when they have no interest in doing that with the PS4? I'm sure they could if they wanted to. Well at least they could have a $199.99 PS4 model probably, maybe $169.99. I'd buy probably one just for the basement TV.
Last edited by Soundwave - on 27 January 2023
