http://www.ps3center.net//news/5444/playstation-4-should-not-have-a-subscriptionbased-model/
You may have read the well thought out opinion piece by Sony-Gamer, who believe that Sony should have a subscription model for the PlayStation 4, which will allow people who cannot afford the outright cost to buy the console early. Whilst this story does have some valid points, there are disadvantages to this model which are not mentioned, so we thought we'd point them out.
The subscription model only makes sense towards the end of a console's life-cycle, because what it does is force people into a 2 or 3 year contract, when everyone else is moving on to new consoles. It's also a time when the manufacturing costs of the device are at their lowest and the reliability of the device is at it's highest. I believe that this is the reason why Microsoft waited for so long to introduce this pricing scheme. Why? This means that the risk to Microsoft is lowered because the console is cheap to produce, and Microsoft are most likely making a profit almost immediately.
Now let's look at what would happen if any company, Microsoft or Sony, used this model right from the beginning. Let's look at it in terms of the PlayStation 4. On the plus side (be sure to check out Sony-Gamer's positives as well), they would sell tons of consoles using this method and would receive $99 subsidy, possibly $199 immediately. On the other hand, this would mean that Sony would have to do a massive early production run, meaning they'd probably need three or four times as many consoles ready for launch than they would usually do. This would cost A LOT, and Sony take a massive hit (around $400) on each console sold for the next two full years AT LEAST. Of course Sony makes most of its money from royalties on game sales, and this would help, but it would take a long time for the company to make it's money back. This type of loss-leading would not make investors happy at all, and I guarantee share prices and stock value would drop immensely after the first quarter's financial results.
The second big issue with this is reliability. The length of the contract would most likely have to include free warranty, meaning if we get a repeat of the YLOD/RROD situation here, Sony would probably have to replace the console free of charge to every user.
The third big issue with this model is that Sony would actually lose money from it's hardcore fans. Whether you like it or not, the PS3 sold almost 4 million units in the first 4 months the console was on sale (that's at $599). If the PlayStation 4 released with a subscription based model at launch, it would need to cost around $45 a month at least to be slightly viable, but they won't be doing it at $15 a month unless they're charging you $300-400 for the console as part of the subscription. For all these reasons, I just don't see it happening until much later in the console's life-cycle.
DISCUSS!
