@wlakiz

It really depends on what you mean by a increase. There are two purposes for price cutting to spur on genuine sales momentum, or to allow for stock to be cleared out. Since you are keen on a example, and I really shouldn't have to do this, because it is kind of obvious. The N-Gage was a device remarkably enough quite similar to the Vita except that it was a combo game/phone. It was even in the same market as the Vita, but competed against the Vita's own predecessor. This is what is called a apt example as in I am comparing a expensive portable gaming device against another expensive portable gaming device.

The N-Gage retailed at three hundred dollars, and sold a few thousand units its first week on the market. Within a few weeks it even saw its first retail price cut. When a number of specialty retailers slashed the retail price that they were charging for the device by a third, and that was the first of many to come. As the device quickly moved into clearance mode. Even though the device went from selling a few thousand at launch to selling three million units in the end. The majority of those sales were pure clearance. Before all was said and done you could buy a N-Gage at retail for under fifty dollars.

There are a lot of reasons that people believe the product failed, but the truth of the matter is it still failed even with severe price cuts. The reality is that the competition just out competed this product handily. Even when this device was being sold at severe discount, and had a serious price advantage consumers really didn't pay it no mind. Most of the sales were pure trash sales. You are right in that you can sell almost anything if the price is low enough, but that doesn't magically make the product viable.

You still aren't quite getting the difference between market share and install base. This isn't about percentages at all. The point is that a product needs a bare minimum of users for it to be a feasible market to develop for. Developers are in the market to make money, and if the costs of developing a game for a platform exceed the potential profit from sales. Then it isn't worth developing for that platform even if it is under supported.

On the whole I think you are trying to make the case for a equilibrium developing on the platform, but even if the whole of the platform dwindles to just a handful of development studios. That in itself creates a new problem. The owners of the platform aren't beholden, and they aren't captive either. As the supply of available games decreases so to does their own investment in the platform. A small install base effectively becomes smaller. As fewer of those owners actively use their device. Most will have made the transition to a better supported platform.

This isn't the chicken and the egg we are talking about. What we are talking about is will the platform go into a very real death rattle if its sales don't pick up dramatically in the next few months, and since people say that price cuts will do that over and over again. Well the question is can this cure actually do anything. Don't tell me it will. Tell me how it will.

So essentially you answered your own question?

You admit that with a price cut N-Gage managed to increase its install base to 3-million and you also stated that there is a install-base threshold that game console must hit to be worthwhile. Putting your two statements together, just yields: Price cut would increase the install base to the threshold that would intice developers to develop for.

I wouldn't say I agree with your reasoning but lets take a deeper look in that logic: You imply to have a foumula to determine the success of a console: If console A reaches  X number of sales in T time then A is successful or in good health. Also because you claim this is not a percentage (relative), so this X and T is a const for any console. I am curious what this magical X and T number you have in mind? And since you want someone to prove you wrong, all I have to do is find a console product that is deemed 'successful'/good health that didn't reach this magical X and T threshold number right?

Like I said, my definition of a console being healthy or ill is determined their growth. As long as Vita is still growing in marketshare, I don't consider it to be 'ill'. With that in mind, I don't believe vita is dying and in need of a kneejerk 'fix'. Sure, the sales can be better, but gradual improvements in certain areas would achieve that goal and catayst the sales.

@wlakiz

Developers lost faith in the N-Gage shortly after its launch. Most of the products sales came after the platform had been abandoned, and that three million in sales even then took years to achieve. It is the difference between cutting the price to generate sales, and cutting the price to just get rid of something. Retailers ended up selling the device with no intention of reordering it to refill their stock. Which is entirely reasonable, because they were losing money on the device.

In the end the device basically ended up changing its class. It went from being a gaming handheld. To being just a toy. Like the pocket poker games you find in the toy sections in most stores. If you would qualify that as being a success. I really can't help you with that. Rest assured though that Sony wouldn't want their expensive piece of kit there, and being sold at thirty bucks. At that point though they would just dump a few dozen preloaded games onto the machine, and would be done with it totally. At that point they sure as hell wouldn't be making any more of them either.

Anyway you cannot use a example that disproves the point to prove the point. The increased sales from the cuts that were in fact clearance pricing didn't result in a critical mass. Thus the product failed out of the market. The increased sales that were pathetic in themselves. Didn't result in a viable product. Now if you want it all expressed mathematically I think I can help you with that. You are going to have to bare with me on this I do most math in my head.

O=overhead, A=install base, B=sell through, P=profit, R=retail price

(A x B)R - O = P

For the purposes of this demonstration. We will use a install base of four million users. We will project a sell through of twenty percent. We will treat the standard retail price as a constant, and since we are imagining a sell through of twenty percent. We will say this is a AAA title with a budget on the low end at twenty million dollars. Covering the development, the packaging, the licensing, and advertising. This isn't conservative by the way it is a gift. This is like the perfect storm that I am giving you, and the vast majority of games won't ever get this.

(4,000,000x.20)40-20,000,000=12,000,000

According to this site only one title for the Vita has actually achieved sales close to this, and it was both bundled, and has not retained its initial launch price. Only three titles have sold over five hundred thousand units. If we plug in the sales for those other two.

(500,000)40-20,000,000= 0

By the way both those titles were bundled as well. I mean nothing is enjoying success unless it is getting bundled. Unless developers are being incredibly frugal with their money. Most of the games on the platform have been losses for these developers. The Vita is a really dangerous platform to develop for, because the margins are that slim. By all means run the numbers backwards and see how low a games budget has to be for the time and energy to be worth it for a developer, and ask yourself why they would put up with those kind of margins. When there is better money to be had just about anywhere else.

If you can't be bothered, and just want what would equate to being a healthy install base for the platform. I would have to say around ten million. That is high enough that games can have both healthy budgets, and would stand a decent chance or reaching the needed sell through. As it stands right now the budgets have to be really low for a game to be profitable, and that means games that would in the end defeat the purpose of buying the device in the first place.

I don't think the Vita users on these forums bought the device to play 2D dungeon crawlers, or to play simple puzzle games. They had to be thinking they were willing to pay that premium to play console level games. Those kinds of games have big budgets, and even bigger appetites. Pretty soon they are going to stop coming if the money isn't there.

N-gage is your example, you can throw in whatever logic you want to justify your point but the fact remains that price cut resulted in sale improvement. I am not interested in what you think N-Gage became; I am just interested in soldifying the Supply x Demand mechanism with respect to product price and that mechanism tells us that price drop = increase in demand.

"you cannot use an example that disproves the point to prove the point"? uhh.. So you are saying that you are refusing to look at case studies that contradicts your logic?

Sure, you can propose that N-gage's price cut didn't result in the install base reaching critical mass and hence the console met its demise but what proof do you have that Vita's price cut won't result it into reaching critical mass? After having a 40% price cut, 3Ds sales boosted from 50k -> 300k and maintained a steady 170k/week; it ended up selling a 1.5 million on christmas week that year.

Apart from the awful formula where did you pull the $20 million ?

http://ca.ign.com/articles/2006/05/06/the-economics-of-game-publishing

A PS3/Xbox game cost around 10 million, I would estimate a vita/3DS game have similar cost as a PS2/Xbox game of $3-5, even if let you double the 'overhead' cost for marketing and other fees, the overall would just be around $10million. Now going back to your formula, to break even: You would just need 250k sells.

11 games hit that point for vita and 57 games for 3DS. Putting that into perspective, 11/147 = 7.4% games already broke even for vita while 3ds 15.1% of the games broke even.  Given the current install base, I wouldn't say Vita is too bad.

I don't know why you keep assuming the demograph of the vita players to be the same as PS360. I am perfectly content playing a low budget dating sim/dungeon crawler game (P4G) and judging from the sales, a lot of other people are similar too.

A vita price cut will not bring much if they dont have some must have games on it. The Effect would be minimal.

You need to calm down and just let it go. Your health is more important than this.

@wlakiz

I hope you understand that some sources are more credible then others. In this case your using a IGN article from all of seven years ago, and it was the result of a unscientific poll. Which means the information amounted to next to nothing back then, and absolutely nothing today. If you want reviews, previews, and release dates sites like IGN are perfectly fine as sources. If you want deep and thorough analysis however. You should be looking at sources like Ars Technica, or Develop. This shouldn't even be a matter up for debate, but I am sure you are going to try.

Anyway I did manage to find one relevant source for your claim. Which was a more reputable site, and at a date far less divorced from today, but it is still three years old at this point. In early January of 2010 Develop said that the cost of a single platform developed game cost an average of ten million dollars, but that doesn't even come with qualifiers attached. It probably means that shovel ware costs are being factored in as well as write off development.

http://www.develop-online.net/news/33625/Study-Average-dev-cost-as-high-as-28m

However if you want a more realistic overview of game development costs. You should probably use the Wikipedia article, and then you can branch out from their through sources.

http://en.wikipedia.org/wiki/Video_game_development

How did I reach my figures. Simple I have been paying attention. Every time there is a article on the subject I take some of my precious time and read it. Costs have been going up for quite some time, and I am not just talking about the coders in my development costs. I am using it as a catch all. Which I doubt most are doing anyway. Beyond the coders I am including development kits, platform licensing, software licensing. Marketing both physical, and advertising. Packaging, media, and the retailers cut of the sales price. Even costs that aren't technically development are being factored in there, or did you want a chalk board worth of variables to sift through.

As for your last comment I am assuming that people who bought the Vita had some common sense. What are you assuming. They just spent one hundred or two hundred dollars that they didn't need to spend. Only to spend thirty dollars more for every game that they are going to play on the device. I am just assuming that they are reasonably intelligent people who wouldn't want to feel like they got robbed. It was advertised as console gaming on the go, and it kind has to live up to those standards. Otherwise it is just a broken promise.

Well considering your source didn't actually provide the link to the study, I don't find it having any more credentials than IGN. Until we see how they 'average' it out, I am suspecting that the numbers are highly skewed due to 1 or 2 high cost production.

If you want to play the source game here is another article source about developement cost:

http://www.1up.com/news/3ds-games-cost-millions-develop

comes with a source: http://geimin.net/da/expense.php which you can translate yourself!

In any case, this developement studio only put 3DS development to be $600,000 - $1.8 million USD. Maybe its a regional thing, where japanese studios have a smaller developement budget than american studios but that doesn't change the fact that developers can produce good selling games at low developement cost. In honesty, I don't see Pokemon or mario bros or wii-sport being a 60million dollar production but it garners millions of sales so that makes them AAA games.

Also, I don't know why you are using a 'catch-all' cost in the first place. Administrative cost are often non-static and is based off how much you ship/sell. Thus, I am still calling your 20million dollar cost to be unrealstic. Most game developement studios aren't even 20million dollar companies to begin with.

I feel more ripped off and robbed playing a $60-10 hour-so-called-AAA-FPS game on PS360 than a $40-100+ hour dungeon crawler-rpg. As long as the game provide me with long hours of entertainment, I could care less if it had a $60 million dollar production budget or a $600 000 budget.

@wlakiz

The reason that Develop probably didn't provide a link is, because there wasn't a link to begin with. They either paid for the information, and used a sample of it with permission, or they were just given permission to use that data. M2 research is a for profit market research firm. Just like another market research firm you may be more familiar with called NPD. If you want the full report you can get it. Granted you are willing to pay the four thousand dollars they are charging per report, and are willing to honor their terms of service.

Seriously reputable market research groups carry the gold standard. There is a reason other companies pay them handsomely for their information, and that has everything to do with the quality of their work. There is a reason that major mainstream media outlets use M2 as both a source, and their analysts for commentary. I gave you the horses mouth here. The only better data I could get you would be to pay for it from one of these firms.

The reason I used it as a catch all was, and I think I explained this already. To keep the math rudimentary. I didn't think we really needed to calculate all the minutia out. When the point could be proven with broad strokes. I also think I explained why it is good for a portable that is claiming to be a console on the go. Should probably make it a point to provide console level gaming. If the product isn't living up to its promise, or its own pitch. Then it is actually a rip off. There isn't a reason to spend hundreds of dollars more for any product that provides the same experience as a cheaper product.

To put it mildly if that is the direction the Vita is heading. Then the situation is actually worse then I thought, because gamers are fairly intelligent. They know what games are worth full retail, and what games aren't. Look I understand if you like to play generic dungeon crawlers. The problem is they are cheap, and already plentiful on other platforms. Begging the obvious question of why buy the Vita to play them.

Phablets will earn their place in the market (5"-8" tablets). If Vita can let people know that it can be used for internet tasks just like a 7" tablet, then people might get interested in it.