pezus said: osed125 said: pezus said: This could still mean that they'll be selling PS4 at a loss btw. Just that they don't expect to lose $400 on every PS4 like they did with PS3 . A $100 loss per PS4 and software that makes up for the initial loss is the way to go. $100 loss? That's insane, you will need to sell 14 third party games or 4 first party games per console to recover that money (based on this, for first party it will be $27 per game and $7 for third party games (platform royalties)). Although I don't know who gets the $7 from "Returns", most likely the publisher, which in that case it will be 3 first party games. Of course. They do seem to be planning a minor loss. The software will help make the loss less than $50 per system. Actually, based on this Sony would get $34 per first party game (Publisher+platform royalty) if we assume the other prices are constant. Two first party games per console would go a long way to minimise the loss down to basically nothing and then you add a few 3rd party games to get even closer to zero. Edit: And if that returns goes to Sony then they'd only really need 2 first party games per console and they'd lose less than $20.

For first party I do not think it works like that.  The cost of developing the title has to factor in or that game sell as well.0

Even if they could take it, they wouldn't. Look a Microsoft with the next XBox. You think they'll take $200 loss just because they have deep pockets?
They won't. Everyone wants to be profitable or as close to it as possible.

Nintendo ended up doing a huge $80 price cut. No one could have anticipated that. Sony isn't dumb enough to follow them in their current financial state. Sony can't even compete with the 3DS right now even if they did price match it.

We'll be lucky to get a Vita price cut this holiday. Sony seems to be focused on being profitable with Vita, not gaining marketshare. They'll probably do the same with the PS4. It'll retail at a reasonable price and they'll stick to it for a while.

I agree with everything except the "reasonable" part.   Thta a highly subjective word and we still ahve no idea what the price will be.   Given Sony's intention on reducing day 1 losses, your $499 max projection may be plausible and I'm not sure how many want to call that reasonable.

PS4 is a high-end product. I'd say $499 is reasonable for what you'll be getting. $450 would be generous of Sony and $400 would be a steal. Let's not forget that next-gen consoles aren't targeted at the mainstream. 

It all depends on the HDD size, whether or not a game is included..etc..etc. 

osed125 said: pezus said: This could still mean that they'll be selling PS4 at a loss btw. Just that they don't expect to lose $400 on every PS4 like they did with PS3 . A $100 loss per PS4 and software that makes up for the initial loss is the way to go. $100 loss? That's insane, you will need to sell 14 third party games or 4 first party games per console to recover that money (based on this, for first party it will be $27 per game and $7 for third party games (platform royalties)). Although I don't know who gets the $7 from "Returns", most likely the publisher, which in that case it will be 3 first party games.

Two words: Digital Distribution. (+ you aren't considering subscriptions or accessories.)

I think we'll see a $425-$550 range for PS4 to start. It's a much cheaper project than PS3. They'll lose a little, but not like the hundreds per unit on PS3. It's a much better strategy than PS3.

The razor/blade strategy has never worked really well in gaming. Sony and MS wouldn't even be in gaming if they weren't part of a larger corporation - the gaming divisions on their own would have gone bankrupt long ago. Consoles can launch at small losses but they need to get their costs down to profit quickly. The razor strategy can move systems, but it doen's make money.

The model that does seem to be working in some cases is the cell phone model, with subscriptions for Live or WoW biringing in lots of cash. This scares me, as it's a great way for companies to milk money out of us and we don't even notice.

Not gonna happen. Isn't the Wii U still selling at a loss? 
Another thing to consider....the PS3 and 360 will be dirt cheap this holiday. They're still very much relevant.

Max King of the Wild said: osed125 said: pezus said: This could still mean that they'll be selling PS4 at a loss btw. Just that they don't expect to lose $400 on every PS4 like they did with PS3 . A $100 loss per PS4 and software that makes up for the initial loss is the way to go. $100 loss? That's insane, you will need to sell 14 third party games or 4 first party games per console to recover that money (based on this, for first party it will be $27 per game and $7 for third party games (platform royalties)). Although I don't know who gets the $7 from "Returns", most likely the publisher, which in that case it will be 3 first party games. Two words: Digital Distribution. (+ you aren't considering subscriptions or accessories.)

Couldn't find anything about the anatomy of a digital game, but with the current graph the only thing that is not present in digital games is the "Cost of goods" which is $4. Digital games are still $60 so I don't know where the extra money goes. Let's say that instead of $7 for third parties and $27 for first parties it will be $17 and $37.

So it will be 6 third party games or 3 games first party games, not that big of a difference. 

Accessories do play a big part of profit for gaming companies, but I don't know what is average the attach rate for new consoles and accessories. 

osed125 said: Max King of the Wild said: osed125 said: pezus said: This could still mean that they'll be selling PS4 at a loss btw. Just that they don't expect to lose $400 on every PS4 like they did with PS3 . A $100 loss per PS4 and software that makes up for the initial loss is the way to go. $100 loss? That's insane, you will need to sell 14 third party games or 4 first party games per console to recover that money (based on this, for first party it will be $27 per game and $7 for third party games (platform royalties)). Although I don't know who gets the $7 from "Returns", most likely the publisher, which in that case it will be 3 first party games. Two words: Digital Distribution. (+ you aren't considering subscriptions or accessories.) Couldn't find anything about the anatomy of a digital game, but with the current graph the only thing that is not present in digital games is the "Cost of goods" which is $4. Digital games are still $60 so I don't know where the extra money goes. Let's say that instead of $7 for third parties and $27 for first parties it will be $17 and $37. So it will be 6 third party games or 3 games first party games, not that big of a difference.  Accessories do play a big part of profit for gaming companies, but I don't know what is average the attach rate for new consoles and accessories.

The cost they are saving on material, production, shipping, and retail cut are a lot greater than the cost of keeping up servers. Also, I wouldn't be surprised if Sony gets the retailer cut for 3rd part sales of DD. Another thing is Sony gets to dictate the price on their store and they tend to stay higher price longer than hard copies.

I also wouldn't be surprised if we see a some $70 games. (though I hope not)

Point? I think $100 is doable but that would be the max I'd expect.