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Forums - Gaming - Theory on why Sony couldn't drop price on the PS4 last holiday

mjk45 on 29 January 2015
SWORDF1SH said:
Zkuq said:
Makes sense, but then again, so does wanting to make a bigger profit. Sony is currently in a very strong position and they can profit from it directly, so they must be wanting to do so.


True but you have to also balance it out.

They know how many games the average consumer buys, they the percentage of consumer that sign up to PS Plus. They know what he average consumer spend on movies from their store and PS Now. Basically they know how much profit they can gain after they sell a PS4.

They then have to weigh up if dropping the price to make less profit per unit will bring in enough profit with the increased install base to make it worth it.

eg.

PS4 sells 1M at $400 for the year (small number to keep it simple). Sony make $50 profit per console, average consumer spends x amount to profit Sony $50 a year= So they will make $100M for that year.

PS4 sell 2M at $350 but make no profit per unit. Average consumer spends x amount to profit Sony $50 a year= $100

That extra install base will also continue to profit Sony $50 a year per unit sold. That 1M extra gained from price cut will give Sony $250M profit over 5 years for the sake of losing $50M on price cut.

It's a little more complicated than that but it shows that selling for less can benefit you.

At the moment, I don't think they can even entertain that price cut decision because of the lack of units.

Ther are many  assumptions made when talking the benifits of a holiday  price cut , yes there are benifits just not of the scale that some people think , it comes across like all the people who bought the XB1 wouldn't have if it wasn't discounted against the PS4 , when historically going back through previous holidays sales for the Xbox brand have done similar high numbers , so due to the nature of the season it seems logical that a large percentage would have been bought at parity and heavy promotion of various software deals would have taken care of holiday sale factor.

The part about increased software is pretty similar to the above.
even if you just use buyers swayed by the price cut and not the buying season. a lot of these figures seem to assume that one game = the fifty dollar cut and don't factor in what games came with the console also they make it sound like every one buys gold when it's more like 60% .



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Protendo on 29 January 2015
mjk45 said:

when historically the previous holiday sales for the Xbox brand have done similar high numbers 


Which doesn't take into consideration that PS4 was sold out making the Xbox One the only choice for many.

I don't mind playing devils advocate, but if we are going to play devils advocate might as well include the kitchen sink.



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mjk45 on 29 January 2015
Protendo said:
mjk45 said:

when historically going back to previous holidays sales for the Xbox brand have done similar high numbers 


Which doesn't take into consideration that PS4 was sold out making the Xbox One the only choice for many.

I don't mind playing devils advocate, but if we are going to play devils advocate might as well include the kitchen sink.

My mistake I should have added an s to holiday  I was talking about more than just 2013/14 that's why I said Xbox brand .
rereading it I added going back to previous holidays to make it clearer.



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Protendo on 29 January 2015
mjk45 said:
Protendo said:
mjk45 said:

when historically going back to previous holidays sales for the Xbox brand have done similar high numbers 


Which doesn't take into consideration that PS4 was sold out making the Xbox One the only choice for many.

I don't mind playing devils advocate, but if we are going to play devils advocate might as well include the kitchen sink.

My mistake I should have added an s to holiday  I was talking about more than just 2013/14 that's why I said Xbox brand .
rereading it I added going back to previous holidays to make it clearer.

History has proven that brand value should not be used as an indicator for a new consoles success.

SNES/N64
Atari 2600/Name it
Genesis/Sega Saturn
Wii/Wii-U
Playstation 2/Playstation 3



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mjk45 on 29 January 2015
Protendo said:
mjk45 said:
Protendo said:
mjk45 said:

when historically going back to previous holidays sales for the Xbox brand have done similar high numbers 


Which doesn't take into consideration that PS4 was sold out making the Xbox One the only choice for many.

I don't mind playing devils advocate, but if we are going to play devils advocate might as well include the kitchen sink.

My mistake I should have added an s to holiday  I was talking about more than just 2013/14 that's why I said Xbox brand .
rereading it I added going back to previous holidays to make it clearer.

History has proven that brand value should not be used as an indicator for a new consoles success.

SNES/N64
Atari 2600/Name it
Genesis/Sega Saturn
Wii/Wii-U
Playstation 2/Playstation 3

I have the feeling you have read my reply the wrong way since i was replying to the effect of MS's price cut this holiday  and how people in my opinion over play certain elements related to that when talking about what these sales mean to the company , and how they add them up , like every console sold constitutes new sales that would otherwise not have happened, then show a bigger benifit than there is by way of increased software and gold, without taking into account the holiday season itself . my mention of previous high sales figures was only to show that the holiday time of the year drives high consoles and people can't place it all on the back of the price cut nothing more.

So you see it had nothing to do with my take on brand power and history

 

 



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Protendo on 29 January 2015
mjk45 said:

I have the feeling you have read my reply the wrong way since i was replying to the effect of MS's price cut this holiday  and how people in my opinion over play certain elements related to that when talking about what these sales mean to the company , and how they add them up , like every console sold constitutes new sales that would otherwise not have happened, then show a bigger benifit than there is by way of increased software and gold, without taking into account the holiday season itself . my mention of previous high sales figures was only to show that the holiday time of the year drives high consoles and people can't place it all on the back of the price cut nothing more.

So you see it had nothing to do with my take on brand power and history

 

 


That's very possible  English is not my native language.  The last response reads to me that you are including the brand.



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Playstation_prophet on 29 January 2015

They sold multiple buildings!

The reason why they didn't drop the price is because they didn't have to. If you're a member of these forums, you know that. Nice undercover troll topic.



mjk45 on 29 January 2015
Protendo said:
mjk45 said:

I have the feeling you have read my reply the wrong way since i was replying to the effect of MS's price cut this holiday  and how people in my opinion over play certain elements related to that when talking about what these sales mean to the company , and how they add them up , like every console sold constitutes new sales that would otherwise not have happened, then show a bigger benifit than there is by way of increased software and gold, without taking into account the holiday season itself . my mention of previous high sales figures was only to show that the holiday time of the year drives high consoles and people can't place it all on the back of the price cut nothing more.

So you see it had nothing to do with my take on brand power and history

 

 


That's very possible  English is not my native language.  The last response reads to me that you are including the brand.

I'll do another explanation for you I was talking about how a price cut can't be attributed to all sales because the holiday period sees a large increase regardless.

The reason i brought up history was to show that there has been console sales from MS on par with this year  without the aid of a price cut
Me using the xbox brands holiday sales was simple  who else would you compare MS latest console holiday sales too when looking to see if the numbers where mainly due to seasonal factors or the price cut.



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SWORDF1SH on 30 January 2015
arcane_chaos said:

to your first paragraph: the answer is why do they need to cut the price when the demand for the Ps4 is so High? The PS4 is selling near Wii/PS2 terrritory and neither of those cut their price despite beacause of having such a demandng lead over their competition in their first year(discounting BF) why cut the price(temporarily) when they would still sell the same amount in just a timely manor and reap more profit. If we use VGC numbers: the PS4 has a 7.5 mil lead over XB1 and a 8.5 mil lead over Wii U, there's simply no need for Sony to cut the price. through out the year despite the Titanfall launch/ $400 XB1 SKU/ Mariokart Bundle/ Super Smash Bros/ the Ps4 still came up top(WW basis). Sony doens't need to lead in every market to sustain their dominant lead, sony would gladly take worldwide market share over simply america market share which MS and the XB1 are trying to do, and even if they somehow did, there is no way MS could close a 7.5 mil lead with america alone as this gen will much closer to Sony's favor.

for the second; Why are you so fixated on the fact the Sony should've sold more if____ it simply didn't need to, Sony won 10 out of 12 months of 2014 NPD(correct me if I'm wrong) XB1 had to cut the price to stay competitive in the only market it still has a chance(maybe UK), Sony did very well during the holiday season, just beacuse the XB1 did better doesn't mean Sony should've cut the price, every system has it high and lows if the big 3 cut their price everytime one of them had a burst in sales all three would be in the red. Sony beat the XB1 during TF and the $400 SKU months, it took MS to slash all bundle  another $50 with free games and a $329.99 BF Deal to win Nov. and Dec. if we look at amazon/best buy/gamestop which recently have become the barometer for predicting the NPD the PS4 is leading the pack for Jan despite the XB1 again going back to $350; if Sony outsells the XB1 10 out of 12 months and still mantains their lead I'm pretty sure they will have no problems with that.

when we say the Sony and PS4 didn't need a price cut, it didn't need it...

Trust me, I get what your saying. And in no way am I'm saying that couldn't be the reason. I understand they are selling more worldwide and if you look at it as simple as that then you will say they don't need a price cut.

SCE has many divivions that mirco manage specific areas, SCEE for Europe, SCEA for America etc. Now SCEE are happy to sit back because they know there is no need cut price. SCEA on the other hand got outsold. Yes ok, the PS4 is still ahead by 500k in the US and will continue to extend the lead up until the release of Halo but they were outsold by 600k in 2 months, if they had been more competitive they could of won it by the same margin. I'm not even talking about a huge reduction that we saw with the X1. I mean if they could of had the TLOU and GTAV $400 bundles throughout the holiday they could of doubled what the X1 was selling(note: without these bundles the PS4 could of had it's lead wiped out completely). Those bundles were huge. Like I said, $380 + TLOU could of been enough to beat them. But they didn't and instead it probably cost them a 2M lead they could of had. A

Not only does each unit bring in more revenue through movies, ps store, ps now, ps plus, software and peripherals but also the bigger the gap the better bargaining chip for 3rd party exclusives/content.

Again, them being tight on stock is a theory on no price cut. I'm not saying this is fact or that I 100% believe it. I also believe that it could be that Sony didn't feel the need for a price especially with some exclusives around the corner. But Sony could of put anoher nail in the X1s coffin and this missed the chance.



SWORDF1SH on 30 January 2015
mjk45 said:

I have the feeling you have read my reply the wrong way since i was replying to the effect of MS's price cut this holiday  and how people in my opinion over play certain elements related to that when talking about what these sales mean to the company , and how they add them up , like every console sold constitutes new sales that would otherwise not have happened, then show a bigger benifit than there is by way of increased software and gold, without taking into account the holiday season itself . my mention of previous high sales figures was only to show that the holiday time of the year drives high consoles and people can't place it all on the back of the price cut nothing more.

So you see it had nothing to do with my take on brand power and history

 

 

But the X1 went from selling half what the ps4 was selling to outselling doubles the ps4s in the usa. surely thats due to price cut