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PS3 Price Cuts vs. Profitability

July 8th, 2009 1 comment

ps3-close-up

While rumors run rampant about a Summer price drop on the PS3, in a recent Reuters interview Sony’s CEO, Sir Howard Stringer when asked about the logic of not cutting prices said “I (would) lose money on every PlayStation I make — how’s that for logic.” Sony is already losing money on each PS3 sold. Since the PS3’s launch these losses have totaled $3.3 Billion. Yes that’s billion with a “B” and while Stringer’s comments are not an outright denial of a planned price cut, it doesn’t look like the price is dropping anytime soon.

next-gen-systems

Sony’s in a tough spot right now. Were in the middle of the worst economic conditions since the great depression, the PS3 is the most expensive system on the market, developers want a larger PS3 install base, and consumers are holding out for lower prices. And while Sony has been optimistic in the past about the success of the PS3, that optimism seems to be waning. In their most recent annual report Sony says “Even if the platform is ultimately successful, it may take longer than expected to recoup the investment, resulting in a negative impact on Sony’s profitability.” These issues and a steady stream of leaks, such as the PS3 Slim rumored to be coming out the end of the Summer only gives consumers more reason to take the wait and see approach.

So Sony is left with the problem of balancing selling more units without loosing more money in the long term.

ps3_bundle

Sony’s answer for this round: A software bundle. This is something common in Marketing used to change the perceived value of the product being sold. And Sony seems to be going all out with this one: 80GB PS3 with Metal Gear Solid 4 and Killzone 2, two of the systems most popular titles, for $399 which is the same price as the current 80GB PS3 on its own. This effectively saves the end consumer $90, bringing the system cost pretty close to the cost of the Xbox 360 Pro Console System, assuming you want these two games and would purchase them anyway.

While this may not be the price cut everyone is hoping for Sony is trying to close the gap between the pricing of the Xbox 360 and PS3, while still focusing on the long term profitability of the line and even if the rumors of the PS3 slim are true this still seems like a pretty good deal. Will this move work? Only time will tell.

I would love to hear your comments. Let me know if this new bundle will make you more likely to purchase the PS3, if your still holding out, or if your just not interested.

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The Xbox 360 Meets Social Networking

June 18th, 2009 2 comments

xbox_and_social_networking
At this years E3 Expo Microsoft announced that the social networks Facebook, Twitter, and Last.fm will become part of the Xbox Live experience. Mark Kroese, General Manager, Entertainment and Devices, for Microsoft Advertising said in a recent interview that the Xbox is three things; it’s a gaming console, a entertainment service, and a social network. Mr. Kroese went on to say that the combination of the Xbox Live community with these social networks makes the Xbox the worlds largest social community.

Well it didn’t take long for the media to jump on the bandwagon. Advertising Age recently ran a article “How Xbox’s Social Strategy Could Change Gaming Forever.” and while I must admit that I was somewhat excited to see these services added to Xbox Live, I see this as nothing more than a first step in what will likely be a long process if it is to truely change the way we interact while playing games.

At the moment all we are really getting is a version of these popular social networks on the Xbox platform. For these services to take off and add value to the gaming experience one of the biggest obstacle that must be overcome stems from the reason users turn on their gaming consoles in the first place, to play games. A similar situation happened with when advertisements were first launched on Facebook. Not that long ago the ad industry couldn’t stop talking about the size of Facebooks network and the opportunities it would open up for advertisers; however, in the end people did not pay much attention to the ads because they were too busy socializing with their friends.

In the end, for social networking to really change gaming, the gaming and social networking industries will need to rethink how people interact while playing games and integrate social networking services around the idea of gaming, not merely adding existing social networking services to another platform. Only when this occurs can we truly say that social networking has changed gaming forever.

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E3 ’09 – It’s All About Progression

June 8th, 2009 19 comments

e3-logo

The E3 Expo, held at the Los Angeles Convention Center this past week has concluded and I must say that the show did not disappoint. Of all the great new games and technologies I was lucky enough to see, there were two items that I felt stood out above all the rest.  What is it that made these items so interesting to me? It was their potential for progressing the gaming industry to a new level. The two items I’m talking about are Sony’s PSP-Go and Microsoft’s Xbox Project Natal.

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The thing that makes the PSP-Go so progressive for the industry is that the games for this system will be offered via download only (through the PS3, home computer, or wi-fi). Sony did away with the UMD drive freeing up space to make the device smaller, about the size of a larger smart phone, and lighter. Now, Sony is not the first gaming company to offer downloadable content; however, they are the first to develop a main-stream system that will work exclusively with this type of content. Like the music industry before it, gaming is moving toward a primarily download model. The PSP-Go’s successes and failures with be watched closely throughout the industry and will play a large role in speed that this format is adopted by companies and consumers alike.

Some other notes about the PSP-Go: I must admit that when I first saw the device at Sony’s press conference (and from earlier leaked images) I wasn’t very excited. The slide out controls and the placement of the analog nub just looked uncomfortable. Well, what a difference a day makes. I was able to get my hands on one of these devices on Wednesday and I must admit it feels great. The PSP-Go is much more comfortable to hold than my PSP-2000 and its reduced size and weight knock the portability factor up a few notches. The device has a 3.8 inch LCD screen and 16 GB of internal memory which can be expanded by another 4 GB with external memory (Memory Stick Micro M2).

You can find more info on the PSP-Go on the Playstation site here

project-natal-in-use

If the PSP-Go changes the way gamers get their content, Microsoft’s Project Natal changes the way we interact with that content. Rather than following Sony in developing a wand like device to take on the Nintendo Wii, Microsoft one upped everyone by doing away with the controller all together. The device, which looks like a thin set top box senses motion and can even identify the individual users and best of all will work with all current Xbox systems.  While I think Project Natal will make gaming even more accessible to more people, if successful future advancements in this technology will make its impact be much further reaching than just the gaming industry affecting the way people interact with all types digital content, think Minority Report.

You can find more info on Project Natal on Xbox’s site here

The 2009 E3 Expo was held from June 2-4 at the Los Angeles Convention Center in Los Angeles, California.

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