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NPD's Frazier: Console Price Cuts Can Boost Sales 40-60 Percent
by Kris Graft
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August 24, 2009
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As PlayStation 3 kicks off what's expected by some to be the new round of console price cuts, NPD Group analyst Anita Frazier told Gamasutra just how much of an impact a hardware price cut can potentially have on the sales of a console.
"...Based on history, price cuts generally increase month-over-month unit sales in the range of 40-60 percent," she said in an email. Her comments clarified web reports that she said misquoted her as specifically commenting on the PS3's September sales.
Frazier said NPD Group does not predict sales of specific platforms, and therefore wouldn't speculate on how the PS3's $100 price cut to $299 would affect sales when the remodeled "slim" PS3 debuts in early September.
But taking her general estimate into consideration, September 2009's PS3 sales could be in the neighborhood of 170,000 to 195,000 units. In July, NPD Group reported monthly PS3 sales of 121,800 units, lower than the Nintendo Wii's 252,500 and Microsoft Xbox 360's 202,900 for the month.
Some analysts expect Microsoft and Nintendo to cut the prices of their respective consoles before the end of the year. More than two years after the launch of the Wii, Nintendo has yet to reduce the console's price from $250.
Microsoft last cut the price of Xbox 360 in September 2008, a move that led to a month-on-month hardware unit sales increase of 78 percent. There are well-founded rumors that another significant Xbox 360 price cut is coming, that would reduce the top-line Xbox 360 Elite to $299.
An initial sales hike is expected when a console's price goes down, but just how long that increase can be sustained is tricky to forecast, and is reliant on new games and competition, among other factors, Frazier said. If Microsoft does reduce the price of the Xbox 360 in the coming weeks, the company stands a chance of stealing some of the PS3 "Slim's" thunder.
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Seems to me they should have dropped the price of the ones still on the shelf another ten percent. But that is Sony for you.
I also noted that used prices have not necessarily tracked the drop. I inquired at gamestop this weekend about that. I suppose that is because gamestop has trouble with their profit margin on those used units in light of the price jump.
The price drop really does impact the used market. Why would you buy a used one now!! Kind of funny isn't it. I am sure those ebay sellers are pissed. LOL.