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The time is right for Sony and Microsoft to lower prices - analyst
The time is right for Sony and Microsoft to lower prices - analyst
May 7, 2012 | By Mike Rose

May 7, 2012 | By Mike Rose
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    3 comments
More: Console/PC, Business/Marketing, E3



Now is the right time for Microsoft and Sony to lower the prices on both hardware and software for their respective home games consoles, a new report from analyst firm Baird Equity Research suggests.

Baird's Colin Sebastian notes that core console gamers are already anticipating the next generation of hardware platforms, hence price cuts for the Xbox 360 and PlayStation 3 would prove an effective way to retain focus on the current generation for a while longer.

Microsoft's upcoming $99 Xbox 360 subscription offering signifies "a nice start to bring hardware into the value end of the consumer market," Sebastian says -- however, he believes that a straight price cut to the console would be more effective.

In terms of software, the analyst says that Microsoft and Sony should consider cutting the royalty rates that they each take from developers and publishers for game releases, which he believes would help bring prices of new releases down.

"For most software releases, we believe a $49 launch price now makes sense, given the late stage of the current console cycle," he notes.

This train of thought comes as the NPD is expected to report later this week that retail game sales in the U.S. declined year-over-year in April. Sebastian agrees with the earlier report from analyst firm PiperJaffray, stating that Baird expects April software sales to be down 25-30 percent compared to last year.


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Comments


Alex Nichiporchik
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The notion of a cheap $99 entry console with a subscription fee that gets me the Premium privileges of an online service sounds too good to pass.

If I end up paying just a bit over the normal console price, but get the online goodies -- count me in :)

Sounds like something that can save the next gen consoles

Bob Johnson
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From what we know now the $99 console with subscription fee is a deal for the stupid.

Why are some people worse off? Because they enter all these receive now/ pay later deals that cost them more in the long run.

Nicholas MacDonald
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When you look at this from an initial cost point of view, it's obvious the target is people who cannot afford or are unwilling to pay for the normal cost of a console. The problem with this is that a lot of these customers are probably not huge into gaming, and so from a consumer standpoint it doesn't make any sense. Why not just buy a Roku or Apple TV and get a lot of the same media features without additional subscription fees?

Of course, for those that want the gaming functionality, you have to ask, why are you purchasing a game console you can't afford? Payment plans are part of the reason people are excessively in debt. They are looking for ways to buy entertainment that they can't afford, period. This isn't behavior that should be encouraged, it ultimately screws the consumer, and devalues products as we begin to perceive that $99 value as making sense, despite the long term costs still being relatively high.

There are probably some people out there that will get something out of this, so I suppose I'm not totally opposed, but it doesn't feel like a good idea to start making the video game console market reflective of the smartphone market.


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