Both Microsoft and Sony are banking on the Kinect camera for the Xbox 360 and the PS Move for the PS3 to not only extend the life of the two consoles but also to reach out to non-core or “casual” gamers. While Microsoft’s E3 press conference intently focused on lighter gaming fare, Sony showed a broader range of support for both casual and hard-core games. However, neither will be able to expand their reach to the audience that made Nintendo so successful with the Wii without some serious help on one very important front; the price of their consoles.
While both Sony and Microsoft have seen the price of their consoles drop significantly since their introduction, they are both still to high at $300 each to make significant in-roads into the casual market. While the Nintendo Wii was very successful at grabbing the attention of casual game consumers at a $250 price, it also had very little competition at the time and Xbox 360 was priced as high as $400 while the PS3 was priced as high as $600. The market has changed dramatically since then as the Wii has cemented itself as the go-to casual game machine and alternative devices like the iPhone and iPad are quickly grabbing the attention of gamers.
We also find ourselves in the middle of a recession and potential casual gamers who do not yet own a PS3 or Xbox 360 will likely balk at the prospect of having to spend $400 or more to get a new console bundled with Kinect or Move. The Xbox 360 Arcade will likely be in the best position with a likely $300 bundle but that price is still likely to high as households look to reduce their discretionary spending.
A price drop for the PS3 and Xbox 360 would also of course spur sales. When the Xbox 360’s price was dropped by $50 recently because of the introduction of the “Slim” model, sales reached unprecedented levels according to Microsoft. The price drop and the introduction for the PS3 Slim also drove sales to new highs for Sony.
Between the two consoles, Microsoft is in the best position for a price. They were reportedly making a profit on the Xbox 360 already and the “Slim” likely has even lower production costs than previous models. Their biggest problem now will be keeping up with demand for the new console. Until they can get ahead of demand, the price for the Xbox 360 will stay high.
Meanwhile, the PS3 is reported to have just broken even with its production costs. This does not bode well for a price reduction anytime in the near future for the Sony console.
Both the PS2 and original Xbox prices had already long been at $200 at this point their lifecycles and the PS2’s sales really took off at that price point. Granted, those two consoles had a shorter distance to go to reach that level but the market has also changed dramatically since then. Without a price drop for the PS3 or Xbox 360, Kinect and Move won’t be able to help their respective consoles attract casual buyers due to the current economic conditions, established competition with the Wii, and increased competition from alternative devices like the iPhone and iPad.
The next two major game conferences are at Gamescom in Germany in August and the Tokyo Game Show in September. If a price drop is to occur for either console, it will likely be then as we head into the holiday season.
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