PS3 price cut "ridiculous" says economist

Sony's decision to reduce the price of the PlayStation 3 in Japan before the console has even launched has been branded "ridiculous" by a Japanese financial expert.

The outburst comes following Sony's announcement at the Tokyo Game Show that it is due to cut the Japanese price of the 20GB version of the console from 62,790 yen (421 euro) to 49,980 yen (335 euro).
"It's ridiculous to decide to cut the price before they start selling the PlayStation 3," said Yoku Ihara, head of equity research at Retela Crea Securities, speaking to Bloomberg.

"They may cut the price again if sales don't go well," he added.

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gamesindustry.biz
kingboy6419d ago

ridiculous my @ss,it`s called marketing strategy,plus it`s only for japan.so no problem here.

UrbanJabroni6419d ago (Edited 6419d ago )

How is "marketing strategy" great when it effects the short (and potentially long) term profitability of your company?

This is AN ADDITIONAL $100 loss per Japanese console compounded on top of whatever loss they were taking. For the lauch window alone in Japan this represents an ADDITIONAL TEN MILLION DOLLAR LOSS! Expand thigs out 6 months+ and you are easily looking at an ADDITIONAL ONE HUNDRED MILLION DOLLAR LOSS.

Meryll Lynch already estimates a THREE TO FOUR HUNDRED DOLLAR LOSS PER CONSOLE SOLD WORLDWIDE.

Sony is looking at losing billions of dollars in subsidised console says that it may never, ever be able to regain. Sony is not Microsoft, despite what you may think. Microsoft has a $50+ billion dollar warchest of _cash_ (and securities) it is just sitting on. One of the reasons for the slow rollout may very well be to wait until they can get yields up and costs down...fast PS3 sales would, quite frankly, bankrupt the company...

...so tell me again, for Sony as a company, how an additional $100 loss per console is in any way, shape or form a good thing?

RuffRyder6419d ago

This was a stupid move from sony.
It would have been better to drop the price after the first batch of ps3 where released because its obvious that the first batch of ps3 will sell out to the hardcore gamers regardless of the price.

Sony has just lost them selves an extra couple billions so how is it not a problem.

kmis876419d ago

Sony is a larger company than MS, so this notion that they can't spend as much as MS is ridiculous. Plus, the higher ups at Sony, past the Playstation division, really want to get bluray adopted as the new format. If that happens any losses on the Playstation end will be made up by bluray sales.

UrbanJabroni6419d ago

You've got to be kidding me...why do I even bother. sigh.

Caxtus7506417d ago (Edited 6417d ago )

LMAO!!!! I litterally laughed out loud for several minutes!

+ Show (2) more repliesLast reply 6417d ago
FeralPhoenix6419d ago

Damm, Sony can't win for losing!....kingboy, I think you are missing the point of what the financial expert is saying. He's saying that Sony is already losing a substantial amount on PS3, and by cutting the price so early (its not even launched yet) they will lose even more money. Of course most consoles always start out losing money, but over the life cycle they make it back through games sales/royalties and eventually hardware sales as production/manufacturing process becomes cheaper and cheaper....PS2 is a perfect example of this....but if they start off too far in the hole they may not ever make a substantial profit or worse case scenario they might lose too much and never recover. Now I wonder why, this financial expert believes Sony might not be able to "cover" the instant loss of a price cut?.....*cough, Blu-ray, *cough, *cough....uhm excuse me I just I have a lil cold. Thanks.

UrbanJabroni6419d ago

Actually, the idea that consoles are always sold at a loss is somewhat of an urban legend. The only console that has been confirmed to create an instant loss was the original XBOX...although speculation abounds as to the PS2. Prior to this all consoles (especially the Nintendo ones) were sold at a marginal profit.

Ravenator5296419d ago (Edited 6419d ago )

It is not a myth. M$ never gained profit off the XBox system. And the PS2 saw losses at the beginning.

Software sales are what turned profit for these companies. Even today, M$ still doesn't make any money off an original XBox. Also, M$ has a few other divisions that make up for the "expected" losses on XBox.

The reason Nintendo would profit from their systems is that they always kept the production costs low. Their systems were just for games and nothing more.

Trust me, M$ loses money on the 360 and Sony will lose money on the PS3.

Just think about it, a brand new Blu-Ray DVD player costs $1000 by itself. That should tell you right there that a video game system with a Blu-Ray DVD player selling for $600 is going to create a substantial loss for Sony.

A loss that IMO, they may not recover from.

These expensive systems are the reason why we are paying $60 for a new game rather than $50. They need to turn a bigger profit on the software for the losses on hardware.

This also hurts Sony because realistically they should be selling their games for upwards of $70. Why?, because Blu-Ray media is more expensive than DVD9 media. Plain and simple.

This is a move by Sony because they are genuinely worried that M$ is going to dent their Japanese market.

FeralPhoenix6419d ago (Edited 6419d ago )

M$ was the first to launch with a HDD included at the time, and the tech in the original Xbox was expensive for that specific time, but M$ knew that if they sold the original Xbox for what it cost to make, most consumers would not pay that much money for a console, Neo Geo is good example, therefore M$ took the strategy of selling at a lost and trying to make a profit over the life cycle of the console, which didn't happen....but it did establish them a solid 2nd place in the business. Now in todays world new tech is very expensive because of all the research and development money spent on chips, etc. so I don't believe we will ever see the days of launching a videogame console with a instant profit, think about it, who's going to pay $1,000+....unless you take the Nintendo strategy of not using the latest most powerful technology, because otherwise if you try to charge the consumer what the new tech actually costs....its just not going to work, since most gamers are not hardcore gamers....which means its just a toy to them. I mean the numbers speak for themselves, I forgot the actuall amount but the 360, costs M$ alot more to make than what their selling it for, and the PS3 is costing Sony a arm and a leg....now the point of my #2 post is that they would only have marginal loses on every PS3 sold, if they had not chose to go with a uneccessary format,(Blu-ray). Now when you add a price cut before they even launch, suddenly you are talking about a major financial loss for every PS3 sold. The question is was Blu-ray worth the risk?...in my opinion Hell No!....not that Blu-ray is a bad thing, I just believe, no Im positive that by the time, we need 50gigs for games...PS3 will be outdated because the next-next gen Xbox will be here with the latest and greatest technology. M$ is smart, and they seem to have the better hand this deal.

kingboy6419d ago (Edited 6419d ago )

lol what about bill loosing rite from day one with the original xbox and is still loosing even more.what u call that then?u think he enjoys loosing money?please cut the cheap talk like we don`t know why these companies play with marketing prices..it`s called installing some motivation and confidents on purchace.They`ll still make money some how on other products they provide
And to that so call Ruffryder..it`s been a while u`v been on my back talkin sh*t..i know ur still mad just because i hit on your sister all night..u don`t want it with me in these forums lol! and by the way kingboy is the logo i own when sellin or promoting my stuff..

calderra6419d ago

Few people know- Xbox is only one step in a larger Microsoft plan to push Sony out of the home market. They had prepared for loss from the get-go in order to make the first attempt work. The Xbox division was made one small part of the Entertainment division, and even though Xbox lost some money, the loss was largely absorbed by the Entertainment wing.

Sony is in a nearly desperate financial situation. They didn't even have enough money to produce PS3 on their own- they had to call on investors to help them finance production.

When you can't even afford to MAKE the console, how can you afford to slash its price?

Plus- the REAL reason this is happening is because they're only shipping 100,000 total units to Japan. Without a price cut, Japanese gamers caught in the shortage will be too angry at Sony to buy into the console. This is to help soften the blow.

Ravenator5296419d ago

You have no idea what you are talking about.

Yes, the XBox was not a profitable system. On paper the division lost money on every console sold.

But M$ as a company was never hurt by the losses because of the profits made in other divisions.

kingboy6419d ago

who gives a sh*t about bill anyway.i`m here for TGS news today.please i`m not into arguing ..just let me wait for my ps3 right!hope u not mad cuz i`m gettin one hahah!

PS360WII6419d ago

Good for you. Really I'm happy that you found out you can't win this fight so you went ahead and changed the subject. Sony is taking a loss for each console sold. They said that themselves. Plus now they put themselves deeper in with Japan just so they can "soften the blow" (I read that in a previous comment)

It's an intresting way to go about it they must know that Japan isn't really up on the whole ps3 so they have to dangle a carrot in front of them....

Show all comments (35)
90°

10 Weirdest Video Games of All Time

Plenty of unforgettable games have completely messed up their players throughout the years, all the way back from the PS1 days to the dark recesses of the modern internet.

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culturedvultures.com
JonTheGod1d 1h ago

Why are the Katamari games not on the list??

130°

70 percent of devs unsure of live-service games sustainability

With so many games fighting for players' attention and interest losing out over time, time sink games are at risk of eventually losing steam.

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gamedeveloper.com
thorstein1d 21h ago

It was worrisome to begin with.

It's a niche genre with only a handful of hits that can stand the test of time.

Cacabunga1d ago

I like the sound of that!! I will for sure never support these gaas games.
Sony must be shocked at gamer's reaction, making them cancel a few of these and hopefully go back to the good heavy hitters they had us used to..
now bring on that PSPro reveal and show us some SP 1st party awesomeness.

CrimsonWing691d 20h ago

What’s to be unsure of!? Look at the ratio of success to failure!

DarXyde1d 3h ago

It's pretty ridiculous.

Imagine having a breadth of data at your disposal to see the statistically low success rate of these games, only to be laser focused on the exceptional case studies.

shinoff21831d 19h ago

Yes. Stop all the live service bs.

jznrpg1d 19h ago

Only a few will catch on. You need a perfect storm to be successful in GaaS and a bit of luck on top of that. But a potential cash cow will keep them trying and some will go out of business because of it.

MIDGETonSTILTS171d 18h ago

Helldivers 2 manages just fine…

Keep production costs low… don’t just make custscenes until the mechanics and enemies are perfected first.

Make so much content that you can drip extra content for years, and the game already feels complete without them.

Most importantly: make weapons, enemies, levels, and mechanics that will stand the test of 1000 hours. This might require more devs embracing procedurally generated leveled, which I think separates Helldivers 2 from Destiny’s repetitiveness.

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60°

The Battle Pass Is The Worst Thing To Happen To Modern Gaming

Nameer from eXputer: "Some exceptions aside, I don't think the battle pass is a net positive for gaming with how they're implemented in most live service titles."

got_dam1d 23h ago

Battle passes AND meta gaming both.

DivineHand1251d 21h ago (Edited 1d 21h ago )

I like the way Helldivers 2 does battle passes. It allows you to make purchases on each level of the battle pass and gives you the option of choosing which item to unlock first. The more purchases you make using medals the further you progress. There is no timer and you can earn medals towards purchasing stuff via personal orders and Major orders.

I haven't played much live service games that have battle passes but I remember some games that have battle passes where you progress through it linearly using an exp system. What makes it really bad is that the battle pass will have like 50 or more levels with the cooler stuff being closer to the end. They also have an in-game shop that sells exp boosters so you can reach the end of the pass before it refreshes. Everyone ilse will have to grind their way through.

lucian2291d 20h ago

battle pass in fortnite is perfect; buy one and it buys the rest for every other season as it gives you more money than the first cost. so 8.50 and season ends with you getting 13.00, it pays for the next and you have some pocket change to save up for cash shop. All of which is optional