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PS3 Japanese Price Drop 'Ridiculous' 70

Posted by Zonk from the no-more-so-than-anything-else-they've-done dept.
Gamasutra reports on comments from a Japanese analyst group, characterizing the pre-launch price drop for the Japanese market as ridiculous. From the article: "Meanwhile, Naoki Fujiwara of Shinkin Asset Management suggested that the price reduction was 'negative for the short term because the company may not be able to sell enough consoles to cover an instant loss caused by the price cut.' The PlayStation 3 was already expected to be sold at a loss, with Sony allowing up to five years to recoup the costs. Shares in Sony fell 1.9 percent following the announcement, although this coincided with a generally poor day for the Tokyo Stock Exchange and may not be entirely related to the price cut."
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PS3 Japanese Price Drop 'Ridiculous' More

PS3 Japanese Price Drop 'Ridiculous'

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  • So they are selling the PS3 at a loss yet:
    the company may not be able to sell enough consoles to cover an instant loss caused by the price cut.

    What the? Wouldn't selling more units mean more loss if the thing's sold at a loss per unit?

    • Re: (Score:2)

      by nebaz ( 453974 )
      I assume they think that more units sold = more games bought, which are not sold at a loss, which would profit them.
    • More units = more potential game sales. You'll buy at least one game when you buy the
      console normally, and that's where they intend to make the money.

    • Re: (Score:3, Insightful)

      by SkullMac ( 420520 )
      Ah, but in order to sell more units, they must order more parts to manufacture the extra units. A larger order for parts means a larger bulk discount, thus reducing the loss per unit. As component prices continue to fall over time, this can eventually become a profit per unit.

    • Obligatory (Score:4, Funny)

      by UbuntuDupe ( 970646 ) on Saturday September 23, 2006 @02:10PM (#16168519) Journal
      What the? Wouldn't selling more units mean more loss if the thing's sold at a loss per unit?

      It may be a loss, but they make it up in volume, goddamnit!

    • Re:Wait what? (Score:5, Funny)

      by Pharmboy ( 216950 ) on Saturday September 23, 2006 @02:23PM (#16168621) Journal
      I still say they did this in response to Nintendo's new commercial [google.com] comparing the Wii to the PS3... ;)

      If that doesn't sell more Wiis, nothing will.
      • Hahaha! I wish I hadn't just spent my last mod point! lol
    • The point was that they would have sold out in Japan at the higher price anyway. So cutting the price results in a loss with no real benefit. If losing more money on the consoles resulted in more units being sold then they may make up the difference in extra game sales (difference between the two sale prices, not the discount from manufacturing cost).

    • Re: (Score:2)

      by Nazmun ( 590998 )
      Well, primarily analysts were expecting a sellout of the meager 100k units being supplied their at launch.

      More importantly however your point is flawed, startup costs like factory tooling/building are far greater then cost per unit without that built in. Sony's already spent billions before even making one ps3 unit, that is where most of the money went.

      You will get far closer to profitability if you keep on churning units at the max capacity of the factory to regain the cost of building it.
  • Slashdot users have always been at the bleeding edge of technology adoption and sometimes we understandably are willing to pay the premium for features but this time Sony I think has overestimated the response of their base. It is not exactly lean times for many of us yet a wary eye has been placed on new formats that come out at 10x the price they will be in a year. If the blu-ray technology is anything like DVD tech, we will have ~100 dollar players next Christmas. The playstation does have an alluring
    • For me the selling point of the PS3 is that I can be pretty sure I will get some interesting games from Japnese developers, perhaps the next Ico or Katmari Damacy. And since the PS3 is region free (in regards to games) I am not even at the mercy of game developers to bring ports over to the US.

      Also Blu-Ray is going to provide a much better display that DVD's even on lower end equipment - I have an 600x800 projector and 1080i content downsampled to that device looks MUCH better than DVD's. You don't have t

      • For me the selling point of the PS3 is that I can be pretty sure I will get some interesting games from Japnese developers, perhaps the next Ico or Katmari Damacy.

        How can you make that assertion? It only works if, somehow, the PS3 manages to obtain a dominant position in the [Japanese] marketplace (more consoles = better chance an offbeat title will make money). There are many reasons to think that the Wii is in a far better position to get these "interesting games" you speak of, given its more attracti

        • How can you make that assertion? It only works if, somehow, the PS3 manages to obtain a dominant position in the [Japanese] marketplace (more consoles = better chance an offbeat title will make money). There are many reasons to think that the Wii is in a far better position to get these "interesting games" you speak of, given its more attractive price, its "new" controller, the general ennui regarding the PS3 and its price, as well as what will presumably be lower (non-HD) development costs.

          I did not say th
      • "I have an 600x800 projector and 1080i content downsampled to that device looks MUCH better than DVD's."
        Please explain how. I'm gonna assume you mean 800x600, a typical DVD is 720 × 480. The most you can get out of a 800x600 projector widescreen is 800x450. Unless you are viewing fullscreen HD content and comparing it with fullscreen DVDs, I don't think the difference is as drastic as you claim. I think you are likely playing the DVDs on a composite output DVD player and comparing it to a computer
        • "I have an 600x800 projector and 1080i content downsampled to that device looks MUCH better than DVD's."
          Please explain how. I'm gonna assume you mean 800x600, a typical DVD is 720 × 480. The most you can get out of a 800x600 projector widescreen is 800x450. Unless you are viewing fullscreen HD content and comparing it with fullscreen DVDs, I don't think the difference is as drastic as you claim. I think you are likely playing the DVDs on a composite output DVD player and comparing it to a computer hook
          • "Why would I not be viewing this content fullscreen?" Fullscreen is generally a synonym for '4:3'. I assume you aren't scaling and cropping to fit 800x600 as you said yourself '800x450 [roughly]'. That's all I meant by fullscreen. For example, the game Soul Calibur II on the original Xbox can output to HD in a 4:3 aspect ration, and it indeed would look significantly better at 800x600 than at standard resolution.
            • The fullscreen is handled by the computer, basically it is being cropped a little with bars at the top and bottom - as you noted the absolute resolution availiable is still only 800x600, so something has to give!

  • From the Article: (Score:2, Interesting)

    by Garrett Fox ( 970174 )
    The cheaper of the two hardware variations was originally priced at ¥59,800 ($515) but was reduced to ¥49,980 ($430), at the same time as a HDMI video port was also added to the unit.

    That's an improvement, but $430 is still very high for a game system! Yes, yes, it's also a Blue Laser media player, but since I had no plan to buy one of those, I still think of the PS3 as a vastly overpriced gaming system.

    As a side note, given that Dead Rising for the X-Box 360 apparently requires HD [slashdot.org] to dispay so
  • Of course it's ridiculous. Why do the Japanese get a price drop and the rest of the world has to pay $600(or similiar in different currencies)? It seems like Sony is desparate to get marketshare and has carelessly discarded the rest of the consumer base.

    • Re:Yes it is. (Score:5, Interesting)

      by ArwynH ( 883499 ) on Saturday September 23, 2006 @03:59PM (#16169359)

      Tough isn't it? We in Japan got to play the system 1st as well. I've just gotten back from the Tokyo Game Show. Played a few PS3 demo's there. Nice graphics, reminds me of PC games. But to be honest, the thing I noticed most about the PS3 was that it felt and played almost exactly like a PS2. That isn't really a bad thing, the PS2 was a nice system, but the PS3 doesn't really offer that much more than the PS2 does as far as game experience goes.

      Overall impression? I'll probably end up buying a PS3, it's a nice gaming machine, but not at launch. Even with the price drop, it's still more expensive than Wii with 4 games and a few extra controllers. I'll wait for the 1st or 2nd price drop before buying or until a killer game comes out. There were quite a few there that I'd like to play, but none that sold the system.

      Back on topic, market share is everything at this stage of the game. Japanese have a tendency to follow trends. The console that gets the largest market share at the start will set the trend. This means Sony have thier work cut out for them because not only does thier closest competitor have a cheaper console, it's also smaller, cuter and it's controller has a larger 'wow' effect than the PS3's graphics do. This doesn't even take into account that Nintendo will probably out produce Sony. So every little helps I guess.

      As for why Japan is important, well it's Sony's home market. It's also the home to the development teams for a fair number of core PS franchises. If it loses Japan the effect on the other markets will be significant.

  • Reductions in price are always good. For the sell more and sell more games idea I'm not too sure, if we believe the marketing then the PS3 is meant to do everything and be a "media centre" and everything else, I think that even from what's been coming from Sony I've not seen them pushing the games

    I've actually been thinking of getting a PS3 (or at least looking into it when they come out). I've heard that it can run linux and that the hardware seems pretty good. If I could get Fedora to work on it I co
    • I originaly wanted to get a PS3, but every day I don't have one is another day I'm happier with my Xbox 360 and more content with the idea of missing out on Sony's next greatest console. I really hope Sony can pull their crap together, because from what I've been reading here, I'm not the only person to feel this way.

  • Great (Score:3, Funny)

    by Ant P. ( 974313 ) on Saturday September 23, 2006 @02:41PM (#16168771)
    1. Import region-free Japanese PS3s
    2. Sell Japanese PS3s
    3. ???^WPROFIT!!!

    • We need a new term to replace "region free." (Score:2, Informative)

      by Anonymous Coward
      Why do people believe in these "region free" claims?

      Both Sony and Nintendo(before Nintendo corrected their mispoken PR person) heads said that "region free" support was up to the developers/publishers. In other words, companies can decided whether or not to let their games work on -- still region encoded -- consoles from different regions.

      Does that really sound like being REAL "region free" to you? Because it sure doesn't to me.....

      Not sure what it should be called, maybe "region friendly"?

    • Even if US games work on your imported Japanese console, are local Blu-Ray movies going to play?

      From what I've heard, game region locking is optional for the publisher, but Blu-Ray movie region locking is still there.

      Besides, good luck trying to import one of those 100K launch units.

  • I do believe it's better business practice to run out of the product you're selling and backorder instead of not being able to sell what's on the shelf. That is, unless for every unit of something you sell, you're losing (net long-run) money rather than gaining money.
    • They don't lose money per sale, because they've already spent money to manufacture the thing. When you buy a ps3, all that happens it that their losses are decreased. When they manufacture a ps3, it'll cost them $900 (made up figure). They are $900 in the red, until you buy one for $600, which now makes them only $300 in the red. So basically, for every ps3 sold, the less money they lose.
  • Cel tel carriers subsidize handsets & sell air-time...

    Free razor, you buy the blades...

    Sony subsidizes the PS3 & wants to sell content...

    ---

    All examples of tried & ture business practices

    So, what's newsworthy here?

    Or... is this another "sponsored news article"...? :-/

    • Re:Recall: Intel's Free 4004 CPU, You buy the RAM (Score:5, Interesting)

      by tilandal ( 1004811 ) on Saturday September 23, 2006 @06:33PM (#16170503)
      No consol maker has ever made a profit by selling units at a loss. What exactly makes this tried and true?

      Idiots keep quoting the razorblade thing. Guess what. The razor is just a handle. Its is the CHEAP part of the package. You can afford to give those away because the next time someone buys a blade you make a profit. Sony only makes about $10 per third party game sold. If they are loosing an extra $85 per consol sold that means they must sell an additional 8 games before they break even. This mean the consumer has shelled out more then $900 and you have yet to see any profit. Here is the worst part. The average attach rate for a consol is only 9-10. The highest attach rate has been the PS1 at 13.2 games per consol (as of June 2005 in Japan) and this is only after a decade of being on the market. What does this mean? If Sony losses $100 per consol they will probably NEVER see a profit. And we are only talking about hardware here. This does not take into account the cost of marketing, shipping, QA, or the initial development costs.

      The dirty secret of the consol business is HAVING A LARGER INSTALL BASE DOES NOT SELL GAMES!

      Here are a list of attach rates from the last generation.

      GameCube (End of 2005)
      Japan - 6.693
      America - 9.838
      Other - 8.550
      Total - 8.945

      PlayStation 2 (End of 2005)
      Japan - 8.454
      America - 11.222
      Europe - 9.294
      Total - 9.885

      Xbox (Unofficial, End of 2004)
      Asia - 4.706
      America - 9.773
      Europe - 8.200
      Total - 8.945

      What does all this mean? The average consumer will only buy 9-10 games! The time you own the consol makes no difference either. (The PS1 average attach rate is only 9.3, The NES rate was about 8, SNES 7) Each consol sold has a total expected revenue from games of only $100.

      So what exactly are Microsoft and Sony doing?

      Microsoft is simply trying to buy mindshare. They expect to eventually make money on selling services over Xbox live and software that ties your Xbox to your PC (running windows) and your set top box (running Media center). They are willing to pour money into the black hole because in order to sell you high margin item at a later date. Microsoft has the financials to support this indefinably by using their profits from Windows and Office.

      Sony is a different beast. Sony intends to make money off of Blueray royalties. As it stands, if Blueray fails (like betamax, Memory Stick, Atrack, and UMD) Sony will be in deep financial trouble. On the other hand if Blueray takes off like DVD did Sony stands to reap huge profits.

      Personally I do not see Blueray being the next big thing. Consumers are not going to shell out real money on HD yet. The players are expensive, the standards are confusing, and most people don't yet have a HDTV. It will be years before the number of households with HDTV reaches the critical mass needed to make Blueray a success. In that time, it is likely that there will be other options. Blueray may very well turn out like laserdisc and VCD did.

      • Re: (Score:2)

        by ivan256 ( 17499 )
        Sony is a different beast. Sony intends to make money off of Blueray royalties.

        With the PS2, Sony actially made a profit on the hardware for a signifigant portion of the console's lifespan (which isn't over yet). They started making a profit on the hardware well before they said they were going to be able to. Perhaps this is their plan now, as well.

        Also, you forgot to include accessory sales in your numbers. PS2 memory cards wre 70-80% profit from the beginning. Controllers, extension cords, S-Video cables.
        • I do agree with you on the ps2. It was sold at a modest loss initially and became profitable later in its lifespan. The problem with the PS3 is it may not become profitable to make, ever. Since it comes with a hard drive, there wont be any profits from memory cards. Sony has not shown any unified online system so profits fron micropayments are questionable. So, Why won't the PS3 be profitable? Analists are predicting that each consol loses from $300-$500 (thats before the price cut). This number seems in t

          • Re: (Score:2)

            by ivan256 ( 17499 )
            If your assumptions are true, You're right, but I think you make some faulty assumptions. I think the analysts make some faulty assumptions too, and they certainly have a poor track record, so I see no reason to believe them. You also say some things that are plain incorrect.

            If Blueray follows the same adoption rate as DVD then in four years Blueray players will still cost $250!

            Unlike the previous generation of video players, the current generation re-uses most of the technology from high speed DVD readers.

      • The dirty secret of the consol business is HAVING A LARGER INSTALL BASE DOES NOT SELL GAMES!

        I have to disagree. A larger install base DOES sell more games although indirectly. We see proof of this with the Gamecube.
        gamecube with smaller install base = less 3rd party support = less games available = less attractive to potential adopters = weak overall sales = gamecube dies ugly slow death by starvation.
        PS2 with huge install base = lots of 3rd party support = tons of available games and choices = attra

    • Re: (Score:1, Insightful)

      by ClamIAm ( 926466 )
      Sony subsidizes the PS3 & wants to sell content...

      Um, sure. Too bad Sony has said absolutely nothing about how much each unit costs to produce.

      • Re: (Score:1)

        by kirun ( 658684 )
        Compare and contrast the PS3 price with the price of a Blu-Ray player, take into account that those shiny Cell processors, video chips, etc. that will push up the cost of producing the PS3 and either Sony is making a loss on the PS3, Blu-Ray players are being sold at a massive profit, or Sony has some super-secret manufacturing method that means the PS3 can be profitably sold for significantly less than a internal Blu-Ray drive for a PC.

        Now, which option is most likely?

        • Re: (Score:1)

          by ClamIAm ( 926466 )
          Or, maybe something else is going on.

          The Blueray players out now are expensive for several reasons. One is simple economics, where we have a very small supply of players, driving up the price. Another reason is that the players you can buy today are basically "rough drafts", as Samsung et al basically slapped together a bunch of components to get them out the door as soon as possible. They now can refine their process, removing unneeded or overpowered components, and taking advantage of things like Moore

  • With only 100 000 PS3s available in Japan at launch, even people who would pay $600 for a console will not receive one. However, there will be plenty of Wiis available. This was designed to stop gamers from buying a Wii, encouraging them to hold off purchasing a next gen console until a PS3 is available. If Sony had not dropped the price, a lot of Japanese gamers would purchase a Wii and then consider purchasing a PS3 when the price dropped. Barring a miracle for Microsoft, the Xbox 360 will not be a fa

  • Wii = 280$CAD
    Xbox 360 = 500$CAD (Xbox360 core = 400$CAD, still 120$CAD more expensive than a Wii)
    PS3 (20GB) = 550$CAD

    IMHO, it's the Xbox360 that's overpriced. No wonder nobody's got one here (people rent them, nobody buys them).

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