PS4 price hilarity continues
So, rather than a price lowering, here in frigid Canada, the price of the PS4 actually went UP after release as I pointed out in an earlier article. Whether or not Sony makes a similar move elsewhere, the fact that they felt the need to do this clearly states that a price drop is FAR from imminent ANYWHERE in the world.
If a short term 5-10% drop in local currency value in such a small market is enough to send them adjusting the price they must be losing money fast.
And this should be a relevant statement since many of the Xbox One nay sayers look to the price gap between the two systems. And I think the price gap should be a relevant reason for those on the fence when deciding what to purchase. Depending on your starting point, the Xbox One is either 25% more expensive than the PS4 or the PS4 is 20% cheaper than the Xbox One. And when they first launched both were console only at those prices meaning games were extra. And either way you slice it, that is a big percentage. It also equates to a sizeable amount of real world money, $100.
$100 is about a game and half. Or an extra controller and half a game. Or money in the bank, or money you don't need to save up to buy one or the other. So, if you're under any financial constraint, and eco-system or system exclusives aren't pulling you one way or another the PS4 is the smart way to go. Or at least that was the prevailing wisdom.
And today, the absurdity got better. Best Buy and Walmart are selling Xbox One Titanfall bundles at $50 off in the US. Would be triple the hilarity if that deal were in Canada as well. That is a console + a month of Xbox Live Gold and a (or precisely "the") premium game title for $450 USD.
When the price raise on the PS4 came to Canada, I argued that it hurt the value proposition of the PS4 vs. Xbox One in terms of hardware to value cost because it meant that to get a PS4 with the move camera or a game alone would cost more than an Xbox One with both a free copy of Titanfall and Kinect. Because even with our apparently unbearably fluctuating currency Microsoft was still able to bundle Titanfall with the Xbox One without increasing the cost.
And now the same is true in the US (until this deal ends). A PS4 bundle with a game will set you back $459.98 according to BestBuy.com which doesn't include the PS4 eye. But the Xbox One Titanfall bundle now costs $449.99. Only a saving of $10, but when you add-in the free month of Gold and the value in the Kinect sensor I can easily say the value is over $75 greater than the PS4. And even if you don't care about Kinect or Gold it is still cheaper now. If only by $10.
That alters my stance entirely. If you're on the fence, the best option is now the Xbox One. The price gap is dead. Between being bundled with a free game and the price drop in the US (or with the PS4 price raise in Canada) in those 2 countries, people on the fence should choose the Xbox One. It is cheaper to get an up and running (Console + premium game) and it comes with Kinect and HDMI pass through. While not everyone may find those worth paying extra for, in this case, now that the console + game is cheaper, you're not paying extra for them, you simply get more for less and you won't feel ripped off if you never use them.
Back to why this is all relevant to that price gap. Best Buy and Walmart aren't selling these $50 cheaper because they want to be nice people. Either, there is enough margin in the products to either justify it come close to justifying it or Microsoft has enough breathing room on price to cut some slack to larger retailers. Or some combination of the two (with a few caveats that aren't worth covering).
Which means Microsoft is much closer to being able to provide a price drop across the board. Which ultimately means that the price gap may turn even more in Microsoft's favor before Sony can afford such a move.
Sony can't even afford to bundle a game with the console without jacking the price up $60 in the US. They can't afford a the complications of a mildly fluctuating currency. Yet Microsoft can afford to give a game away for free in a bundle, and then allow that same bundle to sell $50 cheaper.
And beating PS4 on the value prop in the US is key. Head over to this Wikipedia page and sort by country. The US has more game development studios than even Japan. The US market is also one of the best in terms number of paying customers. So, winning the US market is also critical to winning IP rights from gaming companies, because even those which aren't based there, will need to target heavily the platform that is winning there. I don't know what the sales are for just the US, but while I suspect the PS4 is winning there, it may not for long if the value of the Xbox One keeps increasing while Sony either stands still or increases lowers the value offered as they did in Canada.
If a short term 5-10% drop in local currency value in such a small market is enough to send them adjusting the price they must be losing money fast.
And this should be a relevant statement since many of the Xbox One nay sayers look to the price gap between the two systems. And I think the price gap should be a relevant reason for those on the fence when deciding what to purchase. Depending on your starting point, the Xbox One is either 25% more expensive than the PS4 or the PS4 is 20% cheaper than the Xbox One. And when they first launched both were console only at those prices meaning games were extra. And either way you slice it, that is a big percentage. It also equates to a sizeable amount of real world money, $100.
$100 is about a game and half. Or an extra controller and half a game. Or money in the bank, or money you don't need to save up to buy one or the other. So, if you're under any financial constraint, and eco-system or system exclusives aren't pulling you one way or another the PS4 is the smart way to go. Or at least that was the prevailing wisdom.
And today, the absurdity got better. Best Buy and Walmart are selling Xbox One Titanfall bundles at $50 off in the US. Would be triple the hilarity if that deal were in Canada as well. That is a console + a month of Xbox Live Gold and a (or precisely "the") premium game title for $450 USD.
When the price raise on the PS4 came to Canada, I argued that it hurt the value proposition of the PS4 vs. Xbox One in terms of hardware to value cost because it meant that to get a PS4 with the move camera or a game alone would cost more than an Xbox One with both a free copy of Titanfall and Kinect. Because even with our apparently unbearably fluctuating currency Microsoft was still able to bundle Titanfall with the Xbox One without increasing the cost.
And now the same is true in the US (until this deal ends). A PS4 bundle with a game will set you back $459.98 according to BestBuy.com which doesn't include the PS4 eye. But the Xbox One Titanfall bundle now costs $449.99. Only a saving of $10, but when you add-in the free month of Gold and the value in the Kinect sensor I can easily say the value is over $75 greater than the PS4. And even if you don't care about Kinect or Gold it is still cheaper now. If only by $10.
That alters my stance entirely. If you're on the fence, the best option is now the Xbox One. The price gap is dead. Between being bundled with a free game and the price drop in the US (or with the PS4 price raise in Canada) in those 2 countries, people on the fence should choose the Xbox One. It is cheaper to get an up and running (Console + premium game) and it comes with Kinect and HDMI pass through. While not everyone may find those worth paying extra for, in this case, now that the console + game is cheaper, you're not paying extra for them, you simply get more for less and you won't feel ripped off if you never use them.
Back to why this is all relevant to that price gap. Best Buy and Walmart aren't selling these $50 cheaper because they want to be nice people. Either, there is enough margin in the products to either justify it come close to justifying it or Microsoft has enough breathing room on price to cut some slack to larger retailers. Or some combination of the two (with a few caveats that aren't worth covering).
Which means Microsoft is much closer to being able to provide a price drop across the board. Which ultimately means that the price gap may turn even more in Microsoft's favor before Sony can afford such a move.
Sony can't even afford to bundle a game with the console without jacking the price up $60 in the US. They can't afford a the complications of a mildly fluctuating currency. Yet Microsoft can afford to give a game away for free in a bundle, and then allow that same bundle to sell $50 cheaper.
And beating PS4 on the value prop in the US is key. Head over to this Wikipedia page and sort by country. The US has more game development studios than even Japan. The US market is also one of the best in terms number of paying customers. So, winning the US market is also critical to winning IP rights from gaming companies, because even those which aren't based there, will need to target heavily the platform that is winning there. I don't know what the sales are for just the US, but while I suspect the PS4 is winning there, it may not for long if the value of the Xbox One keeps increasing while Sony either stands still or increases lowers the value offered as they did in Canada.
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