ROFL-copter: PS4 price INCREASE
So, here in Canada, apparently due to a weakening in the value of the CAD Sony has decided to raise the price of their console accessories and games!
I have to wonder if this is the first time in console gaming history where the cost of a console has gone UP after a release.
I'll admit I'm confused. Firstly, the increase, across the board is greater than 10% which is larger than the delta between the CAD and USD (and more than it is predicted to stabilize at) and Sony isn't even an US company. Also the components by and large aren't even produced in North America. Sony is a Japanese company, and most of the components are made in places like South Korea and China. The CAD compared to those currencies is actually fairly stable of late, or at least more stable than compared to the USD. The other vexing part of this claim is that Canada is small enough a country to eat a slight loss without any real impact on global sales values.
To back that up, Canada is an order of magnitude smaller than the US and Sony's home country of Japan. In other words, if those were the only 3 countries the PS4 was sold in, a 10% dip in the currency here, would make about a half percent impact on Sony's bottom line. And that isn't the case, instead of just 3 countries where the PS4 is sold, there are 53. Even if many of those are smaller than Canada, it just serves to push the impact from Canadian sales even lower. Conversely, charging 10%+ more will have a similarly small positive impact on Sony's bottom line even if the increased price doesn't deter a single consumer from purchasing it. And, if it forces enough consumers to not buy, that could easily hurt Sony's bottom line more than the price increase would help.
Or to put that another way. The net impact of this move, even if it has no negative impact on demand which is unlikely, is likely to be negligible. The impact on demand however actually does stand a chance to have a noticeable impact.
So, I'm at a loss though. Based on, you know... reality, and what they are saying... it doesn't make sense. Unless Sony is attempting to use Canada to test how successful the console can be at a higher price point before potentially rolling similar price changes out globally, or at least into other more valuable markets. It seems like an unlikely tactic. But then, changing the price in just one, such small country for such a weak reason as the one provided makes even less sense.
And what actually exacerbates the madness is that PS4's are SOLD OUT. Most companies aim to produce more units than they will sell, and this means there is some amount of expected loss built into the cost of the console. Being sold out of units should actually improve your resilience to changing currency prices since it means you recouped that money you hadn't expected to receive back.
These reasons combined are why I think the price testing theory at least holds some water. Its no big secret that many of Sony's divisions are in financial distress, and it must sting that Xbox One is nowhere near the flop that the PS3 was when it originally debuted at a similarly high price point. It probably also stings that recent news for sales in February imply that even though PS4's outsold Xbox One's that Microsoft made more money off their console due to the cost difference.
These situations paint one of two equally stark futures for Sony. The first is that they are willing to lie, cheat and steal to get more money out of you. And the other is that there is some truth to this story and the financial fate of Sony's gaming division is so grim that they think that inflating their bottom line by such a small margin could help. So, either the console division at Sony is on its death bed or Sony just wants to bleed you a little more for their system. Either way, as a consumer in any country I would be troubled by this.
On the off the chance that the truth is neither of these things or a shade somewhere in between this is probably still a bad move for Sony, at least, in Canada. At a time when consumers are bashing Xbox One for its higher price while simultaneously hoping for prices on both to come down, to have one of them go up in price is probably worse for future sales for Sony than things would have been if they had simply debuted the console at that price point.
In Canada it also makes the Xbox One a better value than the PS4. Prior to this move, the major difference between the two packages and their prices was $100 and a motion camera. With the PS4 eye not costing $100 it meant you could a PS4, the eye and still have some money left over to put towards a game all before reaching the cost of an Xbox One without a game. What changes is that now, under this new price, a PS4 + PS4 Eye alone costs more than an Xbox One with Kinect. So while Sony still gives you the option, it is no longer cheaper to get a PS4 and the camera. In fact, a PS4 + a premium game title now costs more than Xbox One which was another big argument against Microsoft when the two consoles launched. Admittedly, for a time, that thought alone had swayed me a bit.
With Kinect Sports Rivals around the corner marking the first string case for bundling the Kinect with the Xbox in the first place, this couldn't be a worse time for Sony to be increasing the cost, especially not by this much. Amusingly, perhaps the best move Sony could make would be to bundle the PS4 with the PS4 eye and charge $500 for it. The markup on that accessory is probably enough that if one were bundled with every console at an even higher price point such as with the Xbox One that they would probably make more money overall than they would with both now being more expensive and sold separately, because even those who buy a PS4 are unlikely to buy the eye.
Or, a move Sony could have made without increasing the cost of their system would be to make a PS+ membership required in more areas of the system. Also, much like the Xbox One model.
And those last 2 points also illustrate why Microsoft is not currently announcing a price increase for their console despite actually being a US based company where the price difference is even more tangible. Their console had a slightly higher profit margin built in and with a higher price tag which gives them more wiggle room. And the amount of services locked behind a Gold membership promotes even more console owners to payout that way.
A side benefit of the Kinect bundling is more components wrapped up in a single price tag. Consoles come down in price over time because the cost of the individual chips and components come down over time. The more components you have, the more pronounced this effect is, and the more likely it will happen sooner rather than later.
I have to wonder if this is the first time in console gaming history where the cost of a console has gone UP after a release.
I'll admit I'm confused. Firstly, the increase, across the board is greater than 10% which is larger than the delta between the CAD and USD (and more than it is predicted to stabilize at) and Sony isn't even an US company. Also the components by and large aren't even produced in North America. Sony is a Japanese company, and most of the components are made in places like South Korea and China. The CAD compared to those currencies is actually fairly stable of late, or at least more stable than compared to the USD. The other vexing part of this claim is that Canada is small enough a country to eat a slight loss without any real impact on global sales values.
To back that up, Canada is an order of magnitude smaller than the US and Sony's home country of Japan. In other words, if those were the only 3 countries the PS4 was sold in, a 10% dip in the currency here, would make about a half percent impact on Sony's bottom line. And that isn't the case, instead of just 3 countries where the PS4 is sold, there are 53. Even if many of those are smaller than Canada, it just serves to push the impact from Canadian sales even lower. Conversely, charging 10%+ more will have a similarly small positive impact on Sony's bottom line even if the increased price doesn't deter a single consumer from purchasing it. And, if it forces enough consumers to not buy, that could easily hurt Sony's bottom line more than the price increase would help.
Or to put that another way. The net impact of this move, even if it has no negative impact on demand which is unlikely, is likely to be negligible. The impact on demand however actually does stand a chance to have a noticeable impact.
So, I'm at a loss though. Based on, you know... reality, and what they are saying... it doesn't make sense. Unless Sony is attempting to use Canada to test how successful the console can be at a higher price point before potentially rolling similar price changes out globally, or at least into other more valuable markets. It seems like an unlikely tactic. But then, changing the price in just one, such small country for such a weak reason as the one provided makes even less sense.
And what actually exacerbates the madness is that PS4's are SOLD OUT. Most companies aim to produce more units than they will sell, and this means there is some amount of expected loss built into the cost of the console. Being sold out of units should actually improve your resilience to changing currency prices since it means you recouped that money you hadn't expected to receive back.
These reasons combined are why I think the price testing theory at least holds some water. Its no big secret that many of Sony's divisions are in financial distress, and it must sting that Xbox One is nowhere near the flop that the PS3 was when it originally debuted at a similarly high price point. It probably also stings that recent news for sales in February imply that even though PS4's outsold Xbox One's that Microsoft made more money off their console due to the cost difference.
These situations paint one of two equally stark futures for Sony. The first is that they are willing to lie, cheat and steal to get more money out of you. And the other is that there is some truth to this story and the financial fate of Sony's gaming division is so grim that they think that inflating their bottom line by such a small margin could help. So, either the console division at Sony is on its death bed or Sony just wants to bleed you a little more for their system. Either way, as a consumer in any country I would be troubled by this.
On the off the chance that the truth is neither of these things or a shade somewhere in between this is probably still a bad move for Sony, at least, in Canada. At a time when consumers are bashing Xbox One for its higher price while simultaneously hoping for prices on both to come down, to have one of them go up in price is probably worse for future sales for Sony than things would have been if they had simply debuted the console at that price point.
In Canada it also makes the Xbox One a better value than the PS4. Prior to this move, the major difference between the two packages and their prices was $100 and a motion camera. With the PS4 eye not costing $100 it meant you could a PS4, the eye and still have some money left over to put towards a game all before reaching the cost of an Xbox One without a game. What changes is that now, under this new price, a PS4 + PS4 Eye alone costs more than an Xbox One with Kinect. So while Sony still gives you the option, it is no longer cheaper to get a PS4 and the camera. In fact, a PS4 + a premium game title now costs more than Xbox One which was another big argument against Microsoft when the two consoles launched. Admittedly, for a time, that thought alone had swayed me a bit.
With Kinect Sports Rivals around the corner marking the first string case for bundling the Kinect with the Xbox in the first place, this couldn't be a worse time for Sony to be increasing the cost, especially not by this much. Amusingly, perhaps the best move Sony could make would be to bundle the PS4 with the PS4 eye and charge $500 for it. The markup on that accessory is probably enough that if one were bundled with every console at an even higher price point such as with the Xbox One that they would probably make more money overall than they would with both now being more expensive and sold separately, because even those who buy a PS4 are unlikely to buy the eye.
Or, a move Sony could have made without increasing the cost of their system would be to make a PS+ membership required in more areas of the system. Also, much like the Xbox One model.
And those last 2 points also illustrate why Microsoft is not currently announcing a price increase for their console despite actually being a US based company where the price difference is even more tangible. Their console had a slightly higher profit margin built in and with a higher price tag which gives them more wiggle room. And the amount of services locked behind a Gold membership promotes even more console owners to payout that way.
A side benefit of the Kinect bundling is more components wrapped up in a single price tag. Consoles come down in price over time because the cost of the individual chips and components come down over time. The more components you have, the more pronounced this effect is, and the more likely it will happen sooner rather than later.
Comments
Post a Comment