
Analyst Colin Sebastian claims Sony’s forward forecasts can only come into fruition if PS3 price falls by $100
Sony yesterday predicted that PS3 unit sales would increase by 3m (30 per cent) in the next 12 months – a figure that Lazard Capital Markets’ Colin Sebastian says can only be achieved via a $100 price cut to the machine.
“PS3 guidance suggests pending price reduction – timing and amount uncertain,” Sebastian explained in an investor guidance statement. “We believe Sony’s outlook supports expectations for a PS3 price reduction this year, likely at some point between the E3 industry conference in June and the end of the summer, as Sony is able to reduce PS3 production costs.
“A significant price cut could provide the PS3 with a needed shot in the arm. In addition to a $100 price reduction, which would put the PS3 in easier reach of a mass-market audience, we note that Sony has a healthy lineup of upcoming first-party video games planned over the next year, including inFAMOUS, God of War III, Heavy Rain, Uncharted 2 and Gran Turismo 5.
“A price cut would also be positive on the margin for software publishers and GameStop, given lackluster sell-through thus far of the PS3 and the potential for price cuts to generate additional consumer interest in the platform and PS3 software.
"We also believe the sweet spot for console sales is below $300; thus, a price cut of less than $100 would likely be perceived negatively by the market.
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“For Sony PlayStation, we believe the next 12 months are critical to regain market share, particularly with Nintendo losing some momentum near-term, and with Microsoft likely introducing a new gesture-based user interface.”
Comments
Analysts...
Analysts... I think we all know there is a price cut in the pipeline for PS3. I think we can all make a pretty good guess that the price cut will be $100 for North America, or £50 for the UK. And I think we know based on what Sony themselves have said about not dropping the price during the first quarter of 09 that we can expect this price reduction around Q2 - Q4 depending on territory.
Will be interesting to see what Microsoft does to smoke out Sony's fire. I believe that this year MS will be unable to drop the price of their 360 Arcade model and feel they probably have little room for manoeuvre on the Premium version as well. And so I think they will go with the value added approach of sweetening the deal with extra software etc. Possibly even going as far as making Xbox Live totally free.
Free Xbox Live? I don't think so...
@geeQ:
I just don't see Microsoft making Xbox Live free any time soon. It's too good a money-spinner for them and I don't think there's any real evidence that Sony is stealing a march on them due to PSN being free.
Worse than the lost future revenue would, I imagine, be the need to refund any pre-payments made to date for people who are part way through a 12 motnhs subscription.
MS really don't want to do that, surely?
and...
Yeah it's not exactly earth shattering news, we've all been holding out for a PS3 price cut, it's the only real defining difference between PS3 and 360, however everybody forgets that XboxLIVE will make up the cost difference soon enough. at the same time, nobody can forget that PSN just isn't a patch on LIVE for gaming.
I'm a PS3 owner, and i've got the "old" model, BC and everything. i'm happy with the price i paid, i'm enjoying trying to break the Home beta and i'm looking forward to some big releases this year. But until they sort out game launching on Home and proper voice chat facilities, it'll always be a R.I.P off at it's current R.R.P
what i've seen of the Xbox motion control (not much) i think it's gonna be rubbish, and way too expensive. what i've seen of the rumoured PS3 motion controller sounds more promising, but why are they years behind Nintendo in this? i know the tech is different and i think the PS3 version has the potential to be the best (like the Dualshock2 was to analogue controllers), but until PS3 has useful apps and games a cut above the current norm, i can't see it gainin market share.
price cut will have to be massive
The problem they have with the ps3 is the premium 360 is they model they need to compete with (being the most popular) they are going to have to come down to at least the match the elite in terms of not only price but offer.
Its all well and good saying the price could come down to say £250 but unless you get substantial stuff with that people are still going to buy 360's. I know you get the best part of £115 worth of stuff in your ps3 if you tried to get the same via 360 (free online gaming, rechargable controllers and wireless internet.) but customers just tend to look at price along with all their friends have. Neither of which sony are anywhere.
ps3 + extra controller + top title game + sony/platinum title + free blu ray film + 3 year guarentee (cos they dont break like 360's and sony should really be plugging that one) £250. Then you would see some units really shift.
If their master plan is ps3 + one top title game at £250 possibly even £260 then I dont see them making much head way. I love my ps3 its great machine and I enjoy playing while microsoft are fixing my Xbox every 6 months but I just think they are a big company dissaster waiting to happen.
£1 billion loss last year and the fact that it is going to cost them a fortune just to try and break even with profits from gaming this year now the ps2 is dead.
Re: Free Xbox Live? I don't think so...
@KB
Depends on how well the PS3 sells at £250 or $300. Include a top game in the deal like Gran Turismo 5 for instance and I think the PS3 will begin to sell like hot cakes, for a while at least. That may put pressure on Microsoft to react, and one of their reactions could well be to eliminate the cost of XBox Live. At some point the cost of buying a PlayStation 3 is going to be alot closer to that of the premium XBox360, and when that happens Microsoft will surely have to think about how to add extra value to their product offering.
This Colin Sebastien
I don't really know what planet this Sebastian guy has been living on for the last few years but since launch the PS3 has been the strong performing No. 2 console this generation. It has virtually caught up with 360 already given that Microsoft had a year headstart and the 360 sales include 360's that have been replaced multiple times.
Sony are simply saying that in 3 years they have sold 22 Million consoles, and that they hope to increase sales by 30% for year 4. That too me sounds like sound business talk considering a price reduction will come before the end of the year and ofcourse that means before Christmas.
If Colin Sebastien cannot see this happening if Sony do not drop the price by $100 then I am afraid the Colin Sebastien is in the wrong job. Sony are saying what the business analyst's already expect. Colin Sebastien however prefers to play a part at the exhibition that comes with the gaming industry.
strong performing no 2 console???
that's absolutly ridiculous, so ridiculous I nearly didnt bother to reply but then people might read that and think its fact.
Wii 4.9 million sales,
Xbox360 3.2 million sales,
PS3 1.9 million sales
as of january 31st UK only.
MCV recently carried a piece on here comparing the sales of the ps3 with the sales of the gamecube. If you have any doubts walk into just about any games retailer and look at the amount of space dedicated to ps3 in comparison with 360, Wii and DS.
Statistics Statistics...
@Sodster / dave:
You're both right - but it depends which territories you look at. Sony like to quote global figures because their advantage in Japan and mainland Europe makes up for them being behind the 360 in the US and UK (broadly speaking).
A PS3 price cut is surely on the cards, but the simple matter of the cost to Sony of making the things is always going to hold that back in terms of amount. Hence why they'd much rather bundle some games (which don't actually have much of a per-unit a manufacturing cost) in an effort to shift boxes.
I certainly don't think Sony is doomed - my experience of game retailers is that the 360 and PS3 sections are about even. It's certainly nowhere near the Gamecube's disappointing performance at the same stage in its life in terms of retail presence.
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