Is $300 Magical?

Speculation continues as to the timing of an inevitable drop in the price of the PS3. Most people seem to think a $100 drop is coming by end of summer. I’m going to go out on a limb here and say “who cares?” and “it really doesn’t matter.”

The PS3 is currently $400. A $100 price cut will put it at $300. Analysts appear to be fond of saying that $300 and below counts as “mass market pricing” for a video game console — as if timing, the current economic conditions, and the competitive landscape have nothing whatsoever to do with consumer demand.

If it were the middle of 2007, a $300 PS3 might be something to get excited about. But unfortunately for Sony, it’s the middle of 2009. If you’re a true hardcore gamer, by now you’ve most likely purchased the Xbox 360 or PS3 already. A select few consumers might be waiting for price drops to add a second hardcore machine to their collection, but the software libraries for the PS3 and 360 are so similar that most people won’t ever bother. Long story short: the war for the hardcore gamer is effectively over in this console generation.

So the question is, will $300 appeal to the mass market? Well… the economy still sucks, and both the 360 and Wii are still cheaper even without potential future price cuts of their own. The Wii still has a better reputation, the benefit of momentum, and much more exclusive content. The 360 is still, ummm… cheaper. (I’d say something about the 360’s superior online service, but I’m really not sure that the mass market consumer cares very much about that — at least today.)

This brings us back to Blu-Ray. It always comes back to Blu-Ray, doesn’t it?

Years ago, I said that consumers wouldn’t give a damn about Blu-Ray anytime soon. Most people told me I was wrong, but it turns out I wasn’t too far off. Are things very different today? Well, there certainly have been signs that consumer interest in Blu-Ray has been picking up recently, but has it picked up so much that cost-conscious consumers will flock to a $300 PS3? I doubt it.

If you really want a Blu-Ray player badly, there will be options that cost half as much or less. And while more people are interested in Blu-Ray nowadays, I’m guessing that most people still won’t bite for all the same old reasons. The discs themselves are still more expensive than DVDs. You can’t play them everywhere (i.e., on your laptop; in the gym; etc) the way you might be accustomed to with DVDs. Most fundamentally, the visible quality difference between Blu-Ray and DVD on a decent-sized HDTV still isn’t anything to write home about. No, Blu-Ray + $300 will still not save the PS3.

Perhaps at E3, Sony will unveil some shockingly-great new feature that causes the press to foam at the mouth and consumers to run wild in the streets. If that happens, you can ignore everything I just wrote. If that doesn’t happen, I wouldn’t double down on PS3 dev kits just yet… unless Sony sells them for $300, of course. With a magical price like that, you couldn’t possibly resist!

13 responses to “Is $300 Magical?

  1. I remember seeing a market research study (a fairly credible one IIRC, but I can’t find it now to save my life) that showed that $200 was a significant threshold because it was a the point at which purchases didn’t require spousal approval. Interestingly, this threshold didn’t change whether the family income was $50k or 150k/yr. Not sure whether recession changes it or not.

    I’ve long believed that the lower price point was a significant factor in the Wii’s dominance. And the press seems to not want to even look at that. It’s all about the controller and retiree virtual bowling, etc.

    I just think that when you look at console + a couple games + accessories, a 360 is a couple hundred bucks more than a Wii and a PS3 is more than that. If I’m a parent buying for my kid, well, that’s a lot of scratch.

  2. I totally agree that there are certain price thresholds that can make a difference for social and psychological reasons; I just object to citing those thresholds in absence of all the other factors that contribute to a purchase decision.

    RE: the Wii’s price: no question that it played a significant role in the Wii’s success. And there’s no question that the PS3’s launch price played the *primary* role in its early failures. But, to quote Chris Hecker, nobody was going to pay $250 for “two Gamecubes duct taped together” unless the timing was right, the interface was novel and accessible, and the marketing was brilliant.

    Sony’s working on the price. Their timing, marketing, and unique feature prop could use some work, too. But again, I don’t know what they’re cooking for E3…

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