Guest Columnist: The PS3 Needs to Be ?Underpriced?

Following the latest announcement of the Xbox 360’s price drop to $199, there has been a fair amount of debate over whether the PS3 needs to follow suit and respond with its own price drop. And the arguments basically break down into the following two camps:

• No, it doesn’t need to drop its price: the PS3 hardware offers much more than its competition, and the consumers should realize the immense value it brings to the table at “only” $400.
• Yes, it should drop the price: The consumers are not going to pay $400+ for a videogame console, especially when they have $199 (360) and $249 (Wii) alternatives.

Here is my take:

On a factual, logical basis, yes, the PS3 is a great deal. The best bang for your buck, so to speak. I own two PS3s, and I paid $1,100 for my first one (at launch, imported), and I don’t regret it from an economic perspective (I also own all other systems, by the way), because it was very apparent that the hardware was more than powerful enough to warrant such a pricetag (in 2006).

However, that is not the problem here.

Sony is refusing to drop the price because it is insisting on turning a profit on the console today, when it should be focused on doing so over the console’s so-called “10-year lifespan”. Somewhere along the time, Sony has undercut its own strategy and objective by making the console inaccessible to the market it is seeking to seize.

And this has had a vicious-cycle-effect. Yes, the PS3’s biggest weakness is its software lineup (and please don’t list its holiday lineup, because it’s a tie against the 360’s; both sides need to admit this and move on already), but it’s also Sony’s own fault that it is stuck in this quagmire of weak/delayed titles.

Game developers are not putting, or have not until recently put, enough effort toward PS3 development. And it’s completely logical for them (the developers), because Sony has been patronizing its potential customers by claiming that they are “too stubborn to see the value of the PS3” instead of making it easier for them to join the party. And this has created the perception that nobody but the most affluent and dedicated gamers own PS3s. (Wait, scratch that. It’s not just a perception; it’s the reality. But don’t tell that to the devs, please.)

Dear Sony. Yes, the PS3 is worth it. Yes, once people own the system, they appreciate their purchase. But your potential market obviously can’t tell. What you should be doing is solving the perception that the PS3 is overpriced. Instead of limiting the customers to a $499 choice (the bundle), give them a $299 option, even if it is fake.

Really, come down from your perch and learn from your competitors.

Case in point, the Wii is $249, but once you buy all the “necessary” peripherals, you’re looking at a $400 investment before you can enjoy your Wii. But people don’t care. They go to a store thinking that they want that $249 machine. Then once they’ve made that mental decision, it’s not hard to squeeze an extra $40 here (game) and an extra $100 (Wii Fit) there.

Same goes for the 360. People don’t know or care that the $199 Core system can’t do Xbox Live, and doesn’t have a HDD and headset. All they see is $199, and when they leave their homes, they are going to EB Games to buy that $199 system. They don’t care or know that they need to spend an extra $60 for the hard drive, $20 for the headset, $60 for a game, then $50 for Live. Why? Because the price that gets advertised is $199, and not $380, which is the real cost.

My point? Know your customers. Understand their financial parameters and accommodate to their lack of foresight and research, and show them a $299 pricepoint. Who cares if they need to spend another $60 to actually start playing a game, and that an additional DS3 costs $40?! They don’t. Yes, I really, really hate to say this, but it’s time you learned how to Pander. Because the public is too stupid to do the math/research itself.

(I am greatly ashamed to have patronized my potential peers, and I sincerely apologize for my bluntness)

Just imagine this. And I’m being somewhat serious here:

The “PS3 ‘CORE’ Package”
Price: $299
Included in Package:

• Standard AV cable (these people don’t even own an HD TV anyway!)
• 20 GB hard drive (let them complain about the HDD size after they buy the system; and release a Sony-branded 120GB for $60; people can already add 250GB drives for $100 if they do it themselves)
• One (1) Sixaxis controller (make them pay for their own Dualshock 3s)

Honestly, whatever little Sony may lose on the console, it’ll easily make up if it can turn around and make sure the PS3 can once again be seen as “THE” videogame system to own, thereby solving the perception issue.

But Sony doesn’t get it. Sony doesn’t even understand its own 10-year strategy, and it may not be until it loses this console war that Sony finally learns it.

Bo “Orakga” Jinn believes everybody is a closet gamer. Most just don’t realize it.