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PS4 initial costing analysis [Updated]
- Thread starter zomgbbqftw
- Start date
The biggest problem with the $600 price braket is that:
1- There was no real reason to get the PS3 at launch for that price since there was no blockbuster software for it. It took almost 2 years to get games that could justify that price.
2- Videogames are still considered "toys" by a lot of people, while tablets and overpriced cellphones are not. That is probably the main factor. Consider that a lot of people that buy videogames get then for their children not for themselves.
If the PS3 was released alongside games like Uncharted, Killzone, God Of War or Gran Turismo (just to mention first party titles, no counting third party) gamers would be smiling from ear to ear when they dropped the cash.
Selling the PS4 at that price nowadays even with games like Killzone Shadow Falls is a little more difficult IMO because of the recent economy, besides the obvious "video games are toys" angle.
1- There was no real reason to get the PS3 at launch for that price since there was no blockbuster software for it. It took almost 2 years to get games that could justify that price.
2- Videogames are still considered "toys" by a lot of people, while tablets and overpriced cellphones are not. That is probably the main factor. Consider that a lot of people that buy videogames get then for their children not for themselves.
If the PS3 was released alongside games like Uncharted, Killzone, God Of War or Gran Turismo (just to mention first party titles, no counting third party) gamers would be smiling from ear to ear when they dropped the cash.
Selling the PS4 at that price nowadays even with games like Killzone Shadow Falls is a little more difficult IMO because of the recent economy, besides the obvious "video games are toys" angle.
I doubt we are going to see proper gimping like we did at the start of this generation. The 20GB PS3 really was a gimped system.
I hope/am sure that whatever the SKUs they have the base hardware is identical and the difference will be HDD capacity and pack-ins.
If the suspicions are correct that every PS4 will ship with a headset and the PS4 Eye then the only other pack-ins they could add to make a premium SKU would be a bigger drive, a second controller, a game or PS+ subscription.
They want every SKU to have an HDD to do all the new bits and get people buying more digital content, they want an eye in every box to make everyone have the capability for Move games and they want a headset in every box to encourage more online atmosphere.
If gimped this coming generation means "smaller hdd" then I'll take it.
The stunning thing is that despite that it still kept pace with the X360 sales when launch aligned. Despite being late and hideously expensive people still bought it at the same rate as the competition. No idea if that also related to sold software or not though.
I think it was mainly the strength of the brand coming out of total dominance on the previous gen.
People believed Sony could do no wrong. It was a hard wake up call to fans and Sony alike.
The Playstation brand doesn't have the same strength now, but if they release before or closely after the 720 they won't need it that much. Specially if they release first.
Brand recognition and strength are more important when your release is considerably later than your competition.
Do your numbers come from straight wholesale pricing or does it factor in a bulk purchasing adjustment?
I would think that on the RAM in particular that would be a big factor. I have the suspicion that Sony and either Hynix of Samsung, whomever is providing the RAM, have an agreement of sorts where the PS4 is going to effectively subsidize the ramp up to 4Gbit chips. If that is the case Sony is likely getting a sizable discount if not getting them for damn near cost.
I'm expecting Sony to roll out the following:
Basic Model (system + controller + PSeye + ~300GB HDD + one month of Plus)
N.A. - 399, E.U. - 330 before VAT, JP - 41000
Advanced Model (system + controller + PSeye + 1TB HDD + 3 months of Plus)
N.A. - 450, E.U. - 400 before VAT, JP - 45000
Vita Plus Model (system + controller + PSeye + 1TB HDD + 3 months of Plus + Vita)
N.A. - 600, E.U. - 500 before VAT, JP - 60000
For Europe and Japan they would be at a USD of ~$430, so just one game + one accessory or two games in they've recouped costs. In the U.S. they'll be a bit more aggressive since it's a key territory. The advanced model is nearly profitable out of the box, and makes money after the first piece of software is sold. The model is back closer to break even, but will help push both the PS4 and Vita, also likely moving Vita software with it as well resulting in more software profits.
Sony's premium models will mostly focus on HDD size and additional months of plus because that is where the profit marigns get fat and it would only help Sony roll more gamers into the PS+ family. I'd expect PS4 to get PS+ support from day one, with a few digital distro games rolled out for "free" at launch. The benefit of this is that if those titles are strong they will result in a lot of free PS+ subs rolling over to paid subs.
I could see Planetside 2 as one of those titles actually. F2P for everyone but first month PS+ players (read - everyone with the system) gets a few freebies out of the gate (XP booster and a few select items), then every week PS+ members get another freebie (with one XP booster a month guaranteed). It would effectively cost Sony nothing and if Planetside 2 takes off due to being F2P at launch they would have a lot of people very interested in keeping up PS+.
prag16
Banned
What math are you using to determine they'd be about breaking even on the $450 model?? Based on the OP the BOM alone could be close to that number...
Yeah, I think my word choice was poor. I wanted to say that they will try to make the $499 SKU as attractive as possible compared to the $399 to entice people to buy that more to an extreme degree.
product choices, especially among the upcoming 18-30 demographic, are becoming extremely image-based. "can i take this tablet everywhere. will my friends see it. what will they think of me." are just as becoming just as important as the actual value behind the product itself. you can bring a tablet with you anywhere, so it's easier for many people to justify the expense.
prag16
Banned
Guys, look at the OP. The most conservative estimate puts the BOM alone at around $400. BEST CASE. The situation is likely worse than that. The Vita BOM was $170 and sold at a loss at $250.
Sure, the OP could be way off. But that works both ways... I personally think the CPU/GPU estimate is rather low. Chipworks speculates nearly $100 for the Wii U's MCM. If they're right, $85-95 for this sounds too low.
If you want Sony to thrive, it's shortsighted to wish for another massive loss leader here.
Sure, the OP could be way off. But that works both ways... I personally think the CPU/GPU estimate is rather low. Chipworks speculates nearly $100 for the Wii U's MCM. If they're right, $85-95 for this sounds too low.
If you want Sony to thrive, it's shortsighted to wish for another massive loss leader here.
Iacobellis
Junior Member
One SKU at $400 and the PS4 would sell like crazy at launch and the weeks after. Parts still have about another six months to get cheaper.
prag16
Banned
Don't be too sure. You might be right, but many of the big games will be cross gen, and this isn't the economy of 2006.
Regardless, I don't think they can afford to go that low, personally. MSFT is in better position to pull that off.
Iacobellis
Junior Member
If they shoehorn in PS+ at $10 a month for a year with every system sold, I think they could easily do $400.
weekend_warrior
Banned
Pretty close to what I expect. I don't think there will be a Vita bundle though. It doesn't make sense to wrap the limited number of PS4's they'll have into such expensive bundles, plus you'll have idiots going "LOL PS4 $600 again!" like it was last gen when it was conveniently ignored that the PS3 launched with a $500 model too. Maybe Sony will opt to have a PS4 launch window sale on the Vita or offer a $50 coupon with any purchase of a PS4 to stir up more interest.
AranhaHunter
Banned
I expect the break even model to be about 70-80% of the available models out there, much like the 60GB was when the PS3 launched. Besides games and accessories, there's also subscriptions from PS+ and new tiers of service that will likely come when the console launches.
Special bundle to push the vita, mainly. Maybe initially be just a BF thing, i.e. $600 will net you the PS4 and PSV during Black Friday. Not sure if they will get enough space with retailers for it though.
zomgbbqftw
Banned
So I had a few conversations with game publishers today and the same price points keep coming up with all of them:
$299
$399
$499
This is my speculation now:
$299 - 1TB, and a 2 year PS+ commitment at $10/m
$399 - 320GB
$499 - 1TB
They all say that they expect PS3 to drop this year to $199 also. I think if Sony are doing a subscription model they might do a $99 PS3 with a 2 year PS+ commitment.
$299
$399
$499
This is my speculation now:
$299 - 1TB, and a 2 year PS+ commitment at $10/m
$399 - 320GB
$499 - 1TB
They all say that they expect PS3 to drop this year to $199 also. I think if Sony are doing a subscription model they might do a $99 PS3 with a 2 year PS+ commitment.
weekend_warrior
Banned
But do you really need a special "bundle" to push the Vita? How about if you include a $50 off Vita coupon with every first run PS4 SKU. You get people home, they start looking through all the free Vita games on PSN+, they start thinking about streaming PS4 games to it, they look at this coupon, think hey I only need to spend another $150/$200 to get all this way not. And now Sony is basically selling tons of it's highest priced SKU, without actually having that SKU, and they're getting more people into the Playstation ecosystem, which is the real end-goal.
You're not wasting retail space with a $600 SKU.
You're getting more people to buy Vita.
Win-win.
Just curious, based on what should we believe you that this information is reliable? Don't get me wrong, I believe you because the majority of GAF does and I've seen your name flying around earlier, but I'm just curious where you get your information from? I know you can't blow your cover but do you work in the industry, if you don''t mind me asking?
TheRagnCajun
Member
So then the $299 consumers would have to sign a contract for a 2yr subscription at the retailer. Or would they pay for the 2yr service in full upfront?
sorry if this is a repost.
Pricing the PS4, or How You Can Skip the Wait and (Kinda) Build One Today
http://www.forbes.com/sites/carolpi...-can-skip-the-wait-and-kinda-build-one-today/
Pricing the PS4, or How You Can Skip the Wait and (Kinda) Build One Today
http://www.forbes.com/sites/carolpi...-can-skip-the-wait-and-kinda-build-one-today/
zomgbbqftw
Banned
Nothing. I offer absolutely no guarantees. My line of work gives me access to a lot of information not readily available to the public, and though I am careful not to push it, I have a lot of leeway to post some of the analysis I do, so I do, though edited to maintain my anonymity.
At the end of the day I'm just an anonymous poster on an internet forum, it's up to you to choose whether you regard my information as reliable. I have been known to be wrong on the odd occasion, but I also get a lot right. I told the Android thread last week that there would be no new Sony smartphones at MWC, probably just an international date for the tablet, and today we saw no new Sony smartphones and a Q2 date for the tablet.
zomgbbqftw
Banned
2yr contract at the retailer, same as phones. There isn't much point in having a $299 model and asking for $539 up front!
AranhaHunter
Banned
Or a $49 Vita with a 2 year commitment as well. I think they will try to implement this within the year starting with the Sony stores and then expanding. MS has been really successful with it, so I see Sony doing the same.
Win win except for Sony who will keep losing money, maybe a $50 SKU with the premium model, but would that be preferable over 1 year of PS+? I'm not sure.
It was the same for PS3, expect the same for PS4.
I believe MS said they were satisfied with it, hence why they expanded to more retailers. It's a smart strategy.
lunchwithyuzo
Banned
I'd expect even more than that. I'm not sure how it went for PS3, but with 360 and Wii U the higher priced models always did more much business. Wii U especially, ranging from 75-85% depending on the market.
Subscription model for launch? Why bother, supplies will be tight and they'll be selling to a core audience who's not afraid to spend high? This seems like a better "Year 2" strategy imo, when they're really in a position to drive userbase growth and push audience expansion.
I think a sub model does make sense for PS3 and (especially) Vita in the short term though. Do you have any insight into how Microsoft's US 360 experiment is going?
Surely it's USD unless stated otherwise?
Liamario
Banned
It's a mainly US site, but there have been plenty of non US figures thrown around.
$499.99 base model. $599.99 for a bigger HDD?
Leaves room for PS3 to reduce to $199.99 and provides a minimal hit in money lost on each unit sold if we consider the parts alone are over $400. If they really want to be aggressive, they'll launch at $450 and $550 and take a bigger loss in an attempt to gain footing in the market-- but I honestly think mass market is going to keep with their current offerings if systems are priced as high as they are with no reason to upgrade.
$399.99 base model if Sony is really desperately wanting to get back their crown. But I don't see it going for less than $450.
Leaves room for PS3 to reduce to $199.99 and provides a minimal hit in money lost on each unit sold if we consider the parts alone are over $400. If they really want to be aggressive, they'll launch at $450 and $550 and take a bigger loss in an attempt to gain footing in the market-- but I honestly think mass market is going to keep with their current offerings if systems are priced as high as they are with no reason to upgrade.
$399.99 base model if Sony is really desperately wanting to get back their crown. But I don't see it going for less than $450.
Baki
Member
I don't think many people will buy the $500 SKU, hence why it would represent 20-30% of sales (not that Sony won't try to allocate more and skew it towards their favour).
If its a 2 year contract, expect it to be $15/m (where Sony gives retailers etc.. a margin). Although $10/m would be the more aggressive and wiser margin.
zomgbbqftw
Banned
Don't forget Sony have their own retail network in which they can push this model.
zomgbbqftw
Banned
They would do it for a symbolic low cost of entry, and to get people hooked onto PS+ which is very, very profitable for them. The majority of people who buy that contract version will stick with PS+ over the term of their ownership of the console making Sony a lot of money in the process. The more people they hook onto PS+ the more solid PlayStation will be as a business. Having a $299 SKU available at launch will give PS4 the wow factor and bring a lot investor cheer that Sony are using new business models to sell their consoles.
MS do very, very well out of this model. I fully expect there to be a $299 NXTBX SKU at launch with a 3 year XBL commitment.
There is zero point in buying the $499 SKU when the $299 subscription is available.
MikeE21286
Member
it's cheaper?
I think these are going to be the two pricepoints. I don't know if the hard drive numbers or pack-ins are the same, but I think you've hit the nail on the head on price.
I still think multiple SKUs is a dumb idea, both from a money making and marketing perspective. These are gaming consoles, not Honda Civics.
AgentP
Thinks mods influence posters politics. Promoted to QAnon Editor.
I don't understand why people refer to a lower end pack that way. Unlike the X360 where it came without a hard drive, which is essential, and was overly gouged, I can't see what Sony could leave out that would cripple the system.
Even without Eye 2, headset, PS+ and only 300-500GB hard drive in a base sku, it would still be a very very competent fully capable device.
zomgbbqftw
Banned
A lot of people like to own stuff outright and having the option there doesn't cost Sony any extra, in fact it would be good as they get the full revenue up front rather than over the two year term.
I agree, but I think the value disparity is very big. Look at the potential $499 customers and tell me how they would not understand the value of a $299 SKU with a 2 year PS+ subscription. Maybe I'm guessing the $499 purchasers are just that dumb...
Firstly, zomgbbqftw wrote $10/month.
Secondly, the subscription adds an extra $40 in cost over 2 years. Anyone in the market for a $499 SKU PS4 will automatically realize the value/benefit of a $40 PS+ for 2 years, combined with a $299 PS4 up front. Now, instead of spending $499 up front, they have spent $299 up front and have left over money for games and controllers, etc... Lastly, anyone in the market for a $499 PS4 might just as likely pay for PS+ out of pocket, but why bother with a $299 subscription SKU.
Why you want to reduce this to a discussion of "$40 difference" is beyond me.
zomgbbqftw
Banned
That $10/m figure is only my speculation based on Sony's past actions. It is in no way based on concrete information. It could well be $14.99 per month.
Again some people like to own stuff outright, having a SKU available for them makes sense as Sony can realise $200 extra in revenue upfront rather than having to wait for it. It literally costs them no extra money as $499 would probably be a break even price point.
I agree with this. I am merely trying to point out that when they announce the SKUs, the perceived value of each SKU should try to play into Sony's favor. Not trying to discount your much appreciated insight
I'm not clicking that link and giving them a hit...for anyone who has already, is it basically a copy and paste of PCGamer's write up a few days ago?
zomgbbqftw
Banned
I agree with this. I am merely trying to point out that when they announce the SKUs, the perceived value of each SKU should try to play into Sony's favor. Not trying to discount your much appreciated insight
True, maybe at E3 they will only announce a $399 model and a $299 subscription based one, and then later they will say there will also be limited availability of the sub one with out the sub at $499.
AgentP
Thinks mods influence posters politics. Promoted to QAnon Editor.
Isn't the current MS plan $15/m?
Last I heard, MS isn't making the PS4. zomgbbqftw wrote $10/month (and added that it was his own speculation) to which I responded. We're all just throwing around numbers here, mate. Part of the discussion surely can be the value that PS4 SKUs offer relative to each other, no? $10/mo, $15/mo - your guess is as good as mine.
devonraynor
Member
what would be great for Sony is to get everyone on their sweet spot with giving them 3 months of PS+. people get free stuff, but tend to forget they lose it when subscription ends. Et voila there you have thousands of people paying a monthly fee of some kind