Sony’s $100 Price Drop Won’t Make A Difference
Sony is cutting the price of the $600 PlayStation 3 by $100. This follows Microsoft’s admission last week that Xbox 360s are failing in “unacceptable numbers” and that it will extend its free-replacement warranty for three years. They’ve both left a huge opportunity for Nintendo to succeed with the cheaper and more innovative - and apparently reliable - Wii. In the first five months of the year, Nintendo has walked away as the winner, selling 1.73 million Wiis in the United States, according to market researcher NPD Group. Microsoft has sold 1 million Xbox 360s and Sony has sold only 665,000 PS3s.
Sony really handicapped itself by pricing its console so high, a necessity brought on by its decision to include the high-cost Blu-ray storage drive in its console. Because of that blunder, coupled with launch delays, the company that once held a 70% market share during the last generation of video gaming suddenly found itself in third place, behind Nintendo and Microsoft. But What Sony really needs to do is show off better games than the rivals. That won’t be easy, since Microsoft will show off “Halo 3,” the third installment of an exclusive franchise that has sold nearly 15 million games. Nintendo has its own lineup of Wii games with familiar “Mario” and “Metroid” characters coming.
Compared to the rivals, Sony’s new price is still too high. But the company can’t afford to cut prices further. In the last fiscal year that closed on March 31, Sony’s video game business lost $2 billion. Thanks to the blunders of its rivals, Nintendo is the company going into E3 without any egg on its face, unless you consider its inability to keep up with huge Wii demand to be a big problem. Nintendo’s machine doesn’t emphasize whiz-bang graphics and so it doesn’t cost much to build. Price-sensitive fans and non-gamers are opting for this console earlier in the cycle than they ever have before. These advantages are why more software publishers are commissioning games for Nintendo.
