Both Microsoft, and Sony showed their cards by unveiling Xbox One, and PlayStation 4 respectively. Just over the last few days, both companies revealed the prices of their consoles: $499 and $399, respectively. Ever since the Xbox One reveal, Microsoft has been shooting themselves in the foot with respect to the “Always On” controversy. However, it didn’t start at the Xbox reveal. It started with an employee, and then it spread like a wildfire in the months before the Xbox Reveal.
Microsoft made a concisous decision to deliberately “lose” the console war. I think that’s a bad idea, and I also think that they can’t get away with the $499 price tag. But before we get to the why’s and whatnot. Let’s take a look at the history of gaming’s astromical console prices.
Neo Geo: Most people don’t realize those Neo Geo arcade units you find at your local movie theaters, local pizza parlors, a local Chuck E’ Cheese, or those integrated amusement parks with [Neo Geo] arcades are actually game consoles. These consoles would cost you a staggering $400 and $650 respectively. And the cartridges themselves sold for an astromical price of $200 and up. [According to a Wikipedia entry]
These consoles were never really available to the “mainstream,” even though there are people that would pay $650 for a console. The problem is that most people wouldn’t be able to afford a console like Neo Geo. So, SNK, the manufacturer of the Neo Geo AES/MVS consoles provided the console(s) to arcade operators, restaurants, bars, and hotel chains – mostly the niche market.
The question you might be asking yourself is: “Was the price justifiable?” The answer is, yes. If you want a perfect arcade port of legendary fighting games such as Fatal Fury, the King of Fighters, and most famously, Samurai Showdown, then you pluck $650. There is absolutely no way to have faithful ports or conversions of these Neo Geo games, even 10-20 years later. Not on a home console, no.
3DO: I thought $400 and $650 was expensive, but 3DO one-upped those prices by selling them for a whooping $700. The company and the console was founded by the very same man who founded Electronic Arts – the largest video game publisher in the world.
Forget the price, the console did not take off due to various reasons. The marketing strategy for the console was lukewarm against the console war that is Nintendo’s and Sega’s “Great Console War” that defined that generation. And then, what puts a proverbial nail into 3DO’s coffin, new consoles were arriving late in 3DO’s life; the 64-bit Atari Jaguar, the 32-bit Sony PlayStation and Sega Saturn. Sony’s PlayStation was the breakout winner between the 4 new entrants.
The launch library was lukewarm, and did not have a single breakout “killer app” for 3DO. In fact, the only saving grace for 3DO was a [almost] perfect, straight port of Super Street Fighter II. Not even Super NES could capture the quality of the conversion. In conclusion, that’s why the console failed.
If I was Trip Hawkins, I’d take the path that SNK took with Neo Geo’s home/arcade consoles. This way, you could start out small (from a marketing standpoint) with the arcade scene, which at the time was at it’s peak, it’s apex. Hell, even Nintendo could’ve benefitted from that path with Ultra 64. But no, Nintendo 64 was the final name.
PlayStation 3: Many people flipped when Sony uttered “$599.” Nope, that price isn’t a typo. For $600, this console was yours. Keep in mind, that’s with one controller. In Neo Geo’s case, there were two arcade sticks packed in with the console, along with a game which (once again) is $200 and up. 3DO’s pack in was similar; one controller.
Much like 3DO before it, the game library was lukewarm. The PlayStation 3 benefitted from the “PlayStation” brand itself; with 250 million PlayStation owners (102m for PSX, 150m for PS2), so it makes sense to keep the price up. Sony dropped the price a year later, in preparation of Metal Gear Solid 4’s impending release. Therafter, the game library strengthened by the year’s end.
Was it justified? PS3 was designed for future growth, since Sony set up their “10 year lifecycle” initiative. Under the hood, the PlayStation 3’s specs was aligned with Xbox 360’s on paper, but is arguably more powerful than Microsoft’s console.
Now that you’ve got the background, it’s time to talk about why Microsoft shouldn’t expect to, can’t, won’t, and ultimately will not get away with their $499 price tag. 104 Million Xbox owners (24m for Xbox, around 80m for Xbox 360) isn’t enough to sustain the $500 price point for a year or two.
Let me put it this way, Sony can get away with “not showing all the major games.” Just show a little bit here, and there. Microsoft has to show off some heavy hitters for Xbox One, because there just doesn’t seem to be a lot of momentum left for Microsoft to gain back.
It was bad enough all of these Xbox One policies that block used games sales in the real world economy – ya know, second-hand sales between two human beings? That. You can sell or trade games online, according to Microsoft, but other than that – used games go bye bye. If you’re not the owner of that particular disc – that means you gotta pay. Xbox One has to make sure that you’re using your Xbox One online. Thing is, this is part of the “Always On” DRM controversy. There’s more, but I’m just going to leave it at that. Let’s just say the problems are endless.
Just when you thought it couldn’t get any worse. Microsoft shot themselves in the foot by telling the world, the E32013 capacity crowd, that Xbox One costs.. $499. That’s $500 after taxes. So, let me get this straight…
Microsoft wants you to buy a console that has low specs. If you read the Xbox One reveal article, you would know that while the console has 8GB of memory, it’s based on an old generation GDDR3. The PS4 has 8GB GDDR5. This difference while it looks like there’s little difference on paper, but that could not be further from the truth. In fact, it’s a huge difference. It gives developers more breathing room to work with. With PS3, developers had to be contended with restrictions with regards to system RAM – 512MB combined memory – which is split; 256MB system memory, 256MB graphics memory. Xbox 360 had 512MB of unified memory, Xbox One and PS4 both has 8GB of unified memory. Except, of course, one is GDDR3, and the other is GDDR5.
Sony is offering you to buy PS4 at an ‘affordable’ price. They are offering you a console that will be used for 10 years in a row. Both companies will be tapping AMD for graphics. No one knows which graphics chip will be more ‘powerful,’ just that each chip will be custom made for each one.
What makes Microsoft thinks they can get away with the $499 price point? I understand that Kinect may $100 – $150 or higher to design, manufacture. I understand that the Xbox One controller might be around $40 to $60 a controller. A low-end headset can go for $20 and the highest can be around $60. (Going by console pattern here!) 100 Million owners isn’t enough, and about half of them will be converting to PS4 after they see the policies. Sony won E32013 only because Microsoft wasn’t trying when they actually need to try. Sony won E32013 because Nintendo gave up trying to steal the E3 spotlight.
Nintendo doesn’t know how to please the E3 crowd anymore after the release of Wii U. They’ve opted for setting up announcements through Wii U’s Nintendo Direct service.
In conclusion: Sony is onto a winner with PlayStation 4. They’ve applied all the right moves over the last 6 months alone. Sony is slowly eating away more and more marketshare away from Microsoft through well-calculated marketing, and business moves. Hell, even some Xbox loyalists are already converting to PlayStation 4. This says a lot about people’s tolerance towards Microsoft’s ‘bull$#!^” and therefore, Microsoft can’t get away with the $499 price point with Xbox One.