Sony decided to not cut the price of the PS3 before Christmas 2008, choosing fewer sales at a higher price point over a sales boost at the expense of per-unit revenue. Unfortunately for them, with consumers becoming increasingly price-sensitive and the large price differential between the Xbox 360 & Wii and the pricier PS3 certainly hurt them when it came to sales. These numbers in particular look pretty nasty for the big black box.
Unfortunately for Sony, they don’t have much scope to cut the PS3 price, as the other divisions of the company, such as consumer electronics, movies and music are all being impacted by the recession. The price will certainly be cut in the spring, but how much? How consumers react will determine with 2009 is a good or bad year for the company. If sales pick up strongly, helped by the release of key first-party title Killzone 2 (due for release next week), then Sony should be able to make more headway at closing Microsoft’s installed base lead. However, if sales don’t show a significant uptick, Sony faces a tough year ahead. Microsoft has extremely deep coffers and its core Windows business is relatively recession-proof due to the ubiquity of the PC platform.
Microsoft can force the pricing of the Xbox 360 lower in response to Sony’s price-cut. As the economic downturn continues to bite, consumers are likely to be even more price conscious and Sony finds itself caught out by events, whereas Microsoft’s hand looks to be coming good. The Blu-Ray drive, which is mainly responsible for the high price of the console, now looks more of a burden that an advantage, for more than one reason (more of that in my next post!)
So are we looking at a 'high noon' moment for Sony? I certainly feel that if sales don't pick up over the spring, they may have to finally concede that they are not going to end up in #1 place this console generation. The global recession certainly provides them with some cover to admit to less than stellar performance. I wouldn't be surprised to see some Scooby Doo-esque statements around E3 time - "we would have gotten away with it as well, if it wasn't for that pesky recession!" It can certainly be argued that this would be healthy for Sony compared to the astronomical levels of hubris displayed in previous years.
Killzone 2 is also an interesting game to examine. It is getting good reviews and will undoubtedly help sales, but I don't feel that Killzone as a brand has become strongly linked to the core Playstation brand in the way that Halo and now Gears of War have becomed entwined with the Xbox brand (of course, that very closeness is a big factor in the difficulties Microsoft has had in expanding the Xbox 360 demographic away from core gamers!) Perhaps this is because the original game launched late in the PS2 lifecycle whereas it is usually games released at the console's launch or soon after that get associated with a platform in the collective consciousness. I don't think there is a big rump of people who are holding off buying a PS3 until Killzone 2 ships, whereas I'm fairly certain there were significant numbers of people who waited for the likes of Metal Gear Solid 4 (and may be waiting for Gran Turismo 5). The series just doesn't have that sort of fanatical following.
More "Trends in Gaming" later this week.
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