Here's How Consoles Should Be Priced For The Holidays

Console prices are a hot topic right now. So let's take an objective look at just what the sweet spot should be for each player in the market.

We've seen Sony finally announce the PS3 Slim and a price drop for the whole PS3 range. Understandably so, it needs the boost it will surely receive from a lower price point, as outside of Japan it's the weakest performer of the three current generation consoles.

But how should Microsoft and even Nintendo react to that?

The Wii has slowed this year, as the industry as a whole has slowed. Even so, it's still comfortably outselling the competition. And some of that competition - such as the Xbox 360 Arcade - is priced considerably cheaper than the Wii.

Microsoft appear to be phasing out the 60GB Pro console. But will that leave the 120GB Elite or is there another, higher-specced version on the way? In Britain today, we hear word that Microsoft is raising the price of the Arcade to combat a weak Pound/Euro exchange rate.

Regarding the handheld market, there's the DSi shifting truckloads across the globe despite a premium over the hugely successful DS Lite. Yet analysts are predicting a price drop for it already.

And what of the PSPgo? It's allegedly over-priced in the US, but Sony can't yet confirm how it might be priced here in Australia.

Looking at all these factors coming into the still hugely important holiday season this year, here's how I reckon Microsoft, Nintendo and Sony should be positioning their hardware in Australia.

Sony Sony has already shown its hand. We know the PS3 will be $499 from Monday, and the Slim drops on September 3. Sony simply had to put pressure on the 360 by coming in under the price of the Elite. They needed to hit $499... and they did. A $200 drop is big enough to convert those who had been previously tempted, but hadn't committed. It's OK if they're still the most expensive console, as the PS3 clearly provides the most out-of-the-box, but $500 is a psychological barrier they need to get under. Sony got this one right. The PSP is an interesting one because while hardware seems to be doing OK, PSP software has lagged way behind. Sony needs the PSPgo to succeed in order to combat piracy, but getting retail support for a system that essentially cuts them out of the loop is a hard sell. How Sony balances the need to give retail a wider margin on the PSPgo hardware, while at the same time pricing it attractively compared to the existing PSP will be telling. If the PSP stays at $300, the PSPgo really can't be more than $349... but I suspect it'll be $399.

Microsoft It's hard to know whether the apparent phasing out of the Pro console was always planned or if it's a response to the PS3 Slim. Either way, Microsoft knows it needs to maintain its price advantage over Sony's console. With the Slim at $499, the premium Xbox must be no more than $399 and probably also sport a bigger hard drive than even the Elite carries at present. Getting a number on the box bigger than the Slim's 120GB is an advantage not to be under-estimated. The question then for Microsoft is how low can the Arcade go? It's already $100 cheaper than the Wii, but are those two machines actually competing for market share? A lot depends on how worried Microsoft is about a $500 PS3 and how much they've driven down the 360's manufacturing costs. I'd be surprised if they can get it to $199 this year, but expect to see even more aggressive bundling at $249 than we've seen even during the recent toy catalogue period.

Nintendo The Wii won't budge in response to any price drops coming from Sony or Microsoft. Nintendo aren't interested in playing that game. Why should they? The Wii continues to outsell the other two combined. And for as long as people still want Wii Sports, Wii Fit, Mario Kart and now Wii Sports Resort, they'll continue to be willing to pay $399 for the pleasure. Sales have slowed, however. But I'd expect bundles before price drops. A New Super Mario Bros. bundle with extra Wiimotes for $399 looks like a good Christmas gift. Similarly, I wouldn't expect much movement on the handheld front. DSi has stormed out of the gate, selling faster than even the DS Lite. Remarkably, the DS Lite is still selling as well. Again, Nintendo won't pay any attention to what Sony does in this space. I expect them to maintain parity, perhaps push more bundled software on both versions, and hold on any price drops until next year.

So, here's my prediction...

PS3: $499 (Slim console, no bundled software) PSP: $299 (bundled with family-friendly software) PSPgo: $399 (bundled with at least one download-only game) Xbox 360: $249 (no hard drive, plus bundled family-friendly games) Xbox 360: $399 (200+GB hard drive, plus at least one M-rated game) Wii: $399 (New Super Mario Bros. bundle) DS Lite: $199 (bundled with a range of games) DSi: $299 (bundled with a range of games)

I'm keen to hear your thoughts. Do you see any flaws in my predictions? Who do you think has the most attractive proposition? And would any of these deals persuade you to buy a new console?

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Comments

    $100 difference between the DS Lite and the DSi, to me, is a bit to large as the DSi does not bring that much more to the table.
    If I were to buy another DS with those prices, it would definitely be a second DS Lite (and I don't even own any GBA games).

      I dunno, givien the downloadable games etc on the DSi, SD card support, bigger and clearer screens, better audio, sure the camera isnt much but $100 is fine IMO

        The 'downloadable games' have less depth to them than the majority of flash games on the internet. What does SD card support and clearer audio bring to most games? Nothing. (My flatmate has one and I've used it extensively) The only noticable feature I would consider it for would be the compatibility with WPA(and 2!) encryption, but then it was revealed the WPA will only work with new games supporting it, what a joke.

        But yeah 300 is to much to me, I just don't see any reason to upgrade to a DSi to begin with.

    I would think those are all pretty close to the money... though not sure about the 360 Elite version. If a standalone 120GB HDD for the XBOX is somewhere up at the $149 mark, a price cut on the Elite with a larger HDD just seems like it can't happen... lol

    200GB HDD might sit up at $199, so a console where half the cost is the HDD? Same HDD @ $399 with a game or 2 is more likely...

      The size of the hard drive really only brings a marginal difference to the manufacturing costs. I'd be surprised if a hypothetical 200GB HDD would cost much more than a 120GB HDD. Factor in the savings of only manufacturing one HDD type, as opposed to running separate lines for the 60GB and 120GB, and it gets even cheaper.

        I'm not doubting the cost manufacture on the HDD, just MS and their pricing...

        Always wanted to move away from the 20GB HDD, but previously the 120GB has always been $199, it's only recently dropped to $149, maybe within the last 6 months... considering 18mths ago that I was able to get a 250GB HDD for $150 for my PS3, and having only 1 option for the 360, they set a rather high price for it...

        They just need to look closely at the individual item price points...

    I think during the holidays the PS3 slim will be bundled with A) Uncharted 2 B) Grand Turismo 5

    On the 360, i dont think it will have a 200GB+ hard drive.

    Everything else you said sounds about right.

    Yeah i agree that the wii won't drop in price either. Yes, they might not be selling as much as they were a year ago but like you said it is still completely dominant.

    For me $499 is still too much for a PS3. I know that may seem unfair but for me personally i would only get it for MGS4 and really from what i have heard it is 3/4 movie, 1/4 game. However i think us Aussies have been shafted again especially since the PS3 is only $299 in North America and its $200 more here. If they were to cut $50~$100 off i would consider a purchase.

    After buying the PSP on launch, and since then has been gathering dust for 4 years i simply am not interested in getting the GO. Even if i was interested because i had played my original PSP, i would be not only put off by the price (considering i could get either a 360/Wii for that price) but also because sony would control all the prices for the downloadable games and effectively charge an arm and a leg for them, removing the "bargains" you can find in the old brick and mortar shops.

    I don't know about the 360 predictions. I would of thought that the arcade might make the distance and get to the $200 mark with the announcement of the slim but that might just be wishful thinking.

    As for the ds lite and dsi predictions i would say spot on!

    Nice write up David!

      Thats a bit unfair to MGS4. Its almost perfect. It might have cutscenes that run too long but the GAME Part is more than long enough. And the way it plays just makes it one of the most fun games this generation.

      On the one hand, I agree...I looked at the Australian-American exchange rate, saw $360 and predicted it'd be $450...so close enough. Slightly annoyed when I saw it'd be $499.

      However, taken from 300 Euros...and we're looking at $513. Suddenly, it's not so bad.

      So yeah, after a couple years of moaning about the price, I'll be picking up a Slim PS3 in a few weeks :)

    I've been looking around to get a 120gig HDD for my Halo edition 360 (20gig) I was toying with the idea of selling the console and then getting a new one.... but i might hold off and wait till the xmas period. But does microsoft have enough time to design and produce new hardware (HDD) for xmas time?

    Will be very interesting as to how Microsoft respond. Sony are pitching the PS3 at two markets - those for true HD movies and those for gaming and I think this is why it is falling behind. Most gamers don't have HD televisions and hence won't pay the extra above the 360 for blu-ray.
    Microsoft however need to respond even though they are targeting one market (gamers).
    Arcade to be scrapped.
    Pro to replace Arcade @$299 (although rumours suggest this will be scrapped?)
    Elite with 250gb HDD and wifi @$449

    Agreed a bigger HDD but maybe add wifi with a price reduction of about $50 only.

    I've been holding out for this price cut / slim version for the ps3 and but i would be disappointed if there is no software bundled

    Those predictions are probably spot on

    I'm personally pretty happy with the new $499 price point on the PS3. I think enough has been said regarding whether or not it should be lower, but I'm in the boat that it's a good price. I haven't followed the PSP enough to comment on that.

    I agree with the Xbox Arcade prediction, but I don't quite see something better than the Elite (i.e. larger drive) dropping to $399. The Pro's $449 at the moment so I think the Elite will probably come down to that price in light of the PS3 cuts (and despite what I might have said in another post). $399 would be a very aggressive, and actually attractive, price, so maybe.

    I have different thoughts on the Wii though. The average Wii is about $380 now, with some even lower, so I'm predicting a $50 price drop instead. I also think that they'll bundle, but I don't think they'll do New Super Mario Bros. *and* an extra Wii-mote for the current price; I think it'll be $449 for such a bundle (or an alternative Wii Sports Resort bundle). DS and DSi sound right to me, though I'm personally having a hard time thinking of what games they could bundle to make it look attractive; Mario Kart and now New Super Mario Bros. were good, just can't think of what the next first party bundle would be.

    Ding!

      Actually, this isn't due to the ps3 cuts, there has been signs for many months now that the Pro was going to be phased out and the elite would replace it.

        My original opinion on the Elites replacing the Pro was that yes it would happen here, but that it would still sit at a slightly higher price point, or at least not be bundled with anything. Hopefully we won't see a price rise like Europe at the very least.

        On further research I'm actually quite mistaken; the Pro's RRP is currently $399. The $449 price I keep quoting is for the Halo and GoW bundles. I'm gonna give up on predicting something for the Xbox; David's come up with some good points regarding HDD pricing (above). My only question to that though would be how much would they sell standalone hard drives, especially if there's only one?

        Ding!

    Actually David I don't think Nintendo Australia will do anything at all to the Wii. Retailers are already slashing it to around $349-$379 by itself.
    Nintendo will sit on this price point for one more Christmas at least and rely on retailers to cut margin and bundle things rather than making an official bundle.

    I think we'll see JB Hi-Fi, EB, Game and the Big Box store bundle in Wii Sports Resort, maybe throw in another controller for still about $399 instead.

    Nintendo thinks $399 is still value for money and nothing will budge them and hey to the target audience it may be. Even though $100 extra dollars net you Bluray player and Media Centre in the box, not all people want or need that. However when the Wii becomes expensive is when you factor in controllers, and that’s what you really need to get the best out of it.

    However at $499 the PS3 is tremendous value by Australian standards as a separate Bluray player is seldom found under this amount and to get a “HD Console” you’d have to buy a 360 and you’re looking at about $700 to buy two different things.

    Having said all this, the Arcade 360 has been cheaper than the Wii for six months and it hasn’t stopped it, yes the Wii has slowed down – but so has the market.

    Interesting times ahead!

      You could be right on the Wii Sports Resort bundle. And when retail is hitting $340 for the console now, it's not a stretch to imagine a big new game like NSMB bundled at $400.

      $399 RRP is still value for money for the Nintendo customer. You can't say $100 will get you Blu-ray etc, because the consumer is wanting different things. There will be a day at some point - probably next year - when the Wii is the most expensive console on the market. Yes, I'm serious.

        Yeah I just don't think Nintendo themselves will do it and leave retailers to fight it out.

        I know you're serious about the Wii being the most expensive, and it's a bit worrying. But as you said the Nintendo customer doesn't care. The Wii has a large mind share here in Australia, something Nintendo hasn't had since the SNES.

        The other ace which is nearly as good as price drop is a new colour, and that Black Wii is looking mighty fine.

    I was rather hoping that the pspgo would be a LOT cheaper than that, I know its unrealistic but I don't think I could bring myself to spend more than $250 on a handheld.

    The 360 Arcade really needs to be phased out in favour of a 20GB pro model. The lack of hard drive really is a handicap and whilst it might spur future purchases of overpriced HDDs when people want to install software or buy marketplace content, it prevents the spur of the moment impulse buys that the marketplace is ideal for and which would probably make more money in the long run.

    The PS3 Slim (Oh my god, who ever saw THAT coming??) being priced at that point has moved it from my "They're dreaming" list and onto my "Hmm, maybe one day when I have a lot of money" list. Its a pity its not more modular, you buy everything or nothing and I'd really prefer not to pay for tech like bluetooth or wifi when I'm never going to use it

      But if it didn't have bluetooth, how are you meant to connect PS3 controllers or headsets?

      And don't you find it ironic how you mentioned the Arcade needed a HDD?

    MS need the Arcade, boost the internal to a gig or 2 gb. That would please a few who look into those specs and advertising its internal memory would appeal to adults buying for children so they don't think they need to go buy a HDD with it and then avoid the 360 route.

    The Elite or rename it maybe, replace the Pro. Black or White to choose from, 120GB (and keep the HDMI cord which they are now not choosing to do, which is cause of the Pro being phased out, cheap pricks).

    Then they're Elite 2.0
    I say 250GB HDD, if the Slim comes out with a 250GB then this competes with that. This has to include a HDMI cable and some extra features. Unless MS announce a newish Xbox SKU with added features that neither Xbox has, then there is no point in having an Elite 2.0 cause it will be $100-$150 pricer than whatever replaces the Pro and wouldn't be worth the HDMI cable and more GB if the 120GB Elite becomes standard.

      I agree they're replacing the Pro with the Elite, but "Elite 2.0" for the new model doesn't really have the right punch to it.

      I think they should've gone further with the whole Halo naming analogies - to go with the Elite, rename the Pro and Arcade models to "Hunter" and "Grunt", the Halo version to "Spartan", and the upcoming Elite replacement should of course be named the "Brute".

      Oh, and make them an iridescent purple colour, naturally, with a blue-LED glow.

    And PC gamers will sit back and laugh, having bought hardware at it's actual price and simply pieced it together ourselves.

    I’m pretty sure the RRP for the PSPgo will be a lot closer to AUD$450. That’s what the press release a large Australian retailer got from Sony today says anyway.

    I can't see Sony going to Xmas without a bundle. They'll either go for one of their big xmas titles (Uncharted 2 looks particularly attractive if GT5 doesn't make it out this year), one of their big-but-not-yet-platinum exclusives like Killzone 2 or LittleBigPlanet, or the old standby 2 platinum games (but please - it's time to let Resistance:FOM and Motorstorm rest. Maybe GT5:P and Uncharted:Drake's Fortune?)

    If Sony don't do an official bundle, you can be sure retailers will do their own.

    MS have always done good bundles, their existing Gears 1&2 pack is a beauty, they could carry that through xmas easily.

    Wii - who gives a...?

    Nintendo should be under pressure from developers still interested in serving the 'core' audience for a price drop to Wii and possibly even DSi. Why?

    Despite still selling strongly, people who read websites are unlikely to see the $300 DSi and $400 Wii, bundled or not, as good value. Which means that people like me, who would otherwise have bought House Of The Dead Overkill and probably The Conduit, don't own a Wii and won't own one because it's an overpriced glittering turd.

    I think all David's suggestions are sensible and likely, though I doubt the increase in hard drive space for the Elite 360 yet, Microsoft will be slow to move on it despite Netflix and Games On Demand and everyone will get the shits with them until about mid next year.

    I think Nintendo are percieved as being overdue for a price drop and may actually succumb to that pressure - because despite strong sales still, their pricing just seems downright rude. Also, I think that if their pricing was more mass-market recession-friendly their Christmas sales would explode. Unfortunately, unless they are willing to drop the price of their rudely overpriced DSi they don't have a lot of movement possible with the Wii. It SHOULD be $299 but they might move it to $329 and the DSi to $279.

    Sony have actually done something interesting to me for the first time in years but still no plans to get a PS3. Is it true they are selling a blu-ray player with composite cables? wtf?

    i can remember $500 being the magic number for me getting a PS2 many moons ago. i think sweet bundles will make this christmas rather jolly for all console customers.
    the hype behind the ps3 slim has been so huge has it broken into mainstream media much yet?
    and big hard drives are what will move 360s? seems lame to me, they must have something more substantial in the works, im calling 720 within 6 months

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