Publishers, Retailers Clamoring for PS3 Price Cut

Time for a PS3 price cut? We say yes.

Sony's E3 showing was definitely a strong one.  The company introduced the slick, new PSP Go, its own version of motion-sensing controls, and demonstrated numerous quality games, punctuated by God of War III. The problem, however, continues to be the much too costly MSRP for the PS3.  Consumers are hesitant to plunk down $399 on a video game system, especially in this terrible economy.  Sony can talk up the “value” of the PS3 all they want – and it is certainly a great machine with a fantastic Blu-ray player – but the bottom line is the company is unlikely to see much uptick in installed base until they drop that price. 

IndustryGamers was somewhat surprised that Sony did not use E3 to make a price cut announcement, and from our conversations with publishers throughout the show, it's clear that they're growing frustrated with the stagnant MSRP on PS3, even if many were reticent to discuss the issue and potentially say something negative about a major platform partner. Some executives didn't hold back, however.

“[We're] disappointed,” Sega of America's VP of Marketing Sean Ratcliffe told us. “I just think it must be hard for Sony to balance three live platforms – that's not something Nintendo or Microsoft have to contend with. ... I think from a platform point of view, we would like to see Sony sell more PS3s. It's good for us as a publisher. We think it's a great [machine] and that for consumers, if they hit a sweet spot with price point  that would bring more consumers to that platform. I think because of the success of PS2 people were automatically expecting PS3 to be the natural successor, and that actually really hasn't happened yet.”

He continued, “We need as many consoles out there as possible so our games [can sell to a larger installed base] so I hope they do something on price, especially in this economy. It's really tough. I was talking to some of our counterparts in Europe and I think in Spain the unemployment rate is going be around 20% by the end of this year. And so it's not just the console itself; you have to invest in the TV and so on. I think Sony needs to recognize that and hopefully do something about it this year.”

When we met with Activision Publishing boss Mike Griffith and asked him for his reaction to the lack of a price cut from Sony, we observed noticeable disappointment in his face.  He sighed and answered, “Yeah, I think the consumer wants to see better value on that platform. It's really up to  Sony to figure out what they'll do with the price. ... History would say they'll get there.”

Bobby Kotick, Chief Executive of Activision Blizzard was more direct, telling Bloomberg without specifically naming PS3, “I was disappointed not to see any sort of aggressive price cutting. Of all the things that the hardware companies need to be doing right now, it’s recognizing the difficulties of the economy and pricing their hardware appropriately.”

Retailers of course would like to be able to move more units as well. GameStop, the largest video game retailer in the world, is likely tired of seeing dust accumulating on their PS3 boxes.

“The hardware price points, where they are right now given this economic environment, are too high,” added GameStop Chief Executive Officer Daniel DeMatteo. “If the platform holders are going to make the numbers that they’ve forecasted for the year, those numbers will have to change.”

Despite the considerable outcry for a price drop from gamers and the industry itself, Sony Computer Entertainment boss Kaz Hirai maintains that Sony is pleased with the current price. “We’re very happy with the price point that we have,” he said to Bloomberg. “We will move when we think it’s appropriate at some point in time.”

Sony is continuing to wrestle with that balance between pricing and profitability, and right now the focus is to get to profitability. In the meantime, Sony is lagging behind the competition.  Nintendo has already sold an astounding 50 million Wiis, Microsoft has sold 30 million Xbox 360s and Sony trails with almost 23 million PS3s sold.