When Sony announced the PlayStation Vita at E3 2011 (June) at a price of $249, there was a palpable sense of positive surprise. After the system’s specifications were released, people were expecting Sony to do a repeat of the PlayStation 3, which launched at a near crippling $599. What happened next was out of Sony’s control and something that they will have to address in one way or another.
Nintendo released the 3DS at $249 in March of 2011 and no one bought it. So many no ones bought it that Nintendo panicked and reduced the price dramatically mere months after its release, in July of 2011. This spurred a buying frenzy. The software lineup that followed the price drop helped to maintain the momentum the system had suddenly built. The unforeseen consequence of this has been an expectation by some gamers that, if a system doesn’t fly off the shelves coming out of the gate, the manufacturer will simply panic and institute a massive price cut.
There are several issues with this expectation. Nintendo historically sells hardware at a profit from launch day. Coupled with the known tech in the 3DS, one can assume that, at $249, Nintendo was making a hefty profit on the device. Cutting the price down to $169 probably sent the bean counters at the House that Mario Built into a tizzy, but it’s reasonable to assume that they are still making a profit at that price point. It’s simply the way Nintendo operates. And the 3DS isn’t exactly cutting edge from a technology standpoint, Even with the 3D aspect taken into consideration, it’s a mundane device. Sony, on the other hand, tends to adhere to the industry norm of selling hardware at a loss and relying on software sales to recoup money spent on R&D and lost on hardware until such a time as the hardware becomes cheap enough to manufacture that it starts making a profit on its own. The idea that Sony will follow the path that Nintendo took with the 3DS is probably not realistic. Sony simply can’t afford to take a bath on Vita hardware. And that’s what a massive price drop would mean for the company.
As mentioned above, the 3DS isn’t terribly advanced on the hardware end of things. The same doesn’t hold true for the Vita. While this means that the cost to produce each device is wildly different, it also means that we, as consumers, should expect the devices to have different price points. When the 3DS and the Vita were the same price, people were proclaiming how much of a value the Vita was. The 3DS getting a price drop didn’t change the value of the Vita. It brought things more in line with where they should have been from the start. Nintendo had wildly overpriced the 3DS. The Vita is said to be at a break even point or a slight loss. There is clearly enough difference in the tech in the Vita to warrant the price differential between it and the 3DS. In fact, the Vita is still a tremendous value when compared to even the most advanced mobile phones on the market. Phones which, off contract (which is the only fair way to compare the devices), cost upward of six or seven hundred dollars.
Thus far, the Vita hasn’t been tearing up the sales charts. That much is true. The software available for the device is very good, but there aren’t a lot of titles to choose from yet. That much is also true. People seem to be overlooking that, after the price drop on the 3DS, software finally began to flow regularly. That hasn’t happened yet with the Vita. And one could argue that the software library was as important or more so than the price drop on the 3DS. That library didn’t really start to kick in until many months after the release of the device. After the price drop, even. Granted, Sony hasn’t announced much, and that is a bit concerning, but E3 is just around the corner and I think it’s prudent to wait until then to see what they have in store for the Vita.
But this business of waiting or hoping for a price drop any time soon is probably wishful thinking. For the Vita to survive in the current reality that is Sony’s financial situation, it has to break even or come close. Sony can’t afford to give the Vita away and hope that software sales follow. They are much better served by building up a compelling stable of first and third party software titles and letting that drive the platform. It’s what people will buy the device for, anyway. A $199 Vita with very little software is still a $199 device without much to play.
Nintendo has inadvertently set expectations to an unrealistic level by attempting to sell outdated tech at a premium price, failing, and panicking into a quick price drop. That was and is abnormal in the industry. Don’t expect it to happen often. And certainly don’t expect it to happen on the Vita.
Nintendo released the 3DS at $249 in March of 2011 and no one bought it. So many no ones bought it that Nintendo panicked and reduced the price dramatically mere months after its release, in July of 2011. This spurred a buying frenzy. The software lineup that followed the price drop helped to maintain the momentum the system had suddenly built. The unforeseen consequence of this has been an expectation by some gamers that, if a system doesn’t fly off the shelves coming out of the gate, the manufacturer will simply panic and institute a massive price cut.
There are several issues with this expectation. Nintendo historically sells hardware at a profit from launch day. Coupled with the known tech in the 3DS, one can assume that, at $249, Nintendo was making a hefty profit on the device. Cutting the price down to $169 probably sent the bean counters at the House that Mario Built into a tizzy, but it’s reasonable to assume that they are still making a profit at that price point. It’s simply the way Nintendo operates. And the 3DS isn’t exactly cutting edge from a technology standpoint, Even with the 3D aspect taken into consideration, it’s a mundane device. Sony, on the other hand, tends to adhere to the industry norm of selling hardware at a loss and relying on software sales to recoup money spent on R&D and lost on hardware until such a time as the hardware becomes cheap enough to manufacture that it starts making a profit on its own. The idea that Sony will follow the path that Nintendo took with the 3DS is probably not realistic. Sony simply can’t afford to take a bath on Vita hardware. And that’s what a massive price drop would mean for the company.
As mentioned above, the 3DS isn’t terribly advanced on the hardware end of things. The same doesn’t hold true for the Vita. While this means that the cost to produce each device is wildly different, it also means that we, as consumers, should expect the devices to have different price points. When the 3DS and the Vita were the same price, people were proclaiming how much of a value the Vita was. The 3DS getting a price drop didn’t change the value of the Vita. It brought things more in line with where they should have been from the start. Nintendo had wildly overpriced the 3DS. The Vita is said to be at a break even point or a slight loss. There is clearly enough difference in the tech in the Vita to warrant the price differential between it and the 3DS. In fact, the Vita is still a tremendous value when compared to even the most advanced mobile phones on the market. Phones which, off contract (which is the only fair way to compare the devices), cost upward of six or seven hundred dollars.
Thus far, the Vita hasn’t been tearing up the sales charts. That much is true. The software available for the device is very good, but there aren’t a lot of titles to choose from yet. That much is also true. People seem to be overlooking that, after the price drop on the 3DS, software finally began to flow regularly. That hasn’t happened yet with the Vita. And one could argue that the software library was as important or more so than the price drop on the 3DS. That library didn’t really start to kick in until many months after the release of the device. After the price drop, even. Granted, Sony hasn’t announced much, and that is a bit concerning, but E3 is just around the corner and I think it’s prudent to wait until then to see what they have in store for the Vita.
But this business of waiting or hoping for a price drop any time soon is probably wishful thinking. For the Vita to survive in the current reality that is Sony’s financial situation, it has to break even or come close. Sony can’t afford to give the Vita away and hope that software sales follow. They are much better served by building up a compelling stable of first and third party software titles and letting that drive the platform. It’s what people will buy the device for, anyway. A $199 Vita with very little software is still a $199 device without much to play.
Nintendo has inadvertently set expectations to an unrealistic level by attempting to sell outdated tech at a premium price, failing, and panicking into a quick price drop. That was and is abnormal in the industry. Don’t expect it to happen often. And certainly don’t expect it to happen on the Vita.
why is there an iphone up there but no android device? for shame.
ReplyDeleteI had to pick one thing for mobile and that was the easiest to draw and still actually look like something other than a slab of black with a screen. :)
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