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The Console Wars – A Readers Thoughts

Console-Wars

We have received another guest article from one of our readers called Matt Long. Matt contacted us with his thoughts on the console wars and prices and as always we are more than happy to share these thoughts.

As Sony and Microsoft gouge at each other by gouging at their own console prices, there’s one surprising winner.

We all saw the loser. The person on our friends list who, a year ago, posted up a picture of themselves with their shiny new console.
“Look at me!” they exclaimed, bragging mode turned up to 11.
“Picked up this baby on release! Cost me £600, worth every penny. Drop me your username if you got one too!” Their cry echoed through social media. You probably felt a pang of jealousy. You hadn’t preordered in time to get a day one edition, or didn’t have the best part of a grand to blow on entertainment.

Well look at how things have changed. You can get a brand new console for less than £300. Sure, it’s a slimmed down version. No camera. One controller. But it’s less than half the price, and comes with games – everything you need to plug in and play. Between Black Friday, Christmas sales, and the now beginning January sales, those who chose to wait are being rewarded for their patience, and as Microsoft and Sony increase their reductions in a downward spiral of oneupmanship, it’s only going to get better.

They’ve both realised that this new console war won’t be won by profits. They’re both chasing the elusive “best selling console” title. They, like every razor manufacturer and drug dealer, have realised the money will be made in the long game. Sell the tools cheap, give them a free sample, and they’ll keep coming back to refill from you. Between online subscriptions, points, and exclusive titles, they’ll make back every penny you save within 3 years.

The Xbox 360 and PS3 price hit a bottom of around £150-£200, for a good model, and I imagine the Xbox one and PS4 will hit that level within the calendar year. We’ll know for certain in February, just over a month from now, where there will be two post-sale options: continue reducing, or go back up. And if you believe customers aren’t going to say “why am I paying £350 for a console obviously only worth £250”, then you don’t know the public very well.

That’s not to say the consoles aren’t worth picking at any price – I work on the front line of gaming retail, not in speculative stocks and shares. But the quick depreciation is more to do with changing battle lines than value for money. For the companies, it’s less about having the best equipment, and more about sheer force of numbers. The eventual goal is to reach Wii levels of saturation, where every front room has your console attached to the TV.

There will eventually be new versions (we’ve already seen the COD Xbox with a 1TB hard drive, and the obligatory colour changes) which will cost more. But a standard, 500GB console, will continue to fall in price until a best seller is declared by a margin. Even if the Wii’s lofty sales figures are beyond reach, a 10% lead would be enough. What we are seeing is not a price-war, but a price-skirmish, and whoever undercuts themselves the most, whoever willingly sacrifices their profit margins quickest, will have the most soldiers in the much larger battlefield. We are looking at one aspect of a much larger war.

It’s a folly of human logic to correlate “best selling” with “best to own”. No one wants to be the proud owner of the runner up. And if the majority own one thing, then that can be extrapolated and applied to your friends too! You want to be able to play against most of your friends, don’t you? The profit based business model is gone. Long live the popularity contest. As long as the majority of parents are only willing to buy one new games console, the fight will continue.

And in the mean time, those who wait in the wings will eventually be the true winners. Prices will continue to fall while there are still front rooms to fight over, and patient customers will have their pick of the spoils of war.

We all know that the early bird gets the worm. But it’s prudent to remember: the second mouse gets the cheese. The first mice have charged in, and paid the heaviest costs. The traps have been sprung, the rewards have been left unguarded. All that’s left is to choose your time to strike wisely.

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