Streamlined PS3 production may facilitate price drop in '07

by Blake Snow { Jan 30th 2007 at 5:15PM }

After a slight decrease in Sony profits largely attributed to the costly and soft-selling PS3, industry analysts maintain that perhaps an early PS3 price cut in 2007 may still be possible due to streamlined production. Said Colin Sebastian of Lazard Capital Markets today: "We believe it is too early to rule out a PS3 price cut for later this year, which will depend in large part on retail sell-through trends, the evolving competitive landscape, and Sony's willingness to endure further losses on PS3 hardware, offset by potential component cost savings." Keep in mind this appears contrary to what Sony chief executive Jack Tretton said in response to early/easy PS3 price cut questions last week. In short, he said "no."

Sebastian also believes Sony may drop the PSP's price to help boost its sales. Granted, there are other ways to increase a product's value proposition without lowering its price; in this case they're called games. But at the moment (and maybe the foreseeable future), both the PS3 and PSP are widely viewed as not having enough games to encourage consumers to lay down cash. Hence, an early price cut may be the quickest route to a spike in sales.

[Thanks, John]

Reader Comments (Page 1 of 1)

Paul C @ Jan 30th 2007 5:22PM

According to sony, they expect PS3 to be breaking even by the end of the year. It seems they are already realizing cost savings somewhere. I could see a price drop by next Christmas. It would also boost Blu-ray movie sales. Of course they will deny it, they don't want people holding off on buying it.

Draco @ Jan 30th 2007 5:24PM

yeah, no self respecting company will admit to a price drop coming soon, that would be corporate suicide.

I don't however see a price cut happening until Microsoft has one, and I don't see Microsoft dropping until Sony does.

Microsoft will probably just keep adding games to their bundles.

ill trooper @ Jan 30th 2007 5:26PM

"Streamlined Production" is the nice way to say "We don't need to manufacture as many as we thought?"

I'm joking... I have my PS3 sitting right next to me. How 'bout streamlining some games production pipelines?

Metalmurphy @ Jan 30th 2007 5:40PM

Joystiq should get up to date a bit... (unless that was just some random Sony bashing as usual)

ATM, the PSP has more 80%+ games then the DS. People just haven't bothered (or don't want to) realise that.

Reuben @ Jan 30th 2007 5:43PM

at #4, It's not all about quantity. I own both a PSP and DS, but lately I have been playing my DS much more. I own a handful of PSP games that I love, and play often, but I haven't a game in months. In fact.. I can only come up with two, three tops that I have my eye on.

JodyAnthony @ Jan 30th 2007 5:43PM

Metalmurphy, and at the moment millions of people are enjoying games on both DS and PSP, so who cares which has higher ratings?

Miniboss @ Jan 30th 2007 5:45PM

@ 4.

"ATM, the PSP has more 80%+ games then the DS. People just haven't bothered (or don't want to) realise that."

Yep. Higher review scores by people who sit in an office next to a power supply all day long.

Zebulunite @ Jan 30th 2007 5:48PM

“But at the moment (and maybe the foreseeable future), both the PS3 and PSP are widely viewed as not having enough games to encourage consumers to lay down cash. “

While I would agree with you on that statement for the PS3 (obviously it just came out, so of course its not going to have a killer game liberary), I would COMPLETLY disagree with you statement in regards to the PSP. While what you said might have been true around summer 2005 or so, that certainly isn't the case toady.

Here's what IGN said about the PSP's game selection in the 2006 Year in Review article:

“In 2006, Sony's PSP had its strongest year yet. Numerous developers released what would normally be called "killer apps" during a launch period, though sadly it seems that many of these titles were overlooked a bit due to all the next-gen hype that lasted year-round. Regardless, 2006 was a fantastic year for the system.

Games like Killzone: Liberation, LocoRoco, Syphon Filter: Dark Mirror, GTA: Vice City Stories, Metal Gear Solid: Portable Ops, Lumines II... the list goes on and on. To say that the system has matured would certainly be an understatement, as developers have now fully begun harnessing the system's power and are creating full and unique titles rather than simple ports. It's a fantastic time to be a PSP gamer.”

And just look here at a number of excellent-looking titles coming out in 2007: http://www.pspfanboy.com/2006/12/26/games-to-look-forward-to-in-2007/#comments

Metalmurphy @ Jan 30th 2007 5:48PM

I'm not saying the PSP is better then the DS, that wasn't my intention. All i'm saying is, this article made it sound like the PSP has no good games, and that simply is not true, it was pretty rough in the start, as are all Sony consoles it seems, but right now the console is in pretty decent shape in it comes to games, plenty to choose and to have fun with.

Spirit @ Jan 30th 2007 5:53PM

So maybe DS is beating PSP.. and you could consider it a better system, sure. But c'mon.. the PSP doesn't suck. It's got a nice library of games, even though it may not be as plentiful as the DS, its got some good quality games in there.

And #7.. the battery life isn't that bad. Perfectly fine by me.

But you may not want to listen to me about PSP games... I mostly just play PS1 games on my PSP...

JodyAnthony @ Jan 30th 2007 5:53PM

Zebulunite, thanks for that list. I swore I wouldn't buy a PSP until sony released Suikoden 1+2 here in the USA, but I had forgotten all about Jeanne d'Arc, and I should be getting my tax refund soon...

sucks to be a poor gamer

matthew @ Jan 30th 2007 6:05PM

No way does Sony drop the price of the PS3 this year. They are supposed to be losing $200-300 a pop on each console, and there is no way they can shave that much off in the next 10-11 months.

If Sony was pushing more volume, then maybe the scale of production would reduce the price-per-unit number, but PS3s are not selling well. It's a catch-22: more demand would reduce the cost-per-unit, but there won't be demand at the current price.

Meanwhile, the 360 premium is at least breaking even, perhaps giving MS as small profit. If I was Microsoft, I'd put a dagger through Sony's heart by dropping the premium to $299 and the core to $199. Up against the $499 and $599 PS3, I think it would be over for Sony before the PS3 was a year old. On top of that, the core would undercut the highly marked up Wii.

Sony Will FAIL @ Jan 30th 2007 5:58PM

1st Off the PSP SUCKS!!! It's a Piece of Garbage!!! Yes I have it & Yes it's up For Sale.

Back on Topic, Sony Has to Drop the Price!!! No-body's buying that 'Other' Sony Piece of Junk!! Check your stores, There in Stock Everywhere!! They can't move'um. Sony should just start over!!!

Sorry Fangirls, But THE TRUTH HURTS~

NeverSage @ Jan 30th 2007 6:02PM

I own a DS and PSP. I only have two games for the PSP though, Lumines and Wipeout Pure. I'm just not interested in any other games. I feel since they're so close to console games I could get a better experience there. The Loco Roco demo was fun, but come on. That game is not worth $40.

Zebulunite @ Jan 30th 2007 6:08PM

“Sony Will FAIL”, I fail to see how a system that has sold 953,200 systems last December alone (in the US), and 6.7 million total in the US is something that “No-body's buying” and that Sony “can't move'um”. Don't believe me? Well, its hard to argue with THE OFFICAL NPD SALES NUMBERS: (http://www.dailytech.com/article.aspx?newsid=5687).

The truth DOES hurt moronic fanboys like yourself and anyone else who wastes his/her life making absurd comments any anything, much less videogame systems.

Mr Khan @ Jan 30th 2007 6:07PM

I believe he simply stated that MORE good games would make the handheld MORE appealing, you people read into this too much, calm down

Zebulunite @ Jan 30th 2007 6:15PM

Mr Khan,

“I believe he simply stated that MORE good games would make the handheld MORE appealing, you people read into this too much, calm down “

No, he claimed that the “PS3 and PSP are widely viewed as not having enough games to encourage consumers to lay down cash”. While, as I said before, I wouldn't argue with his comment so-far as the PS3, I think the PSP selling nearly a million systems in the US in December 06 (nearly 2/3 the number of DS systems sold in the same period) alone proves his claim that the PSP is “ widely viewed as not having enough games to encourage consumers to lay down cash” is clearly false. (Numbers are offical NPD stats that I posed a link to in my earlier post).

I'm not saying that more good games wouldn't increase sales, I'm saying that the PSP's current library is clearly not impeding its sales.

carg0 @ Jan 30th 2007 6:18PM

if there is an official price drop this year for the ps3 it certainly won't be related to cheaper production costs. it'll be because no one's buying them.

syco @ Jan 30th 2007 6:19PM

Actually, there aren't any good games for the PSP except Lumines and possibly Katamari (I don't know how well that game would translate to portableness). Just to be sure I scanned http://en.wikipedia.org/wiki/List_of_PlayStation_Portable_games real quick... It still looks pretty sad to me.

jkarma @ Jan 30th 2007 6:21PM

in response to #5.

Ya, and I enjoy sitting through 3-4 minute load screens for two minutes of actual game play. Got me beat there.

PSP - good in theory for such a massive failure.

If it wasn't for the homebrew scene the device would have bombed by now.

otisgibbon @ Jan 30th 2007 6:22PM

if there's one thing PSP has done is to teach me to take game reviews with a grain of salt. I have found several games with sub 75% ratings that were great whereas a good portion of the above 80% I wouldn't touch with a stick. I feel like the average game reviewer has very specific tastes in game. I also feel they put too much importance on graphics. From all my time spent on the intertubes they don't really seem to match even the general gaming population.

I mean the general concensus is that the PSP is lean on good games and the DS has tons. For me the PSP has maybe four games I want to play (five when ratchet and clank comes out), while My DS library is almost 20 strong.

I would like to start a site where instead of reviewing games in the same time frame they come out you spend a few months playing them. I think that also might help scores better reflect the true value of a game.

But thats just me.

matthew @ Jan 30th 2007 6:27PM

I own a PSP and a DS, and love 'em both, but the DS kicks the PSP up and down the street. The best games on the Sony handheld would be better played on a TV and just feel like broken console games on the PSP: Syphon Filter, Daxter, MGS: PO, GTA games, etc.... And the PSP absolutely kills my hands after about 15 minutes of play.

I definitely do not recommend a PSP to anyone else, and in fact the game library does pretty much suck with a plethora of PS2 games awkwardly shoe-horned in. I frequently look at my PSP and think: "man, this system could be so much better than it is." I look at my DS and think: "this thing is perfect at what it does."

otisgibbon @ Jan 30th 2007 6:28PM

Or maybe a review site where the reviews can be updated. Didn't someone re-review Wii sports after realizing that they were still playing the game on a daily basis and maybe it didn't deserve the mediocre reviews it received. This would also be great for games like Wow where patches can make a game better or in a few cases a little worse.

Killer @ Jan 30th 2007 6:49PM

Is it just me or do they always switch what they say now? I'm pretty sure like a week ago there was some type of article saying that sony probally couldn't do a price drop. Someone refresh my memory was that an analyst or Sony themselves, that said no drop?

Abscissa @ Jan 30th 2007 6:53PM

I was always anti-PSP, but at this point, with a used price reaching near $100, and games like Loco Roco, an updated Lemmings, Crush, and a few others, the ONLY thing holding me back from wanting one is the absurdly slow loading times. If they put out a new one that sped up disc access, I'd actually consider picking one up. I don't even care about battery time, since I never play games on the go anyway.

James @ Jan 30th 2007 6:58PM

I like the fanboy logic:

Sony hater: "The PS3 sucks because it's too expensive!"

Scenario 1: Sony doesn't drop price

Sony hater: "See, nobody buys your crappy system because it's too expensive!"

Scenario 2: Sony does drop price

Sony hater: "See, your system is so crappy you had to drop the price!"

When you create a situation where somebody cannot possibly pursue *any* acceptable action, you are being illogical AKA a fanboy.

I think the fact of the matter is Sony miscalculated (by exactly $100, apparently) how much even hardcore gamers would be willing to pay for a high end game machine. I think Sony knows this and (as they have always stated) are banking on the long term. They just couldn't release the system at any more of a loss than they already are, so they are allowing the super hardcore gamers + blu-ray fans to float the system until a more solid library develops and a price cut can be made (don't be alarmed, most consumer electronics products follow this model).

I'm pretty sure Sony *knows* their current price is a bit high and this was going to make a for a rough 1st year. But year one comes and goes and Sony are forward thinking to years 2-X. In a couple of years, just think how the fully loaded PS3 will look against the nickel-and-dime-you Xbox 360 when both cost essentially the same price but the PS3 does so much more for the money (blu-ray, Wi-fi, standard and larger hard-drive, etc.). When the 360 loses the price advantage (which will happen about the same time the PS3 library begins to blossom), things won't be as rosy as they currently are for Microsoft.

F1ghter @ Jan 30th 2007 7:02PM

Well, I looked at the lists that Zebulunite posted, and out of both of them only found 2 games I was interested in: MGS and Burnout. It really depends on your taste.

Personally I think the problem with the PSP's library is that the games are all way too in-depth, instead of being short and simple. Handheld systems should have shorter, more pick-up-and-play games IMHO.

Revo @ Jan 30th 2007 7:12PM

"26. I like the fanboy logic:

Sony hater: "The PS3 sucks because it's too expensive!"

Scenario 1: Sony doesn't drop price
Sony hater: "See, nobody buys your crappy system because it's too expensive!"

Scenario 2: Sony does drop price
Sony hater: "See, your system is so crappy you had to drop the price!"

When you create a situation where somebody cannot possibly pursue *any* acceptable action, you are being illogical AKA a fanboy."

Anyone including fanboys can see that scenario #2 is the "acceptable" action. However, it's undeniable that both options are bad for Sony, at least initially. Scenario #1 means low sales and scenario #2 means losing even more per unit sold. I don't think that reasoning is illogical by any means.

Mike @ Jan 31st 2007 11:37PM

I think the PS3's future library holds alot of promise (take Level 5's White Knight as one example). But at the PS3's current price I SIMPLY CANNOT AFFORD IT.

Luckydob @ Jan 30th 2007 7:23PM

Sony made their own bed by adding blu-ray to the equation. Yes, it's expensive..yes the PS3 is expensive. Yes, the games are better and a better buy with the 360. The PS3 is the porting bitch for 360 games. If you have a PS3, you paid 600.00 to play what? MGS and Final Fantasy 326. It's overkill and everyone knows and more importantly, realizes that playstation is now going to equal Dreamcast.

Mr Khan @ Jan 30th 2007 7:30PM

I still say PS3 will wind up like GameCube, the great games will be there (FFXIII versus and MGS4 being to PS3 what SSBM and Metroid Prime were to GC), but the general public just won't have the crazy interest in them that will be present for 360 and Wii games

Sensai @ Jan 30th 2007 7:47PM

'ATM, the PSP has more 80%+ games then the DS. People just haven't bothered (or don't want to) realise that.'

I'm pretty sure he was talking about 'good' titles, as in original content. Yes, the PSP has some neat stuff, and as jkarma said, an excellent homebrew scene. IMO, this and the fact that it's Sony are the only reasons that thing is still breathing.

daddycool @ Jan 30th 2007 7:59PM

I was going to rag on the PSP as well until I saw this:

http://www.pspfanboy.com/2006/12/26/games-to-look-forward-to-in-2007/#comments

There's at least 5 games I'd get today if they were out. In the meantime, I'm going to finally upgrade my firmware to the v3 hacked version and play some twisted metal.

Another thing wrong with PSP is the expensive memory cards. I bought one UMD just for the hell of it, but my 1.5 firmware wouldn't let me play it. I'd use it as a PMP if I would lay out for a 4 or 8 gig MS duo.. but I won't.

Oh, and if Microsoft drops the 360 by $100(which they won't, probably $50), Sony won't even have a choice. Most of the games are on both systems and play exactly the same. You'd have to be stupid to pay twice as much, they know that. The price drop will have little to do with production improvements. It's all on Microsoft and what they do.

John @ Jan 30th 2007 8:16PM

Poster #12 is a known Planter, has a history of such strategies. Takes less than an hour a day. Wonder what his/her other job is.

SlyTheBoss @ Jan 30th 2007 8:38PM

Industry analyst, LOL. Do they still have any credibility? They keep missing the frigging barn door!

James @ Jan 30th 2007 8:54PM

Here's a little mathematical thought experiment:

• Let's assume Metal Gear and Final Fantasy fans will approximately equal the number of Gears of War and Halo fans, so they cancel out. (I actually think this skews much heavier one way vs. the other, especially worldwide, but this is a thought experiment)

• Let's also cancel out all the titles that appear on both systems (GRAW 2, Assassin's Creed, Oblivion, Half-Life, Virtua Fighter, most EA games). Yes some games will be superior on one system vs. the other and some will appear first on one system vs. the other, but over the next year let's assume this all roughly balances.

• Let's assume that over time both the Xbox 360 and the PS3 will cost pretty much the same price (historically validated every generation)

What the hell are we really left with here? What's the deciding factor between these two systems? Too Human vs. Lair? Killzone vs. Bioshock? Mass Effect vs. Heavenly Sword?

The point is, when it comes to games coming out in the next year, the two systems are fairly evenly matched (unless you love/hate shooters in which case you automatically love/hate the 360). How can Xbox 360 fans assume 360 superiority when there is very little differentiating the two systems?

daddycool @ Jan 30th 2007 9:40PM

35. You forgot about Xbox LIVE vs. Playstation Network. It will probably take about 2 years for those to be equal or even close. Also FF fans > Halo fans as you implied. Other than that you're right, they're even. Unless you just HAVE to have a first gen Blu-Ray player, they're even. (Which is a good thing)

Evan @ Jan 30th 2007 9:43PM

@James "But year one comes and goes and Sony are forward thinking to years 2-X."

Sony doesn't have a year to get into gear, this generation started 14 months ago and Sony's already late to the game.

Historically, every console generation is decided the 2nd Christmas that all the systems are on the market...

Genesis vs SNES - December '92: It's close with SNES edging out the Genesis 1,355,000 to 1,248,500. The final tally: it's also close, with SNES edging out Genesis 22 to 18 million.

PS1 vs N64 - December '97: PS1 outsells N64 2,675,500 to 1,733,000 in North America, PS1 goes on to win the generation.

PS2 vs XBox1 - December '02: PS2 outsells XBox1 3,170,000 to 1,144,500 (2.78x). The final score 43.5 to 15.9 million (2.74x), almost the EXACT same proportion!

PS3 vs XBox 360 - December '07: If history is any indication, this month's sales should predict the PS3's fate.

James @ Jan 30th 2007 10:06PM

Evan, you have an interesting theory. I'm guessing it holds more true for North America than worldwide, because worldwide the Super Nintendo murdered the Genesis and the PS2 murdered the Xbox, whereas you indicate them being somewhat close. The ultimate victor is still correct, though.

So, if the Wii ends up taking holiday '07 would you be willing to concede that Nintendo takes this generation? I think the mere thought of that makes people's heads explode, but *many* are predicting Nintendo to pull ahead of everyone by the end of the year based on buzz and low price. Nintendo could slash prices to $99 per Wii if they wanted (they certainly don't seem to need to) and not even sweat it.

samfish @ Jan 30th 2007 11:31PM

What's your obsession with killing Blake's parents, Jihad? That's the 3rd post I've seen by you about that.
Fucking Republicans.

Anyhow...
Sony COULD slash the price on the PS3...they COULD also give it away for free! Heck, even I'd happily take a PS3 (even though I sold mine a month or so ago) if it were free.
Of course, the odds are slim to none that either scenario happens, if Sony really is losing $200+ per PS3 manufactured.

mushiking @ Jan 31st 2007 2:08AM

at a decent price, people will buy it even it doesn't have games right now. every bro i see in Gamestop wants one, but they just can't afford it.

mushiking @ Jan 31st 2007 2:28AM

"Back on Topic, Sony Has to Drop the Price!!! No-body's buying that 'Other' Sony Piece of Junk!! Check your stores, There in Stock Everywhere!! They can't move'um. Sony should just start over!!!"

yeah... and yet that "other junk" is selling quite well, which is the reason why Sony doesn't see any reason to drop the price: cause they don't have to. even if the ps3 doesn't sell well, they're still making money off of movies, cds, tvs, etc... one thing you guys to need to understand: Sony's a corporate entity, they're not Nintendo.

Slaziman @ Jan 31st 2007 8:51AM

To whoever said the PSP had more 80%+ games than DS games, that is true. HOWEVER, a lot of those 80%+ games are the same genre, racers, fighters, and sports. The average guy has ONE preferred racer, will buy ONE (or if he has interests in multiple sports, some more) sports game, and buy ONE fighting game.

Why? Because they are too much alike, it's like buying Pro Evo Soccer AND Fifa, it's overkill. Also there is no genre diversity, I know lots of people who aren't interested in racing, shooting, and sports games (on handhelds at least). What's really left on the PSP then? Like 10 games (I didn't count them so don't flame me)?

One thing that did scare me though is that out of the 25 80%+ DS games, 18 are made by Nintendo. WTF is up with that?

Joey @ Apr 23rd 2007 7:55PM

Ah, FFXIII, MSG4, Heavenly Sword can blow away any Wii games. I am not sure why people say Wii has better games. Mario and Zelda is same old game.

I say Sony needs to drop price at least just before MSG4 to boost sales. I think they need to have system cost $475-$500.00 the most. $600.00 was way too much for console. I am not sure why I bought it so early. Resistance Fall of man was okay but I stopped playing after hour of play. It was hard and not interesting.
I think once the great games like Final Fantasy XIII and MSG4 come out that Sony will do better and have the fans come out for it. Now if Sony screws up and lose them to MS than they will lose war and go the wayside. Because why would anyone buy PS3 if you can get every good game on Xbox? Seriously? But if they keep those 2 series than they got it made.