All Game Consoles to Drop Prices in 2011 - Analyst

Prediction: Consoles Price Cuts Inevitable

by Anton Shilov
02/01/2011 | 08:37 PM

The 2010 was the last year when developers of current-generation video game consoles could sell them at current price-pints. All three platform holders - Microsoft, Nintendo and Sony - will have to cut the prices of their consoles in order to sustain sales, according to a well-known industrial analyst.

 

"After maintaining console prices at historically high points throughout 2010, all three console manufacturers appear to us to be poised for price cuts in 2011. U.S. PlayStation 3 sales were flat in 2010, while Wii sales were down more than 25% and Xbox 360 sales up over 40%; we think that Microsoft is in the driver’s seat on price cuts, and expect the company to lower price on its console at the first sign of a year-over-year sales decline," said Michael Pachter, an analyst with Wedbush Securities, reports Industry Gamers web-site.

At present the most affordable versions of PlayStation 3, Xbox 360 4GB and Wii cost $299, $199 and $179, respectively. The analyst believes that the platform holders can trim the prices by $50 this year in order to boost software sales by 5%. But in addition to reducing the prices (which is more likely to happen in the second half of the year), the companies may introduce competitively priced bundles. For example, Microsoft and Sony could  may bundle Kinect and Move with X360 and PS3.

"Since the 'whisper quiet' black Xbox 360 was launched in June 2010 and Kinect launched in November, we think that sales will be up year-over-year at least until June, and we don’t anticipate a price cut for the 360 until then. Microsoft has the ability to bundle Kinect with any of its 360 models at a compelling price point (we remain convinced that the manufacturing cost of Kinect is under $60), and we expect to see a Kinect console bundle priced attractively by June 2011 if not sooner. A $299 price point for a Kinect/250Gb 360 bundle would force Sony to bundle Move with a PS3 at the same price point, and we think that Wii sales will suffer mightily with such competitive pricing," explained Mr. Pachter.

Naturally, neither of the mentioned companies commented on the news-story and no company would ever predict a price-cut. But indeed, the one is inevitable simply because the consoles turn five or six years old in 2011 and have not seen a price-cut for a long time.