Andrew House in the house: why the PSP Go costs that much, why PS3 price has no conflict with recession woes
New SCEE president Andrew House has taken some time out to sit with MCV UK and talk about his experiences as the new big man of the company. Central to this interview would be his explanation on why the PSP Go holds the price tag that it has, and where exactly is it based from. This should clarify all those speculations as to why Sony went down this route, and hopefully will dispell any more impression that they’re ripping people off.
New SCEE president Andrew House has taken some time out to sit with MCV UK and talk about his experiences as the new big man of the company. Central to this interview would be his explanation on why the PSP Go holds the price tag that it has, and where exactly is it based from.
This should clarify all those speculations as to why Sony went down this route, and hopefully will dispell any more impression that they’re ripping people off.
According to House, the US$ 250 tag wasn’t put there to make up for the lost UMD sales the retail stores will have since the handheld is going the digital route. Nor is it there to make up for research and development costs. Simply put, “those aren’t the factors,” he said.
When you introduce a new piece of hardware you have the opportunity to say there is a certain premium that is associated with it, and we took that into account.
As with all hardware launches you look at the business model, the cost structure, and the necessarily level of profitability, and you use that to set the wholesale price. Much as we do with any other hardware.
And speaking of “any other hardware”, the PS3, which has yet to receive a price cut, is also being dubbed as overpriced by some sectors. In response to that:
The strategy there is to say that, not to harp on about it, the device has a 10 year lifecycle and that there are issues of cost and profitability. We will make that move on price when all those factors are aligned.
Would people buy more when they are cheaper? Of course. But on the other hand there is an inherent marketing challenge. In Europe I think people do see the value of the machine, the Blu-ray and network services and take that all into consideration instead of just focusing on price. But we will look at price and will address it when the time is right.
To this, some people will predictably retort: “But isn’t this the perfect time for lower prices? You know, cos we’re in recession.”
Clearly the industry as a whole has seen some impact from the recession. I think everybody would agree we’ve held up tremendously well in the circumstances. On balance, we are still a good value for money entertainment form, especially in terms of dollars per hour spent.
So I don’t think there is a conflict – you have to be clearly sensitive to consumers’ perceptions right now. I am something of an optimist; I think there will be a turnaround within this calendar year.
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Via MCV UK