The holiday season is upon us and we all know what that
means: massive discounts as retailers vie for our business.
Microsoft has something to prove, and thus has come out the
gate swinging in the form of a few notable exclusives, Forza Horizon 2 and Sunset
Overdrive, as well as a wealth of deals for all, which I’ll detail in a
moment.
But first, let’s look at some sales figures.
As you can see in the chart above, VGChartz has estimated
that the PS4 has sold about 12.3 million units thus far in comparison to Xbox’s
6.1 units sold through to consumers. Worthy of note is the uptick in sales that
the Wii U experienced in recent months, (according to IGN 610,000 units from
July to September). The sales boost can likely be attributed by the pleasant
surprise of Hyrule Warriors and the recent release of Mario Kart 8.
A few days ago Sony reported that they sold 3.3 million PS4
units in Q3, a boost to their 2.7 million units sold in Q2. They outperformed
Microsoft which sold 2.4 million Xbox One units in Q3.
All eyes are on the battle between Microsoft and Sony (but
don’t count Nintendo out!). What’s the cause for the sales parity between the
two consoles? I think it boils down to early pricing and messaging from
Microsoft. The price of the Xbox One was announced at E3 during the Microsoft
Press Conference last year. It was to retail for $500 and it came bundled with
their voice/motion sensing device, the Kinect. Later that day, in the Sony
Press Conference, Sony dealt a major blow by announcing that the PS4 would
retail for $400, and revealed that its hardware was more powerful than the
other offerings (with the exception of PC).
The pricing strategists at Microsoft believed that people
would be willing to pay the extra $100 because the system was positioned as the
center-of-the-living-room entertainment system. Sony came out early and
positioned the PlayStation 4 as a system designed for gamers, a similar value
proposition to the previous generation of consoles.
Microsoft stumbled out of the gate with a lot of mixed messaging;
its executives weren’t in the loop about the product that they were selling and
later fact-checking produced a lot of backlash from the community. The system
also came out two weeks later than its competitor, the PS4 and in limited
territories (Japan was left out and is seen as a lost cause for Microsoft). The
system was losing by such a margin that half a year later, Microsoft announced
that it was uncoupling the Kinect from the system and matching the price of the
PlayStaion 4 at the $400.
A lot has happened since then, but Microsoft is positioning
itself quite well for this holiday season. The Microsoft store has the Xbox One
discounted by $50 and the promotion is running from November 2 to January 3.
Not only that, they have an array of bundles including Xbox One Assassin’s
Creed Unity bundle ($350), Sunset Overdrive bundle ($425), COD Advanced Warfare
bundle ($449). One of the more interesting promotions Microsoft is doing is
offering the Xbox One for $250 when you trade it in for a working Xbox 360 or
PS3.
On the other side of the Microsoft bundles, Sony isn’t really
offering any. The only thing that I’ve seen that was a bargain was a promotion
on Ebay that ran for about a week that had the PS4 for $350.
Should Sony lower their prices to compete with Microsoft? The
short answer is no. Why? Because right now it doesn’t have to. It’s enjoying a
comfortable lead in this iteration of the console race. People are buying PS4s.
They aren’t buying as many Xbox Ones and that’s why Microsoft is lowering its
prices: to attract and grow its install base. Sony is riding the wave this
holiday season and they don’t need to lower prices. In fact, lowering prices
would hurt their current profit margins. Sony is already making a profit per
unit sold with the PS4, a point that didn’t come about till much later in the
history of its predecessors.
I think that this holiday season bodes well for Microsoft. A
strong lineup of exclusives for this season as well as a reduction in the price
of the console will go a really long way to boost the sales of the console. But
let’s keep things in perspective: both consoles are doing extremely well
historically, outpacing their predecessors. Microsoft will definitely close the
gap some this holiday season. By how much remains to be seen.
I really want to see Sony discount their system (and also
give me a GTA V bundle), not only because it would mean a sweet deal for me,
but perhaps more importantly because I would love to see Microsoft’s reaction.
Who knows, I might even consider buying an Xbox One.
I’m also really interested to see what Sony’s ‘PlayStation
Experience’ event in December has lined up. My thinking is that they will try
to use the December PlayStation event to generate buzz around the PS4 and the
only price drops we’ll see will come with limited supply. I would love to see
surprises at the event next month, but this is likely just a piece of community
outreach (spending some of that dough that the PS4 has help them make) so I
doubt we’ll see any bombshell announcements.
The holiday season is a win for all consumers. Let the fun
begin!
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