PS3 Open Pricing Should Be Everywhere
While the real version of the PS3 is going to cost $599 in America, there is no set pricing for that model in Japan. Instead Sony is opting for “open” pricing in Japan. As I understand it, that means that Sony is going to sell the machines to retailers at one price, and they can charge whatever the market will allow them to charge. This means the PS3 is probably going to launch for $1,000 or more in Japan. Japanese consumers are screwed.
The reasoning behind this is fairly simple. Sony’s trying to win the Japanese market by making it extremely profitable for the retailers to sell the PS3. By doing this retailers will probably devote more shelf space and marketing to the PS3 than they would for the Xbox 360 or the Wii. Bizarrely, I think this is a pretty good strategy.
For the record, I’m not exactly excited about the PS3, but I know that a lot of people will be. Sony will have no trouble selling every system that they can produce. For this reason, Sony can charge an obscene amount of money for the PS3 and people would still buy it. The same thing happens launch day on eBay. Last fall people spent thousands just to get the 360 and a couple games. It was insane. Yet, if Microsoft would have sold systems on eBay themselves, they could have profited greatly.
So, here is what I propose for Sony to have a profitable launch in the U.S. Don’t ship all 2 million consoles to retailers on launch day. Instead, sell the first 10,000 - 100,000 on eBay at huge profit margins. Heck, why not just stock Wal-Mart and Best Buy with 750,000 and sell 250,000 on eBay. Ok, maybe that’s a bit on the crazy side and Sony might not be able to pull that off, but Sony flooding eBay with PS3’s themselves would accomplish two things. One, it would put more money back to Sony, which in turn could lower PS3 prices quicker. And two, it would drop the outrageous eBay prices a bit quicker than would otherwise happen. If Sony increases the supply of PS3’s on the eBay sales channel, it would very quickly fulfill the demand and thus drop the price on the PS3 on eBay.
No matter what Sony does, on day one it’s going to be next to impossible to buy a PS3 and people who pre-order are going to have to wait months for their orders to be filled. Sony right now hopes to be able to ramp up to 1 million consoles a month by the end of the year, but they don’t even have the final hardware yet. If anything goes wrong at all, which happened to Microsoft and could easily happen to Sony, then Sony won’t hit 1 million consoles produced a month and there won’t be 2 million consoles available at launch. There could be more like 1 million or less. Based on all the PS3 delays and problems thus far, don’t be surprised if this happens.
Based on the fact that the PS3 is going to be nearly impossible to buy at launch, Sony should institute open pricing worldwide in one form or another. Let retailers set their own prices and sell directly to the customer through eBay. Sure, it might make for some angry customers, but at least that way BestBuy and other companies wouldn’t be forced into using bundles and other nefarious tactics just to hit their profit goals. I say let economics take care of the the supply and demand problem. Stores should set their own prices and let consumers decide if the PSe is worth it. Then, once Sony can start supplying the PS3 in large quantities, then they can drop the prices to reasonable levels. Either way Sony will sell the same amount of consoles in the first few months, but if Sony used open pricing worldwide, they might not have to lose as much money on the PS3.
May 16th, 2006 at 1:29 am
Very interesting thought… I’ll be bringing this up on our show thursday night over at allgames.com
Keep up the good work
There are plenty of us out there who like the way you think