Are High Prices For Next-Gen Gaming Consoles Propping Up The Market For Old Machines?

from the the-smurfs-game-never-cost-this-much dept

The talk of the video game industry at the moment is the imminent launch of Nintendo's next-generation Wii console and Sony's long-awaited (and oft-delayed) PlayStation 3. But despite all the hype, recent earnings reports reiterate that it's older consoles that generate all the money in the games business, with analysts surprised by the strength of sales of games for the six-year-old PS2 and the two-year-old Nintendo DS. This is to be expected, on one hand, since there are so many of the older machines in circulation: more than 106 million PS2s have been sold, and though Microsoft is thrilled with Xbox 360 sales, only 6 million of the console have been sold since its launch a year ago. What makes the strength of PS2 game sales so surprising is that as the release of a next-generation system gets closer, many gamers tend to hold off on purchases, wanting instead to spend their money on new systems and games. Game publishers also tend to slow down releases, working to create games for the launch of the newer platforms. However, price sensitivity seems like it is playing a big role here. For instance, Sony recently cut the suggested price of the PS2 down to $129, whereas the Xbox 360 starts at $300 (with no price cuts forthcoming), and the PS3 will start at $500 -- not to mention games for the newer consoles typically run about $60. That might be acceptable to video game companies' core demographic, but as a wider range of people get interested in gaming and are looking for games that aren't necessarily based on ultra-realistic graphics and surround sound, it seems unlikely that they'll jump in at the high end of the market, and flock instead to cheaper systems with cheaper games. This means the supposedly old and busted likes of the PS2 -- which is currently outselling the Xbox 360, incidentally -- and other older machines could have some life left in them yet.

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  1. identicon
    360, 31 Oct 2006 @ 1:09pm

    Selling old consoles to pay for new ones.

    Next gen is propping up old consol sales mainly because people are selling old consoles preparing for new ones. I know I sold all my old consoles:

    Xbox 360 is/will be awesome because:
    1. Spectucaluar graphics, without being to experimental with technology (unlike the risky cell / blue-ray tech of Sony).
    2. Games: Gears of War, Halo 3, Mass Effects…
    3. Xbox Live Arcade games are just as fun as the other games. Lumines is great – it’s like a cool better-than-tetris game.
    4. Optional HD-DVD (sucks because can’t use the extra storage for games, but nice option for my HD theatre system).

    Wii will be fun because:
    1. All of the cool retro Nintendo games
    2. innovative game play / controllers
    3. more reasonable price

    PS3 “could” be great (after the price drops some and the technology proves itself) because:
    1. Blue-Ray (not just a Blue-Ray DVD player but as an enormous data format game storage solution)
    2. I can’t wait to use my 7.1 surround sound system
    3. The games should be great (may not compete with the 360 games – time will tell)

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