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Analyst: PlayStation 3 Price Could Hurt Sony, Industry

A new report from analyst group DFC Intelligence has questioned Sony's pricing model for its upcoming PlayStation 3 platform, which will ship in November with two separat...
A new report from analyst group DFC Intelligence has questioned Sony's pricing model for its upcoming PlayStation 3 platform, which will ship in November with two separate SKUs, the high-end of which will cost $599, a price $200 above its nearest competitor, and twice that of the initial cost of the PlayStation 2. “The video game business model has been to build an installed base of tens of millions of users in a very short-time frame,” read the report issued on Wednesday. “A key factor in this model is relatively low cost hardware.” The report concedes that some will be willing to pay the premium demanded by the console, but that through this pricing model Sony is targeting the console at a much smaller consumer base. However, while consumers who are interested in buying the PlayStation 3 for its Blue-ray capabilities may see the price as a value when compared to stand alone Blue-ray players, game publishers stand to lose on the investment if these same customers do not also invest in the console's video game library. “The PlayStation 3 needs to justify its price difference as a game machine,” read the report. “In terms of game software it currently looks like the Xbox 360 will be able to match the PS3 punch-for-punch in the important genres like shooting, RPGs, racing, sports, Grand Theft Auto IV and others.” DFC continued by asking “Will Sony's brand name alone explain a $200 price difference to the gaming audience?" DFC Intelligence concluded by iterating that Sony's pricing model for the next-generation could have implications that reach beyond simply the cost of the new console. "The higher priced the hardware, the lower overall industry growth will be," read the report. “Unfortunately, there is a sinking feeling that things may have spun out of control for Sony and thus price cuts will be slow in coming. While that may be good news for Microsoft and Nintendo it could spell rough times for publishers that have come to rely so much on Sony’s ability to build a huge market of devoted video game consumers.”

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