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Analyst: PS2 Price Cut Could Boost U.S. Sales By 30%

Following Sony's $99 price cut announcement for the PlayStation 2, analysts have weighed in, with EEDAR suggesting a 30% sales boost, but previous Gamasutra and Sony comments castin
Following Sony's $99 price cut announcement for the PlayStation 2, analysts have weighed in, with EEDAR suggesting a 30% sales boost, but previous Gamasutra and Sony comments casting doubt on a major boost. In comments released after the announcement, analyst firm EEDAR's Jesse Divnich noted: "We are extremely pleased to see that SCEA today announced a $30 retail price cut for their PlayStation 2 hardware in the United States market. EEDAR estimates that PS2 software accounted for 21% of all home console software sold last quarter worldwide, declining to 19% in the first quarter of 2009. We believe that the PS2 price drop will help boost hardware sales in the short-term and decelerate future declines in the market share of PS2 software. Before the announcement of the price cut, we expected PS2 software sales, a good measure of a console’s health, to decline to 16% April through July. We now expect PS2 software to maintain an 18% market share among home console unit sales for quarter two. The PS2 currently has the largest software library of any console with over 1,650 titles to date according to EEDAR’s GamePulse database, plus an additional 110 titles expected to launch throughout 2009. With a mid-range DVD player currently costing $50, an additional $50 to also get a gaming console with the largest software library makes the PS2 an incredible deal – particularly during the current global economic conditions. In terms of sales, we expect the PS2 price cut to increase hardware sales 30% ahead of last quarter in the North America (January through March 09) and to increase hardware sales by 10% year-over-year for quarter 2 (April through July)." However, other comments in recent months have cast aspersions on the concept that a PlayStation 2 price cut will be a major boost for the brand, rather suggesting that it will be a marginal win for the firm at best. Firstly, in his February 2009 NPD article, Gamasutra chart analyst Matt Matthews commented: "For the PS2... one must ask: What would a price drop accomplish other than increasing hardware sales and cutting the company's margin on profitable hardware? Any consumer waiting to get a PS2 which it reaches $100, as opposed to $130, is cost-conscious enough to avoid expensive new software and opt instead for games from the giant pool of used games available at retailers like GameStop." At the time, Matthews also noted that sales of the oldest active console on the market "dropped from over 600,000 for the first two months of 2008 to just 232,000 for the beginning of 2009" -- a likely reason for this price cut. Interestingly, even Sony have seemed dubious at the prospect of a PS2 price cut within the last year. During an Edge Online interview with Jack Tretton last July, the Sony executive noted: "I want to understand the consumer that says ‘$129, too rich for my blood, but $99, I’m all over it’. How much software are they ultimately going to buy? If that $30 was the difference between buying a console and not buying a console, how many games are you going to sell to that person? While I value every consumer I just don’t know if that consumer is really going to be strategically important to the software development community and to us."

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