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EA CFO: Slow Price Cuts, Powerful Hardware Will Slow Console Transition

Slow price cuts combined with advanced modern console technology means the industry is likely to see a slower console transition than usual, according to Electronic Arts CFO Eric Brown.
A slow price cut schedule combined with the advanced state of modern console technology means the industry is likely to see a slower generational shift than usual, according to Electronic Arts CFO Eric Brown. "Pricing has not come down as much as we would have expected at this point in the cycle compared to the last," Brown said during the Goldman Sachs Technology and Internet Conference in San Francisco, according to an IGN report. The executive said manufacturers still have "a long way to go with respect to pricing" this generation. "Last cycle, approximately 48 percent of PlayStation 2 units were sold at a price point of $149 or less. Clearly at $299 we're nowhere near that price point," he pointed out, also citing statistics demonstrating the positive sales impact of price cuts and promotions to current systems like PlayStation 3 and Wii. But it's not just room for further pricing maneuvers that could drag this generation out, Brown said. There's also the evolution in online architecture and delivery, which is more of a software-side issue -- and, he added, the modern HD consoles simply have enough horsepower to keep pace for years to come. "If you have a multi-billion capital investment to develop the next generation hardware, the question I would ask is, 'If you were to produce that, what would you display it on?'" he said. Since the HD television standard has topped out at 1080p in the consumer market, Brown argued, a major graphical advancement in game hardware would be largely superfluous. "You could upgrade in theory, but you wouldn't get the obvious graphic benefit that we saw that drove the transitions in the prior cycle," he said. Most Xbox 360 and PlayStation 3 games output at 720p resolution natively, although some can render at 1080p (and a few are upscaled from sub-HD resolutions). It's not the first time Brown has predicted a lengthier hardware cycle this generation. Last May, he spoke on the topic at a Wedbush conference, citing similar factors.

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