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The Divnich Tapes: Can Hardware-Driving Software Still Drive Hardware?

In his latest Gamasutra-exclusive NPD analysis following the release of May's game sales figures, EEDAR's director of analytical services Jesse Divnich says that GTA IV's failure to significantly increase console sales points to a more pervasive is
[In his latest Gamasutra-exclusive NPD analysis following the release of May's game sales figures, EEDAR's director of analytical services Jesse Divnich says that GTA IV's failure to significantly increase console sales points to a more pervasive issue: the prohibitive cost of entry for mass-market consumers. The issue expands upon Divnich's previous article in this month's series, which examined whether hardware price cuts were due for Xbox 360 and PS3 in light of sluggish post-GTA hardware sales.] Any time we hear the term “a hardware-driving title,” we often only look to one side of the equation - the video game - to gauge how well it may or may not drive hardware. The more superior the title, the more it drives hardware; simple enough. Regrettably, we tend to forget the other side of the equation: the hardware unit. For a game to drive hardware, it must accomplish two things: drive in the core gaming audience, and drive in the mass market of gamers who may only purchase one or two titles a year. In the case of the Xbox 360 and PlayStation 3, core gamers likely made the next-generation leap well in advance of Grand Theft Auto IV so they could play the already large selection of AAA titles like Call of Duty 4, Guitar Hero III and Halo 3. For the mass-market of gamers, I'd point to the steep entry cost of $400+ for the price of hardware and games. These mass market consumers likely helped drive hardware on the legacy systems -- PS2, Xbox, and GameCube -- by purchasing hardware-driving titles such as Grand Theft Auto: Vice City, Grand Theft Auto: San Andreas, Halo 2, Super Mario Sunshine, Mario Kart Double Dash, and so on. However, in those days, hardware and a game totaled only $250 or less, something a little more justifiable. It would be perfectly reasonable to hypothesize that many among the mass audience of consumers are waiting for price reductions before making the next-generation jump, or could be waiting for the holidays when a little Christmas cash can help soften the blow of the steep hardware prices. This raises an interesting question: what price would the mass audience justify paying to be able to play a handful of titles? There likely exists a threshold between the mass gaming audience, hardware prices, and title selection. We can determine what that threshold is by looking at the Wii, since we already know that there exists a large Wii consumer base that only purchased the system for Wii Sports, or one other title. That comes out to $300 or less. Given that, we will not likely see a strong boom in hardware sales for the PS3 and Xbox 360 during the off-season until the total price for hardware and a game inches nearer the $300-$350 marker.

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