Should PS4 get price cut to respond to the $399 Xbox One?

You’ve probably heard the news. Microsoft will release an Xbox One model without Kinect on June 9th for only $399. They say this is because they want to give consumers “options”.

Most likely they’ve seen that the $499 price tag is just too damn high. Dropping Kinect isn’t an easy move for them either, its waving a white flag to a big part of their original vision for Xbox One. I’m sure there are a lot of people over at Microsoft HQ that are pissed off about this decision but ultimately have to live with it. Its for the sake of the console as a whole and its not like they have to stop selling Kinect altogether.

But you can’t talk about this price drop without wondering if Sony will respond and should they?

The PS4 is selling super well at the $399 price point for a variety of reasons. One small reason (don’t kill me fanboys) is because its the cheapest “true” next-gen system. A lot of consumers moved from Xbox 360 to PS4 these past six months, partly because of the Xbox One costing $100 more for less horsepower. But with the Xbox One resting at the same MSRP, will it start to eat into the PS4’s sales? Will it sway consumers who said “Fuck it, in 2014 I’m trading my 360 in for a PS4” to come back to the Xbox brand?

Let’s point out the strengths of the PS4. The biggest reason its selling isn’t because its cheap, its because its a great value. I know, that sounds odd. You’re saying its not selling because its cheaper but because its a good value, aren’t those the same things? Well no, they aren’t.

You just won't see indie titles like Octodad on Xbox One, largely due to MS's controversial indie policies.

You just won’t see indie titles like Octodad on Xbox One, largely due to MS’s controversial indie policies.

For $399 you get the most powerful console on the market today, access to PS+’s free games across PS4, PS3 and Vita. Not only that but there are loads of games that only the PS4 will get, with much better indie and Japanese support than Xbox One. For some, a Playstation console will always be necessary due to these reasons: Indies and Japanese games.

But let’s say the Xbox One does start eating into Sony’s PS4 market, should Sony cut the PS4’s price? Or should they ride the PS4’s current $399 price into 2015?

Remember Sony is losing money on the PS4. Estimates put it roughly at $450 to produce at the time of launch last year so they’re losing $50 or so on each unit. Playstation Plus memberships play a big role in Sony recouping this $50 loss.

If Sony dropped the PS4’s price to $349.99 it would keep Microsoft on the ropes and continue the perception that the PS4 is a better value than the Xbox One. Some gamers will believe the PS4 is a better value at the same price as Xbox One anyway but a lot of consumers will just see the same price tag and ignore all other factors. Still, dropping the PS4 to $349 would mean losing $100 or more on each system, something I don’t think Sony wants to do right now.

So no, I don’t think Sony needs to cut the PS4’s price at all this year even if the Xbox One starts to become competitive and steals away some sales. What Sony could do is slap some cheap, extra stuff into the normal $399 PS4 bundle to add insult to the Xbox One’s price cut.

Imagine Sony’s marketing if they put the PS4 camera into the normal $399 PS4 SKU, which I imagine would only add roughly $20 or so in costs. They could market it as a direct jab at Microsoft, saying that $400 with them gets you the most powerful next-gen console AND a camera for voice control and motion control too. That would be a bold move by Sony that would really sting for Microsoft.

These two PS4 launch titles are the most likely candidates to go free for PS+

These two PS4 launch titles are the most likely candidates to go free for PS+

Introducing a solid Instant Games Collection for PS4 at E3 would also be a good way to respond. In addition to the two free indie titles for PS4 users every month, Sony could add Knack and maybe Killzone Shadow Fall’s multiplayer to IGC on PS4. They could market this as an added $100 value and slap Knack and Killzone on the cover of every PS4, effectively making it a bundle since each PS4 system comes with a PS+ trial. This would be a bit deceptive on Sony’s part but it would be a good marketing move in the wake of this Xbox One price cut.

From a historical perspective, Sony does have a history of price cuts on their consoles within the first year. The PS3 got a price cut/new cheaper SKU in roughly 7-10 months and the PS1 got a price cut of $100 roughly 8 months after launch too. The PS2 didn’t get its first price cut until 1.5 years into its life but notably its first price reduction came six months after the release of its main competitors, the GameCube and original Xbox. So there is precedent for an early PS4 price cut but the console market was very different during those times.

Simply put, Sony doesn’t need to cut the PS4’s price to respond to today’s Xbox One price reduction. If they feel that some reaction is necessary then bundling the PS4 camera or introducing some big launch titles to PS+’s selection of free PS4 games would work well too. No one truly knows what Sony has in store for fans at E3 and a $50 PS4 price cut doesn’t seem likely or even necessary. You better believe though that if Sony does reduce the PS4’s price at E3 that it will definitely ruin the good mood from Microsoft HQ coming off of the announcement of the $399 Xbox One.