Ever since that fateful day at E3, when Sony announced the $500/$600 price tag for the PS3, the cost of the console has been the major issue. All other problems stem from it: Be it the feeling that gamers are being ripped off, that speculators bought and sold the machine giving it bad press, or that people simply can't afford it.
It's a bitter pill to swallow, but it's time to take your medicine, Sony. Lower the price! I'd recommend a $100 price break on the system AND an additional controller at no charge.
This really wouldn't be as big of a deal to Sony as you may think. It's rumored that Sony loses about $250 per PS3. Using that number (and remember, it may be higher or lower, but it really doesn't matter) it costs Sony $850 to make each PS3. Right now, they're recouping $600 of that cost if they sell a system. If the consoles are sitting on store shelves and stores aren't ordering them, then they're recouping $0 per console. If a $100 price drop were put into effect it would mean that Sony would be losing $350 per console. However, if that $100 price drop spurred sales, which it would, it would mean that Sony would at least be recouping $500 rather than $0.
A price drop would also garner a ton a good press, something that the PS3 sorely needs. It would essentially say to the gaming public, "We're sorry, we made a mistake and took you for granted. Please accept our apology with this $100 price break and a free controller."
Finally, a price drop, and therefore more consoles in the homes of gamers, would help software sales. As most of you know, the video game console business is like the razor blade business...give away the razor to sell the blades. Sony doens't mind losing money on each console because the money is made on the games.
A price drop is a panacea for the PS3. It was simply priced too high and it is the cause of all of Sony's problems. The reports of PS3s sitting on store shelves a mere two months after launch is embarrassing. It's time to remedy that at any cost.
The Ultimate Bundle
I have a great idea for Sony and I'm going to give it to them for free. Let me frame this for you. Americans are buying flat screen TVs like crazy right now. Who makes such TVs? Ah, yes, Sony. I wonder what other type of home entertainment electronics they make? Ah, yes, surround sound systems. See where I'm going with this?
When the American consumer hears that the PS3 is $600 they shudder and scream, fist raised in the air, "I'll never buy such an expensive thing!!!" Yet, ask an American consumer who is in the market for a flat screen TV how much he/she is willing to pay and you'll hear numbers from $1,000 to $3,000 without so much as a blink of the eye, much less a raised fist.
So, why not match up two perfect Sony LCD TVs for the PS3 and offer them as a bundle? One could be the entry bundle, say a 26" 720p model and one could be the super bundle, say, a 40" 1080p model.
Looking at Circuit City's website, I see a 26" Bravia 720p LCD HDTV for $1,100. Add a $600 PS3 to it and it'd be $1,700. However, if you buy the bundle, it'd be, say, $1,400. This price point works in two ways. Pyschologically, the gamer who wanted a PS3 anyway would say to him/herself, "I just got a $1,100 TV for only $800," while the TV consumer would say, "I just got a PS3 for only $300". Sony would be saying, hey, we just sold two of our products instead of one!
Now, let's look at the super bundle with a 1080p 40" tv. There is a Bravia that meets those requirements at $2,500. Add the PS3 and call it a $2,700 bundle. Once again, Sony sells one of its best TVs, which I would also imagine has a nice profit margin, and it sells a PS3, which it desperately needs.
OK, let go one final step in this marketing proposal, "Add surround sound for $200!" Sony has many different complete surround sound systems for between $200 and $300. Give the consumer the choice of any one of the three as an add-on. Booya, Sony just sold three of its products in one shot, a manufacturers dream.
The market for flat panel TVs and surround sound is huge right now. Sony is attempting to fend off competition from competitors who offer a cheaper TVs. Why not give the consumer the choice to be the coolest dude on the block and walk out of that Circuit City with a Bravia, a PS3, and a great stereo.
So, there you go, Sony. You can feel free to hire me as a marketing consultant. You can pay me in PS3s and games.
One of the problems with the PS3 right now is the lack of any good games. Again, it usually takes a good year for a console to have some good games, so this isn't anything that is worrisome, however, not everybody knows this. They expect a hit right out of the gates, particularly since they saw it happen with the Wii.
Sony has dropped the ball on letting people know the kinds of games and experiences they can and will have on the PS3.
I'd recommend a full-on ad blitz across all media, but especially TV, with a focus on the technologically inclined, but not necessarily traditional gamers. I'm not talking about moms, like Nintndo focused on, I'm just talking about aiming these ads at people in the 30 - 60 year old bracket, those with disposable income who want to be amazed by graphics and games.
Seriously, I watch a lot of TV and the only time I see video game ads is on Jon Stewart and Steven Colbert, typically a gaming audience. I don't watch MTV, ESPN, G4, TNT, etc., and that's where I assume the bulk of video game ads are shown.
Sony needs to suck it up and spend some real dollars on high end ads, like on the Office, Scrubs, The Simpsons, Family Guy, etc. They also need to hit the elders in our society with a nice blitz on CNN, and lord forgive me for saying this, O'Reilly.
The commericials need to let the consumer know, and more importantly, to reassure them, that the PS3 will soon have an amazing library of games to offer the masses. I know that Metal Gear Solid 4 won't be out until late '07 or early '08, but feature it in an ad now. I know that Assassin's Creed won't be out until god knows when, but entice me now.
Going further, the commercials need to remind the consumer that the entire library of PS2 games is playable on the PS3. And, then it must go on to show how good "Okami" and "God of War" (both PS2 games) look on the PS3.
Finally, the commercials cannot be the weird, creepy, and ultimately isolating commercials that Sony ran before featuring the robot baby in the white room.
This targeted advertising at the people who can actually afford a PS3, and who can actually enjoy its HD output, would greatly benefit Sony. It would also cause a good word-of-mouth campaign as Joe Merlot (the fancy version of Joe Six-Pack) would want to show off his set up to his friend Bob Cabernet.
So there you have it. The way to save the PS3. First, cut the price which results in good press. Then, advertise the heck out of the gaming capabilities of the system. And, finally, offer a bundle for those consumers looking to upgrade their home entertainment system. But really, just cut the price.