PS4 game delays, lower pricing unlikely to impact console war, says analyst

Thursday, 14 November 2013 21:55 GMT By Brenna Hillier

PlayStation 4′s lower price won’t give it much of an advantage against the Xbox One, according to EEDAR’s Jesse Divnich, but nor will recent high profile software delays negatively impact its success.

In an email, Divnich said that the PS4′s $100 price advantage will be important in the early days, but won’t mean much in the long run.

“The initial pricing is crucial to building short-term momentum. Historically, the cheaper console has generally be able to gain an initial lead,” he said.

“Long-term (2016 and onwards), we expect pricing to carry less weight in the consumer decision process. By 2016, we will begin to see consumers weigh more on the value the consoles are actually offering, such as their software library, the quality of their exclusive games, and cost/value of their entertainment options, into the consumer decision process.”

Speaking of the software library, Divnich said Microsoft and Sony are on an equal footing as they’ve both experienced delays and have a similar launch line-up.

“We have to keep in mind that consumers do to take into account near term releases when purchasing a new consoles. Delays are expected and the early adopters understand that. The delays may push out potential software purchases, but it isn’t likely to impact hardware sales to a significant degree this holiday season,” he said.

“At the end of the day, delays can be obstacle, but the net-net is negligible in the long-term.”

Even Sony’s decision to introduce a feww for online play – PlayStation Plus – can’t hurt the console’s chances, Divnich added.

“Consumers have grown to accept the monthly fee required to enjoy a lot of the deeper digital services the consoles offer,” he said.

“It will be incredibly important that Sony drives value in the PlayStation Plus offerings and they will certainly have to offer more value at first at increased internal costs in order to win the battle against Xbox Live.”

Sony has an advantage in that many services it offers for free, like Netflix, are locked up in Xbox Gold, the analyst continued, but there’s a real chance for PlayStation Plus and Xbox Live to end up battling it out.

“If Microsoft begins to lose ground, we could begin to see a value war between the Xbox Live and PlayStation Plus subscription service that could drive down margins on this highly profitable offering. If the war gets too heated, it could even result in both offering so many services or free games that the subscription service turns into a loss lead for the platform,” he said. “Similar to how cable and cell phone companies offer a high amount of value for new customers (and often results in a loss to the company) in order to realize long-term profits and gains.”

The PS4 launches in North America on November 15, which is just a few hours away, and hits Europe and selected further territories on November 29. The Xbox One launches in North America and West Europe on November 22.

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