Buzz Out Loud Lounge forum: Why aren't consoles priced like HDTV's?

That they don't realize all the things you've pointed out, they think that by keeping the price low they'll sell all their products not realizing their getting less profits than the black marketeers. This is smart from a business standpoint, but I'm not sure how much pricing them that way would help customers. However, maybe some else can explain that to me?

The key would be to indicate to both fans and developers that the price will come down as the months go by and production increases. The hard core types with money would jump in first (just as they do now with HDTV's or Gaming PC's) with the mass market following later. In other words, whet their appetites by seeing actual consoles and games being played at first by a few.

Developers would have more time to put together games so their costs would be less since they wouldn't have to rush to meet the intial release date -- they could use less programmers and spread out computing resources. But the current situation is worse since the developers rush to put out a game for a market with just a few consoles available. So they get the high costs AND low initial sales. Of course, the developer could delay the games but they still have the risks of figuring out when the market will finally reach a decent size.

Not everyone would wait -- there are plenty of people with the cash to burn. We're seeing them now buying PS3's on EBay and Craigs List. And buggy new stuff didn't stop these people from buying the first plasma TV's or the first HD DVD players. Some people just can't wait to stay ahead of their neighbors.

Holding back the release date until you have enough production to meet demand is very risky. If you think demand will be in the millions (and judging by XBox 360 sales, Sony would have to expect that), then you'd have millions of consoles sitting in warehouses. At a minimum $800 cost to make, that would tie up $800 million in inventory for every million consoles. In a Just In Time world, having several billion in capital sitting in warehouses would be a very risky strategy. Especially when all those consoles would be first generation production with all the bugs inherent until the consoles are actually tested by consumers. And what happens if the Wii turns into a huge hit while Sony is stockpiling PS3's? Or Halo 3 comes out early? That demand could disappear.

And retooling factories and subcontractor's factories for a mass production run in the millions and tens of million isn't done with the flip of a switch.

That's why the TV makers do the high price, limited production runs for new TV's.

Gamers, in general, tend to be younger with less disposable income. And $600 is a big deal. And the games aren't cheap either. I imagine that's where the real money is made. But what do I know? I'm not a gamer at all.

HDTVs, on the other hand, initially appealed to older professionals with more disposable income, and as the prices went down the appeal widened.

Sorry for the sweeping generalizations.

Console makers don't make money on the consoles. They make money on the games and accessories over the next few years. TV manufactures need to make a profit on the sale now, because they won't be getting any more money from the buyer afterwards.