PlayStation Vita Sales Skyrocketing After Price Cut
I was fascinated to see this article (link below) and learn that weekly sales for the PS Vita handheld gaming device have quadrupled since Sony introduced a price cut in Japan. Apparently, according to a subsequent report, the sales may have in fact reached 6 times the volume in the week subsequent to the price cut. It is expected that price cuts will follow in the rest of the world.
The handheld was introduced in Dec 2011 in Japan and unveiled to the rest of the world in Feb 2012. The price cut, introduced on Feb 28th 2013, was 20% from ¥24,980 to ¥19,980 (roughly $250 to $200).
Despite the price cut and the ensuing sales, I understand that PS Vita is still lagging expectations and 'isn't out of the woods yet'. Looking at the sales numbers of it's predecessor, I can see that the bar is set high.
The price cut and the subsequent sales spike behooves several questions -
Was the price too high to begin with?
The pricing has a precedent in the form of the Vita's younger siblings the PSP variants which sold over 71 million units worldwide. The PSP was launched in 2004 with a launch price of $200. So, the launch price for PSP Vita is roughly the inflation adjusted equivalent.
Should the price cut have come sooner?
The PS Vita sales reached 2.2 million units in late 2012, certainly not tracking the heights seen by the predecessor. The price cut induced sales frenzy does indicate pent up demand.
I think the answers are - Yes and Yes
I am sure there are a number of factors that cut into the forecasted demand for the Vita - the influx of smartphone gaming apps, competition from Nintendo 3, global economic environment to name a few.
There is a balance between healthy margins (through a higher price point) and higher revenues (through higher sales volumes). With price sensitive tracking of sales numbers month over month, quarter over quarter, the price cuts could have come earlier. The price cuts need not necessarily come in a big chunk but incrementally over time. Given the overall sales numbers I am assuming that the monthly and quarterly numbers do not compare favorably to expected demand.
We can see that it is indeed possible to quadruple sales with a price cut! There are certainly other questions as well - How long with the sales sustain? Hopefully enough to bring the Vita 'out of the woods' while providing enough guidance and data points on pricing for the next version.
Happy Pricing (or price cutting)!
Link to article: http://www.forbes.com/sites/davidthier/2013/03/06/playstation-vita-sales-skyrocketing-after-price-cut/
I was fascinated to see this article (link below) and learn that weekly sales for the PS Vita handheld gaming device have quadrupled since Sony introduced a price cut in Japan. Apparently, according to a subsequent report, the sales may have in fact reached 6 times the volume in the week subsequent to the price cut. It is expected that price cuts will follow in the rest of the world.
Despite the price cut and the ensuing sales, I understand that PS Vita is still lagging expectations and 'isn't out of the woods yet'. Looking at the sales numbers of it's predecessor, I can see that the bar is set high.
The price cut and the subsequent sales spike behooves several questions -
Was the price too high to begin with?
The pricing has a precedent in the form of the Vita's younger siblings the PSP variants which sold over 71 million units worldwide. The PSP was launched in 2004 with a launch price of $200. So, the launch price for PSP Vita is roughly the inflation adjusted equivalent.
Should the price cut have come sooner?
The PS Vita sales reached 2.2 million units in late 2012, certainly not tracking the heights seen by the predecessor. The price cut induced sales frenzy does indicate pent up demand.
I think the answers are - Yes and Yes
I am sure there are a number of factors that cut into the forecasted demand for the Vita - the influx of smartphone gaming apps, competition from Nintendo 3, global economic environment to name a few.
There is a balance between healthy margins (through a higher price point) and higher revenues (through higher sales volumes). With price sensitive tracking of sales numbers month over month, quarter over quarter, the price cuts could have come earlier. The price cuts need not necessarily come in a big chunk but incrementally over time. Given the overall sales numbers I am assuming that the monthly and quarterly numbers do not compare favorably to expected demand.
We can see that it is indeed possible to quadruple sales with a price cut! There are certainly other questions as well - How long with the sales sustain? Hopefully enough to bring the Vita 'out of the woods' while providing enough guidance and data points on pricing for the next version.
Happy Pricing (or price cutting)!
Link to article: http://www.forbes.com/sites/davidthier/2013/03/06/playstation-vita-sales-skyrocketing-after-price-cut/
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