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http://www.next-gen.biz/index.php?option=com_content&task=view&id=796&Itemid=2&limit=1&limitstart=1360 Price: The Industry Reactsby Christian SvenssonThursday, 18 August 2005Developers, media and analysts have told Next Generation exactly what theythink about Microsoft's dual-pricing policy. The responses range from happyto ambivalent to absolutely bone-shaking furious.Developers and PublishersLyle HallStudio directorHeavy Iron Studios"From a developer and publisher perspective, it makes no differenceto us today in how we build our games for Xbox360 because Microsoft hasinstructed us in advance to assume no hard drive from a technicalrequirements standpoint."Longterm, it could limit some of the console's technical potential if youhave a fairly fractured audience from launch. However, that is alwaysadjustable by the right absolute must-have game coming out that requires thehard disk. For the retailers, its initial consumer appeal to the casualgaming audience is more limited than last time because the Xbox360 does notoffer any new mass market productinnovation like the previous console did in supporting DVD movieplayback."Scott MillerCEO3D Realms"One word: Blunder. Developers will almost always cater to the lowestspec'ed system when it comes to consoles, so as to maximize the customerbase. So, my guess is that few games will truly make significant use of thehard drive, given that it's an option that cannot be counted on."David PerryPresidentShiny Entertainment"I've personally always been a big fan of being able to upgrade stuff I own.It's like adding a 2GB memory stick to your PSP, when some people are happywith the poopy 32MB card that comes with it, I'm not. It's like buying acar with an optional GPS built in or not. I hate not having the choice.Choice is your friend. I've been pushing for it for years on the consoles. Ieven had a friend that once built a prototype console, into which you couldadd as many processors as you could afford."The PC model is the example, giving gamers the experience they are happy topay for. Xbox 360 actually beats the PC as there's a common high-quality 3Dbaseline, so you can only go upwards. I hope Microsoft enjoys the experiencefrom this strategy and truly opens up the model for Xbox 720. Meaning if Ichoose to add extra features or enhance features, I can do that. (Fasterhard drives, more texture memory, physics chips etc.) Fingers crossed.Mark ReinVPEpic Games"I think it's a very good strategy given the potential competitivelandscape. They get a lower priced version for people who are morecost-conscious and an everything-you-need-for-online-gaming version forthose who want the full experience. Developers were always told not toexpect a hard drive on every machine so nobody has developed with theassumption it will be there."Developers already got our big Xbox 360 gift - we got 512MB of RAM. Thatwas a huge win for developers and customers alike and there was no way wewere going to get that and a hard drive on every machine. The RAM is moreimportant and will make a bigger difference than the hard drive would have.There will be lots of great reasons why you'd want to buy the hard drive andit will be available as an upgrade so nobody is selling themselves short ifthey can't afford the all-options version because they can buy those optionsa-la-carte (for more money mind you) if needed.CS WeaverFounderBethesda SoftworksAlso Visiting Scholar at M.I.T"The idea of selling a $299 'basic' (read crippled) version of the new Xboxmay make for minor bragging rights and a little press, but it is akin tobuying a Ferrari F430 only to find that while the car is beautiful and has apowerful engine, the model you bought lacks a transmission capable ofgetting out of first gear. You may be able to rev the deep-throated engineand impress the neighbors, but in truth, you will barely be able to get outof the garage."This is one of those silly market concepts dreamed up by a middle-aged,non-gamer who once worked at Proctor and Gamble. To him or her I say, 'Stickto Tide and Pringles.'"With the original Xbox, I admired Microsoft for having the imagination toincorporate an Ethernet connector. Even though they got the initial timingwrong, it was a leap of faith by a major player who showed the industry theywere willing to back a vision. The current play of $299 for a box that isinadequate in order to have bragging rights over Sony is as bad an idea asthe RJ45 connector was a good one."So, listen up Microsoft - never disrespect your audience. We willunderstand if you tell us that you cannot match PS3 in price because of thedifferent approach you have taken in order to achieve a better end result.But do NOT confuse the retail chain with a near worthless SKU and try topull one over on your public for the right to play shell games with pricewhen the PS3 is released next year."That is a recipe for more bad word of mouth than any 'under $300' pricewill ever achieve in the hearts and minds of your customers. It takesfourteen positive impressions to register "awareness" with a consumer. Ittakes but one negative impression to wipe it out. I figure with your initialleap of faith added to this latest stupid pet trick, you're just about even.Doug HareVP of product developmentThe Collective"From a developer perspective, I don't see [Microsoft's decision] havingmuch of an impact other than that most, if not all, games will be developedto function perfectly well without any reliance on a hard drive. If it getsthe platform into the hands of more consumers then it surely must be a goodthing for the industry."Jon MiddletonVP business developmentMad Catz"It's nice to see that Microsoft brought some creative pricing to theirlaunch strategy. Offering a premium pack complete with all the bells andwhistles is great for early adopters, but the addition of an 'a la carte'approach to a next-gen console release may lead to quicker adoption by themass gaming community."This move should help ease the cost impact and allow retailers to offer awider array of possible hardware bundles. It will certainly help drive salesfor Microsoft's third party peripheral partners."__ The MediaAndy McNamaraEditor-in-chiefGame Informer Magazine"As a gamer, it doesn't really seem to me that there is much of an option.Yes, there are two SKUs, but Microsoft has priced the two units and theaccessories so there really isn't much of a choice. The only problemMicrosoft faces now is that consumers will walk into retailers expecting tobuy a unit for $299 and will walk out with their wallets short and theirexperience with 360 tarnished. Let's all pray those launch games are good sothe price ultimately doesn't matter."Dave HalversonEditor-in-chiefPlay Magazine"Anybody wanna buy my Porsche? It's $30k, or you can buy it without wheelsfor $25K. .Hey, you'll still be in a Porsche. You can stick spare tires onit and look almost famous! I'm referring of course to Microsoft's absurddual price points; one for that poor sap who enters the next generation withwired controllers, no hard drive and standard AV cables (thusly grindingevery Microsoft catch phrase under foot) and one for people with fullyoperational cranial units and 400 expendable bones, sans game."Does this make any sense? .No; but does it come as any surprise? Becausevideogame feuds have become akin to political campaigns in this country,complete with rhetoric and enough speculation and innuendo to make yourbrain explode. $299 becomes the sound bite price while 399 is the actualarticle. And what timing: I was just thinking yesterday how the Zelda delaymight drive hordes of on-the-fence gamers to the 360 for the next best thingin Kameo, but with this odd packaging I'm sure the majority have now hit thebrakes. At least give us wireless and suitable cables for $300. It's builtinto the PS3.and tethered chords? That's the one aspect of next-gen I deemmandatory."Wes NiheiEditor-at-largeGamePro Magazine"In the long haul, consumers are going to adjust to the pricing and the twoSKUs. If they want it, they're going to buy it."Initially it's going to be a confusing message for the masses. That's goodfor those of us involved in the games media whose job it is to explain suchsudden and mysterious moves to the public. It sets up an interestingscenario, too, where if Sony can put together the right package for PS3 atthe right price and make it easier and simpler for consumers to make apurchase at launch, they are going to score. Of course, then Microsoft canback down their pricing by just reducing the number of extras in one of thecurrent SKUs."Also, if backwards compatibility is dependent on having a hard drive, it'svery odd that Microsoft has now set pricing to make it tougher on consumerswho might want to get into the next generation but are cost-conscious. Theyare the ones most attracted by backwards compatibility. For Microsoft then,backwards compatibility is not a key issue."Rob SmithEditor-in-chiefOfficial Xbox Magazine"How will OXM readers react? I expect a lot of them to be upset that theoption that gives them backwards compatibility (requiring the hard drive) is$400. In the big picture the multiple options can serve a broad potentialmarket. I also genuinely believe that the early adopter gadget/console guywon't be at all put off by the price tag."My big surprise is the inclusion of the DVD remote rather than the expectedXbox Live Gold membership. I think this suggests that Microsoft is veryconfident that Xbox Live will be so strong that Xbox 360 users will seek outa $50 or more membership for the service, which of course will moreeffectively monetize Live."Tom RussoDirector of games editorialG4 Media"Launching with both core and premium packages seems like a perfectlylogical extension of Microsoft's plans to offer gamers multiple levels ofcustomization. I expect the majority of the launch-day crowd day won't becaught leaving stores with anything less than the up-market,metallic-detailed unit."But I question the concept of an optional hard drive, especially when itcomes to the casual gamers who make up the bulk of the market. WhenMicrosoft launched the first Xbox, the hard drive was evangelized assomething that developers could use to make their games better. Now that it's no longer a standard feature, I expect developers won't spend as much timefiguring out unique ways of supporting it, ways the casual consumer may takefor granted as something the system just 'does'. So I fear it may ultimatelyserve as nothing more than a giant memory card."Also, with no Zelda this year, that's $50 more some gamers may be willingto spend towards the premium package, or another launch title."Dean TakahashiReporterSan Jose Mercury NewsAlso, author of Inside the Xbox"This is a compromise that isn't like to make anyone really happy. Thisproblem starts with the $50 cost of a hard disk drive. It makes the box tooexpensive to produce at the traditional target price of $300. Microsoftfound this out last time since their initial costs on the original Xbox were$425. That cost declined over time, but it wasn't really possible to knockmuch cost out of the hard disk. That's because it was already at rock-bottomcosts. It had one disk and one spindle. Traditionally, hard drive makers addmore capacity to their disks, but they never go below their rock-bottomprice. This is a fundamental cost barrier. So it looks like the same problempersists."But there are consequences. Microsoft doesn't lose as much money on everybox this time, with the higher price for the hard disk version. But gamedevelopers, especially those developing online games, have to choose how toarchitect their game for two different base platforms. In this day, thatisn't so hard to do."Microsoft says they told developers from the beginning that they would haveto solve this. So basically, the developers treat storage virtually. Theycreate a game to store assets either on a disk drive or on a memory unit.That memory unit is the problem because it can't hold as much data. Sodevelopers, by necessity, have to shoot for a lower common denominator. Thebottom line for them is they won't be able to make the best game they can."For consumers, the choice is tough as well. You can pay more than you everhave for a console in recent years, or you can do without the full machine.Consumers already have to invest in digital TV sets in order to fully enjoythe Xbox 360. Now the hardcore gamers will have to dish out more for thesystem too. If consumers buy the version without the hard disk, then it isguaranteed that they will not be able to play older Xbox games on the 360."Microsoft runs the risk of making the same blunders that killed Sega, whichhad too many SKUs on the market at the same time. It dilutes the energies ofthe game developers, confuses consumers, but it saves the company money."__ The AnalystsMike SabineMarket analystInternational Development Group"I think the dual-SKU option with one being $299 lets Microsoft reach a morecost-conscious consumer - a consumer that will still need to spend $60 to$120 buying one or two games and likely another $40 or $50 on a sparecontroller. Some day when the premium SKU is $299, the core SKU could be$199, which may also assist Microsoft in penetrating more nascent gamingmarkets such as Central & Eastern Europe and Latin America."However, the core SKU may cause some consumer confusion and forces theconsumer to buy a $40 memory card to save games whereas the $399 buyer hasthe hard drive for game saves. Developers have known for a while to notdepend on a hard drive being available in every Xbox 360 sold so they havedealt with the technology issue. Having two SKUs on shelves at retail isalso a method to command shelf space."David ColeChief analystDFC Intelligence"Something that gives consumers more options is generally good as long as itdoesn't confuse them. Of course, it is a new paradigm so there is thepotential for confusion. The main issue is that the basic system be able toplay all the games just as well as the deluxe system. The hard drive ismainly used as a big memory card, but it will become a crucial feature foronline gamers."The confusion issue will become more of a problem after the system has beenon the market for a year and you move from core gamers to more of the massmarket. I think most of the early adopters will tend to go for the high-end,my bet would be 2/3 to 1/3 in the first year, but of course that may dependon how many units of each are manufactured. Microsoft can choose to 'steer'consumers in a certain direction by what they manufacture."For Sony, the Xbox 360 system will provide them with a test of howconsumers react. Being second has its advantage in that you can see whatcomes before and adjust your strategy as need be."Michael PachterAnalystWedbush Morgan Securities"I think the pricing strategy is correct, and I think that Microsoft willmaximizerevenue without gouging customers while maintaining flexibility to cut priceat PS3 launch."I don't think many people will buy the $299 box, since value of the otheroption is so high. It's a PR play, so Microsoft can claim they launchedlower than Sony."
http://www.next-gen.biz/index.php?option=com_content&task=view&id=796&Itemid=2&limit=1&limitstart=1360 Price: The Industry Reactsby Christian SvenssonThursday, 18 August 2005Developers, media and analysts have told Next Generation exactly what theythink about Microsoft's dual-pricing policy. The responses range from happyto ambivalent to absolutely bone-shaking furious.Developers and PublishersLyle HallStudio directorHeavy Iron Studios"From a developer and publisher perspective, it makes no differenceto us today in how we build our games for Xbox360 because Microsoft hasinstructed us in advance to assume no hard drive from a technicalrequirements standpoint."Longterm, it could limit some of the console's technical potential if youhave a fairly fractured audience from launch. However, that is alwaysadjustable by the right absolute must-have game coming out that requires thehard disk. For the retailers, its initial consumer appeal to the casualgaming audience is more limited than last time because the Xbox360 does notoffer any new mass market productinnovation like the previous console did in supporting DVD movieplayback."Scott MillerCEO3D Realms"One word: Blunder. Developers will almost always cater to the lowestspec'ed system when it comes to consoles, so as to maximize the customerbase. So, my guess is that few games will truly make significant use of thehard drive, given that it's an option that cannot be counted on."David PerryPresidentShiny Entertainment"I've personally always been a big fan of being able to upgrade stuff I own.It's like adding a 2GB memory stick to your PSP, when some people are happywith the poopy 32MB card that comes with it, I'm not. It's like buying acar with an optional GPS built in or not. I hate not having the choice.Choice is your friend. I've been pushing for it for years on the consoles. Ieven had a friend that once built a prototype console, into which you couldadd as many processors as you could afford."The PC model is the example, giving gamers the experience they are happy topay for. Xbox 360 actually beats the PC as there's a common high-quality 3Dbaseline, so you can only go upwards. I hope Microsoft enjoys the experiencefrom this strategy and truly opens up the model for Xbox 720. Meaning if Ichoose to add extra features or enhance features, I can do that. (Fasterhard drives, more texture memory, physics chips etc.) Fingers crossed.Mark ReinVPEpic Games"I think it's a very good strategy given the potential competitivelandscape. They get a lower priced version for people who are morecost-conscious and an everything-you-need-for-online-gaming version forthose who want the full experience. Developers were always told not toexpect a hard drive on every machine so nobody has developed with theassumption it will be there."Developers already got our big Xbox 360 gift - we got 512MB of RAM. Thatwas a huge win for developers and customers alike and there was no way wewere going to get that and a hard drive on every machine. The RAM is moreimportant and will make a bigger difference than the hard drive would have.There will be lots of great reasons why you'd want to buy the hard drive andit will be available as an upgrade so nobody is selling themselves short ifthey can't afford the all-options version because they can buy those optionsa-la-carte (for more money mind you) if needed.CS WeaverFounderBethesda SoftworksAlso Visiting Scholar at M.I.T"The idea of selling a $299 'basic' (read crippled) version of the new Xboxmay make for minor bragging rights and a little press, but it is akin tobuying a Ferrari F430 only to find that while the car is beautiful and has apowerful engine, the model you bought lacks a transmission capable ofgetting out of first gear. You may be able to rev the deep-throated engineand impress the neighbors, but in truth, you will barely be able to get outof the garage."This is one of those silly market concepts dreamed up by a middle-aged,non-gamer who once worked at Proctor and Gamble. To him or her I say, 'Stickto Tide and Pringles.'"With the original Xbox, I admired Microsoft for having the imagination toincorporate an Ethernet connector. Even though they got the initial timingwrong, it was a leap of faith by a major player who showed the industry theywere willing to back a vision. The current play of $299 for a box that isinadequate in order to have bragging rights over Sony is as bad an idea asthe RJ45 connector was a good one."So, listen up Microsoft - never disrespect your audience. We willunderstand if you tell us that you cannot match PS3 in price because of thedifferent approach you have taken in order to achieve a better end result.But do NOT confuse the retail chain with a near worthless SKU and try topull one over on your public for the right to play shell games with pricewhen the PS3 is released next year."That is a recipe for more bad word of mouth than any 'under $300' pricewill ever achieve in the hearts and minds of your customers. It takesfourteen positive impressions to register "awareness" with a consumer. Ittakes but one negative impression to wipe it out. I figure with your initialleap of faith added to this latest stupid pet trick, you're just about even.Doug HareVP of product developmentThe Collective"From a developer perspective, I don't see [Microsoft's decision] havingmuch of an impact other than that most, if not all, games will be developedto function perfectly well without any reliance on a hard drive. If it getsthe platform into the hands of more consumers then it surely must be a goodthing for the industry."Jon MiddletonVP business developmentMad Catz"It's nice to see that Microsoft brought some creative pricing to theirlaunch strategy. Offering a premium pack complete with all the bells andwhistles is great for early adopters, but the addition of an 'a la carte'approach to a next-gen console release may lead to quicker adoption by themass gaming community."This move should help ease the cost impact and allow retailers to offer awider array of possible hardware bundles. It will certainly help drive salesfor Microsoft's third party peripheral partners."__ The MediaAndy McNamaraEditor-in-chiefGame Informer Magazine"As a gamer, it doesn't really seem to me that there is much of an option.Yes, there are two SKUs, but Microsoft has priced the two units and theaccessories so there really isn't much of a choice. The only problemMicrosoft faces now is that consumers will walk into retailers expecting tobuy a unit for $299 and will walk out with their wallets short and theirexperience with 360 tarnished. Let's all pray those launch games are good sothe price ultimately doesn't matter."Dave HalversonEditor-in-chiefPlay Magazine"Anybody wanna buy my Porsche? It's $30k, or you can buy it without wheelsfor $25K. .Hey, you'll still be in a Porsche. You can stick spare tires onit and look almost famous! I'm referring of course to Microsoft's absurddual price points; one for that poor sap who enters the next generation withwired controllers, no hard drive and standard AV cables (thusly grindingevery Microsoft catch phrase under foot) and one for people with fullyoperational cranial units and 400 expendable bones, sans game."Does this make any sense? .No; but does it come as any surprise? Becausevideogame feuds have become akin to political campaigns in this country,complete with rhetoric and enough speculation and innuendo to make yourbrain explode. $299 becomes the sound bite price while 399 is the actualarticle. And what timing: I was just thinking yesterday how the Zelda delaymight drive hordes of on-the-fence gamers to the 360 for the next best thingin Kameo, but with this odd packaging I'm sure the majority have now hit thebrakes. At least give us wireless and suitable cables for $300. It's builtinto the PS3.and tethered chords? That's the one aspect of next-gen I deemmandatory."Wes NiheiEditor-at-largeGamePro Magazine"In the long haul, consumers are going to adjust to the pricing and the twoSKUs. If they want it, they're going to buy it."Initially it's going to be a confusing message for the masses. That's goodfor those of us involved in the games media whose job it is to explain suchsudden and mysterious moves to the public. It sets up an interestingscenario, too, where if Sony can put together the right package for PS3 atthe right price and make it easier and simpler for consumers to make apurchase at launch, they are going to score. Of course, then Microsoft canback down their pricing by just reducing the number of extras in one of thecurrent SKUs."Also, if backwards compatibility is dependent on having a hard drive, it'svery odd that Microsoft has now set pricing to make it tougher on consumerswho might want to get into the next generation but are cost-conscious. Theyare the ones most attracted by backwards compatibility. For Microsoft then,backwards compatibility is not a key issue."Rob SmithEditor-in-chiefOfficial Xbox Magazine"How will OXM readers react? I expect a lot of them to be upset that theoption that gives them backwards compatibility (requiring the hard drive) is$400. In the big picture the multiple options can serve a broad potentialmarket. I also genuinely believe that the early adopter gadget/console guywon't be at all put off by the price tag."My big surprise is the inclusion of the DVD remote rather than the expectedXbox Live Gold membership. I think this suggests that Microsoft is veryconfident that Xbox Live will be so strong that Xbox 360 users will seek outa $50 or more membership for the service, which of course will moreeffectively monetize Live."Tom RussoDirector of games editorialG4 Media"Launching with both core and premium packages seems like a perfectlylogical extension of Microsoft's plans to offer gamers multiple levels ofcustomization. I expect the majority of the launch-day crowd day won't becaught leaving stores with anything less than the up-market,metallic-detailed unit."But I question the concept of an optional hard drive, especially when itcomes to the casual gamers who make up the bulk of the market. WhenMicrosoft launched the first Xbox, the hard drive was evangelized assomething that developers could use to make their games better. Now that it's no longer a standard feature, I expect developers won't spend as much timefiguring out unique ways of supporting it, ways the casual consumer may takefor granted as something the system just 'does'. So I fear it may ultimatelyserve as nothing more than a giant memory card."Also, with no Zelda this year, that's $50 more some gamers may be willingto spend towards the premium package, or another launch title."Dean TakahashiReporterSan Jose Mercury NewsAlso, author of Inside the Xbox"This is a compromise that isn't like to make anyone really happy. Thisproblem starts with the $50 cost of a hard disk drive. It makes the box tooexpensive to produce at the traditional target price of $300. Microsoftfound this out last time since their initial costs on the original Xbox were$425. That cost declined over time, but it wasn't really possible to knockmuch cost out of the hard disk. That's because it was already at rock-bottomcosts. It had one disk and one spindle. Traditionally, hard drive makers addmore capacity to their disks, but they never go below their rock-bottomprice. This is a fundamental cost barrier. So it looks like the same problempersists."But there are consequences. Microsoft doesn't lose as much money on everybox this time, with the higher price for the hard disk version. But gamedevelopers, especially those developing online games, have to choose how toarchitect their game for two different base platforms. In this day, thatisn't so hard to do."Microsoft says they told developers from the beginning that they would haveto solve this. So basically, the developers treat storage virtually. Theycreate a game to store assets either on a disk drive or on a memory unit.That memory unit is the problem because it can't hold as much data. Sodevelopers, by necessity, have to shoot for a lower common denominator. Thebottom line for them is they won't be able to make the best game they can."For consumers, the choice is tough as well. You can pay more than you everhave for a console in recent years, or you can do without the full machine.Consumers already have to invest in digital TV sets in order to fully enjoythe Xbox 360. Now the hardcore gamers will have to dish out more for thesystem too. If consumers buy the version without the hard disk, then it isguaranteed that they will not be able to play older Xbox games on the 360."Microsoft runs the risk of making the same blunders that killed Sega, whichhad too many SKUs on the market at the same time. It dilutes the energies ofthe game developers, confuses consumers, but it saves the company money."__ The AnalystsMike SabineMarket analystInternational Development Group"I think the dual-SKU option with one being $299 lets Microsoft reach a morecost-conscious consumer - a consumer that will still need to spend $60 to$120 buying one or two games and likely another $40 or $50 on a sparecontroller. Some day when the premium SKU is $299, the core SKU could be$199, which may also assist Microsoft in penetrating more nascent gamingmarkets such as Central & Eastern Europe and Latin America."However, the core SKU may cause some consumer confusion and forces theconsumer to buy a $40 memory card to save games whereas the $399 buyer hasthe hard drive for game saves. Developers have known for a while to notdepend on a hard drive being available in every Xbox 360 sold so they havedealt with the technology issue. Having two SKUs on shelves at retail isalso a method to command shelf space."David ColeChief analystDFC Intelligence"Something that gives consumers more options is generally good as long as itdoesn't confuse them. Of course, it is a new paradigm so there is thepotential for confusion. The main issue is that the basic system be able toplay all the games just as well as the deluxe system. The hard drive ismainly used as a big memory card, but it will become a crucial feature foronline gamers."The confusion issue will become more of a problem after the system has beenon the market for a year and you move from core gamers to more of the massmarket. I think most of the early adopters will tend to go for the high-end,my bet would be 2/3 to 1/3 in the first year, but of course that may dependon how many units of each are manufactured. Microsoft can choose to 'steer'consumers in a certain direction by what they manufacture."For Sony, the Xbox 360 system will provide them with a test of howconsumers react. Being second has its advantage in that you can see whatcomes before and adjust your strategy as need be."Michael PachterAnalystWedbush Morgan Securities"I think the pricing strategy is correct, and I think that Microsoft willmaximizerevenue without gouging customers while maintaining flexibility to cut priceat PS3 launch."I don't think many people will buy the $299 box, since value of the otheroption is so high. It's a PR play, so Microsoft can claim they launchedlower than Sony."
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