A certain amount of confusion has reigned since Sony announced that the price of the 60Gb PS3 has been cut by $100 in the US – while in the UK, potential PS3 purchasers will instead get a Value Pack, which throws two games and a second Sixaxis controller into the mix, but leaves the PS3’s RRP at £425. Part of the problem was caused by Sony’s initial reluctance to point out that the 60Gb PS3 is being phased out in favour of an 80Gb model in the US, so effectively, the $100 price-cut will only be temporary.
But the fact remains that while a PS3 officially costs £425 in the UK (albeit bundled with more kit than the Americans get), for a while, it will cost just £250 in the US. We thought that the best thing to do would be go straight to the horse’s mouth, and managed to catch up with Sony Computer Entertainment Europe’s President, David Reeves, who provided a reasoned argument as to why we haven’t had a price-cut in the UK yet (it’s partly because it would annoy everyone who has already bought a PS3) and provided some strong hints that it won’t be too long before we do get a PS3 price-cut over here. Here’s what he said:
Q: So why didn’t we get a PS3 price-cut in the UK?
David Reeves: If you’re a consumer — and we introduced the PS3 in March for £425 or 599 Euros – let’s say you bought one at the end of April and have been using it, playing Resistance: Fall of Man and MotorStorm. We’ve only been on the market for three and a bit months. Our thought process was: “Wait a minute – we’re actually not doing too badly – we’re not selling as well as Wii or DS – but seasonality-wise, compared to, say, PS2 at the same time we launched it in 2001, we’re actually doing quite well on a regional level”. It’s exactly the target that we sought. July is not really a gamers’ month unless you get a big, big title. So we thought if we reduced the price, we’d annoy a lot of people. We did think about it, but we also felt that it wasn’t doing that badly. In the US, they’ve been going for more than six months, so they took the decision that going down in price was a better thing to do than a value pack.
Q; The fact remains that right now, if you want to buy a 60GB PS3 over here – admittedly with an extra controller and game – it will cost you £425, but in the States, it will cost £250. That raises the spectre of grey-market imports, which Sony has been tough on in the past. Is that something that worries you?
DR: The value in there is £120 to £125. We know that most people, anyway are going to buy two to 2.5 games. So when you do the maths, it’s going to be $499, which is £250, plus two games and a Sixaxis controller. So that’s going to come up to £380 to £390. But there’s VAT in Europe, so you have to take 15 per cent off, and there’s GST in the US, and the average sales tax is 8.5 per cent. So when we did the maths, and this is the case in Australia as well, they are exactly the same. We could have omitted the Sixaxis controller and just put two games in, but it wasn’t enough – we wanted to have a level playing field. But not drop the price – because we believe that dropping the price in the summer doesn’t work.
If you drop the price in the summer, the sales rate goes up for a couple of weeks, because there’s not much demand out there, and then the sales rate comes down again until you get to the end of September/the beginning of October, and it all starts to heat up. We’ve had more success doing that either earlier in the year, in March, or later in the year, but doing it in the summer just hasn’t worked for us. We’ve tended to do these starter or value-added packs, and people have come out and said: “You know, that’s not bad”. That keeps us going in the summer. But we realised we had to – to use an old Chris Deering expression – take some air out of the tyres to get to the next level.
Q: But a spanner in the works is that GameStation, pre-Value Pack, were selling PS3s for £399 with a game. There must be something going on when retailers voluntarily slash their margins. Do you think we’ll see more retailers dipping under the £425 RRP?
DR: I think, in the UK, yes. In the UK, there’s intense competition. The situation in the UK is unique – it is so competitive. People are going to come out at £399 with a game, to get people into the store to buy another game and another game. That’s the name of the game. In France, for example, you can’t do that because there’s a law on price-control. In Germany, they hold the prices – you can even go onto amazon.de and they won’t pull the prices down or put offers in. In Switzerland, too. Even in Russia, they’re not discounting. I do think that the UK is a unique situation and you’re going to see all sorts of deals.
Q: Everything you’re saying indicates there will be a price-cut before Christmas – can you comment on that?
DR: We don’t plan these things just from one week to the next –we look at these things in the context of an overall plan and overall budget. Our plans are in place – we know exactly what we’re going to do and when we’re going to do. I’m not going to answer your question, because that would get me into tremendous hot water. But we have a plan and we’re going to stick to it. We are confident but not arrogant about reaching a very, very good installed base on PS3, and having the same momentum that we had with the PS2. We’re not putting our heads in the sand – we know it’s not selling that well, but we know that it’s selling according to the targets.
Q: You’ve spoken about how the PS3 will begin to prevail over its rivals in March 08 – do you think the PS3 will be a major contender this Christmas?
DR: I think each peak is crucial to maximise what you can do, but I don’t think this Christmas is necessarily the most critical one – I think that’s going to be Christmas 08. I see this more as kind of like a tsunami – it starts small and gathers speed, and eventually, after four or five years, it will start to take you over. At least, that’s the way we’ve mapped it out. We’re not necessarily trying to take a scatter-gun approach with all the top titles just before Christmas. Again, it’s like reducing the price in summer – we don’t believe it works to put six or seven of our own games out [at Christmas], because consumers don’t have enough money to buy them all. And the trade doesn’t quite know where to put all the top titles. So what you’re going to see is that we might put some of our jewels out in February, March, May and right through the year. We call them pillar titles. I think, probably, that third parties will try to put their pillar titles out before Christmas, because that’s where they get the best sales. But we have a slightly different approach.
Q: What are the big first-party PS3 games that really stand out for you beyond Killzone 2?
DR: They haven’t been announced, but I’ll give you the thought process. We now have, every quarter, something called Gameshow where we all get together globally and look a what Worldwide Studios are producing. Now, we don’t see every game at every session, but every session, we see five or six new IPs which we can rate. I can, hand on heart, say that there are six or seven such games, coming in the next 18 months, which are absolutely spectacular. There are some that are very emotional – one of the objectives we gave Phil Harrison is to make people cry. We know that in the middle and the back end of next year, these are going to come out and people will say: “I have never seen anything like that before”. We just have to be a little bit patient – there will be more God of Wars and so on. What has been remarkable is that there was a crash programme to put games ion the PlayStation Network – LittleBigPlanet was originally designed for that. We’ll see that some of them will be online, but some will be done as full-blown games. We started that programme over three years ago.
Excellent interview - I think he talks a lot of sense! Cheers Three Speech
Comment by Timeless — Jul 20, 2007 @ 6:31 pm
Exactly what I was saying/my sentiments. Good job.
Comment by Ben Furneaux — Jul 20, 2007 @ 6:36 pm
Great interview, thanks Three Speech!
Comment by Tom Eccles — Jul 20, 2007 @ 6:44 pm
While I disagree with Sony’s policy of making Europe last with all its offers and price cuts. I do understand that the PS3 has only been out here for 3 months and in reality , I wouldn’t expect a price cut for another 3 months minimum.
Saying that it doesn’t really effect me having a PS3. I just want more people to play against online. If cutting the price will do that, then so be it.
Comment by Eararaldor — Jul 20, 2007 @ 7:16 pm
Well that sounds like a good honest review for a change unlike alot of others ones from sony recently.
Its like 1 step forward 2 steps back sometimes it seams.
Comment by Ricky — Jul 20, 2007 @ 7:46 pm
Wonderful. Can’t wait to see some of these games he mentioned.
Comment by Chad — Jul 20, 2007 @ 7:59 pm
This guy has been talking alot of sense lately.
Comment by Rothbury — Jul 20, 2007 @ 8:37 pm
Threespeech,
Why didnt you ask about in-game XMB. You know it’s what people want, SO ASK ABOUT IT!!!
Comment by Kris — Jul 20, 2007 @ 8:48 pm
[…] Interview via Three Speech. The specific comments about this topic can be found under question 5. Did You Enjoy this Post? Subscribe to 1P Start. It’s Free! « Back Home Posted in Interviews, Industry, Playstation 3, News, General Link to this Entry Email This Entry […]
Pingback by 1P Start » Blog Archive » Ballsy statement from SCEE — Jul 20, 2007 @ 11:02 pm
so basically they don’t have nice games this year because people doesn’t have money to buy them all??? : )
lamest thing ever heard
“we don’t believe it works to put six or seven of our own games out [at Christmas], because consumers don’t have enough money to buy them all”
Comment by SaintOfKillers° — Jul 20, 2007 @ 11:48 pm
That was a good interview - well worth reading, Thanks to all involved.
Comment by GleeDemon — Jul 21, 2007 @ 12:39 am
This interview is from SPOnG…
http://spong.com/feature/10109618
Comment by TnS — Jul 21, 2007 @ 12:48 am
Kris, and they are just going to respond ‘no comment’, because once they say it’s coming, when there’s an unexpected setback there will be a LOT of unhappy users. It’s not a trivial thing to get done after all, considering they want to keep memory usage of the OS while in-game at a minimum.
Do you truly think nobody’s asking? It’s just that the answer that Sony is giving is not interesting.
That said, I personally don’t care for an in-game XMB at all. Rumble, AVI and OGG support, and adding 576i and p to the output resolution choices of the Japanese model though… I want those
. Oh, and having a better store would also be nice.
~Grauw (who lives in Japan for a year and wants to take his Japanese PS3 back home to Europe without compatibility issues)
Comment by Laurens Holst — Jul 21, 2007 @ 11:01 am
[…] SCEE president David Reeves has a lot of explaining to do. With a $100 cut in the 60GB PS3 in the USA and nothing (yet) in Europe, there is a bit of animosity towards Sony from their fan-base over here. In an interview with Three Speech (the semi-official blog that sort of isn’t run by Sony), he had the following to say when quizzed on why the UK didn’t get a PS3 price-cut… David Reeves: If you’re a consumer — and we introduced the PS3 in March for £425 or 599 Euros – let’s say you bought one at the end of April and have been using it, playing Resistance: Fall of Man and MotorStorm. We’ve only been on the market for three and a bit months. Our thought process was: “Wait a minute – we’re actually not doing too badly – we’re not selling as well as Wii or DS – but seasonality-wise, compared to, say, PS2 at the same time we launched it in 2001, we’re actually doing quite well on a regional level”. It’s exactly the target that we sought. July is not really a gamers’ month unless you get a big, big title. So we thought if we reduced the price, we’d annoy a lot of people. We did think about it, but we also felt that it wasn’t doing that badly. In the US, they’ve been going for more than six months, so they took the decision that going down in price was a better thing to do than a value pack. Q; The fact remains that right now, if you want to buy a 60GB PS3 over here – admittedly with an extra controller and game – it will cost you £425, but in the States, it will cost £250. That raises the spectre of grey-market imports, which Sony has been tough on in the past. Is that something that worries you? […]
Pingback by Playstatic » Reeves explains lack of PS3 price cut in Europe — Jul 21, 2007 @ 1:28 pm
(1) Fix backward compatibility - or start offering refunds. Another option if you dont want to provide 100% backward compatibility with earlier “Playstation” models is to drop the brand “Playstation” and start a new console family. If there is not 100% compatibility please tell Kaz to shut up about the so called “Playstation” library…
(2) Everyone knows that the 80GB model will be US$399 with rumble by Christmas. We know the stock piles of the 60GB model & old controller has to be dumped first. Just dont screw the PAL regions at Christmas OK - we can all import.
(3) Quit flogging that Blow Ray - no one gives a toss. We all have lots of DVD’s and upscaling is good enough, we all have access to cheap hard drives - like a few 250GB, 750GB or the new 1TB SATA drives in our media centers OK and we can therefore stream our movies and gazillion bloody MP3’s on demand. IE: Blow Ray means nothing so stop charging for it.
(4) Release some games please.
Comment by Peter Sakes — Jul 21, 2007 @ 2:15 pm
You didn’t ask him which games are going to be 4D?
Comment by Dave — Jul 21, 2007 @ 7:13 pm
Nice interview thanks, good to hear that there are some big games to look forward to apart from what we’ve already heard about.
Comment by betahoven — Jul 21, 2007 @ 8:13 pm
“So we thought if we reduced the price, we’d annoy a lot of people.”
What is this guy smoking?!!
Comment by Keith Williams — Jul 21, 2007 @ 10:40 pm
I like this guy, its nice to have sony talking to the people, big up phil harrison too.
But yeah i would have been annoyed if they dropped the price having not had my ps3 long but i think this packs a good idea, both the games are worth playing.
Comment by Baron — Jul 22, 2007 @ 1:39 pm
Is he going to furnish the early adopters with a free controller and a game?
Comment by Ton Capone — Jul 22, 2007 @ 1:58 pm
it’s nice if company’s are just honest about their business.
plus Laurens Holst there are only a few PS1/PS2 games not working on the euro ps3 and even those will eventually work “contact sony”.
plus the PS3 isn’t a billion dollar crippled console ala xbox360 “1 billion wasted”.
Comment by stewiemark — Jul 23, 2007 @ 12:02 am
So basically they can continue to rip people off, because they value Europe less than the US. Thanks guys! That is hard value to beat!!
Comment by Orjust — Jul 23, 2007 @ 12:18 am
What’s important to all PS3 owners (present or future) is that Sony sticks to its long-term strategy which should ensure the same market dominance the PS2 had.
As Mr Reeves points out, cutting the price now, would only give a short term gain in customers, but would leave them high and dry later on in the year when it would make more impact.
Current PS3 owners should be happy with what they’ve got and that Sony have a solid strategy for increasing the user base which, in turn, will raise the profile (and importance) of the PS3 amongst developers.
Anyone considering buying a PS3 right now will have to make the decision based on how much they want the machine right now against the current lack of games and the prospect of a price drop this Autumn/Winter.
Comment by Mothra — Jul 23, 2007 @ 8:59 am
Good interview, clear strategy, yet, I’ve purchased my ps3 once month ago, and I’m very “annoyed” that Sony did not give me back something.
I’ve paid 600€ for my ps3, without any game, Sony said there will not be any cut price in europe, yet, according to me, the stater pack is a 170€ cut price.
So, why If I’ve bought my ps3 a month ago I can’t have the games and paddle of the starter pack ?
3 month later only, tssss. The value pack should have been the first europe pack released. I think sony consider me as a ….
Comment by Rem — Jul 23, 2007 @ 10:07 am
Sort of a “Screw Europe”, there paying more than the US in the first place so they can keep on paying the more expensive prices.
Its about time you give the European Region a little more respect it sells well here, it was the same with the PS2 yet it seems when it comes to certain things we are always last in the queue. (European Shop for instance!)
Oh and its nice to see these value packs 3 months after I forked over €650 for a console and a game. You should have released the console with a game at European launch especially after we already had to wait longer then everyone else to get the console.
I’m not complaining about not getting something that other will be getting and that I suppose is how things work but I can’t help feel a little annoyed.
Comment by Alisdair Comb — Jul 23, 2007 @ 11:28 am
Another bit of propoganda by a company that doesnt care, lets face it the PS3 is overpriced anyway thats why people are getting it from abroad, just do the exchange rate conversions and the UK is paying through the nose £299 maybe but £424 your joking right? And not only that but customer support is non-existent and Sony know and allow cheats to ruin most online activities, Sony should be ashamed.
Comment by zammis — Jul 23, 2007 @ 12:27 pm
Oh and dont believe the hype about Sony making a loss on every console, thats the biggest load of bull thats ever been uttered.
Comment by zammis — Jul 23, 2007 @ 12:30 pm
[…] SCEE:n johtaja David Reeves analysoi yrityksen päätöstä olla alentamatta PlayStation 3:n hintaa Euroopassa: ”Se olisi ärsyttänyt monia ihmisiä.” Reevesiä haastateltiin Sonyn puolivirallisessa ThreeSpeech-blogissa. […]
Pingback by Reeves: PS3:n alennus olisi ärsyttänyt monia - Pelaajalehti.com — Jul 23, 2007 @ 1:56 pm
please shut David R. up .. he is starting to sound very out of touch with reality .. an image that its taken alot of time and hardship to shed.
http://kotaku.com/gaming/david-reeves-says/ps3-price-cut-would-annoy-a-lot-of-people-281149.php
Comment by whackmushrooms — Jul 23, 2007 @ 2:04 pm
@Zammis
And your proof for that sir?
Comment by Matt — Jul 23, 2007 @ 4:06 pm
[…] In an interview on the Threespeech blog, Sony Computer Entertaintment of Europe President David Reeves attempts to answer the question that is on every Sony Nation members mind. What games will be coming out after Killzone 2 ships? On the blog he states that there are six or seven internally developed PS3 games in development “which are absolutely spectacular” and that one of the objectives for these games is to “to make people cry”. This is absolutely wonderful news. I’ve always dreamed of the day where after killing some alien I would have the urge to pick up a tissue and cry about it. This is just further proof of the 4D capabilities of the Cell Processor(I like to call it the Jesus Processor) and the amazing potential of the PS3.� […]
Pingback by $599 US Dollars » Blog Archive » Sony is developing new IPs that will “make people cry” — Jul 23, 2007 @ 5:56 pm
[…] Heavenly Sword is expected in September, giving PS3 owners something to play while Xbox owners immerse themselves in all things Halo 3. Heavenly Sword is one of the games coming this fall which will hold the system together through this non-critical holiday season. We’re just glad to finally be able to play a good PS3 exclusive that doesn’t start with Resistance and end with Fall of Man. […]
Pingback by Electronic Zone » Sony confirms Heavenly Sword demo this Thursday — Jul 23, 2007 @ 7:05 pm
SCEE CONFIRM COMPANY LOBOTOMY
Once again the brain trust at Sony (or more specifically, SCEE) have offered some more
amazingly insightful pearls of wisdom in relation to PS3 console pricing, consumers, and the
European market.
Corporate mouthpiece and stand-up comedian in-the-making (SCEE president) David Reeves has
once again given us all an instance of SCEE arrogance by quietly murmuring the following
statement in an interview with semi-official Sony blog Three Speech;
“July is not really a gamers’ month unless you get a big, big title. So we thought if we reduced the
price (of the PS3), we’d annoy a lot of people.”
Let’s review that statement.
Firstly, how can you “annoy a lot of people” with a price cut for something as desirable as a PS3,
no matter what month of the year it is? Secondly, if July is a little low on big name game releases,
why the hell wouldn’t you announce a PS3 price cut WHEN PEOPLE HAVE SOME SPARE CASH
TO THROW AROUND?!!?
If you have some big games lined-up for the holiday season, what better time than the summer to
grab a price-reduced console in preparation? Buy a PS3 now and the window of saving time
between the summer and the holidays is such that you actually spread the cost of purchasing a
new console and three or four games.
Wait for a price cut, and you give up on potential game sales, further reducing the market to a
shining example of corporate-controlled franchise instalments designed to drip-feed so-called ‘new
modes’ and ‘exciting new feature(s)’ that should have and could have been included in the
previous year’s version.
So, the situation is now this; come the holiday season, consumers will buy a cut-priced PS3 and
perhaps two games. If the price-cut had happened in the summer, consumers would already have
a PS3 and would therefore have more money saved to splash out on three or four titles - instead of
only purchasing just the latest Madden or Tony Hawk outing, consumers would have more choice
to spring for a title they would not normally grab, thus giving smaller (and in most cases, more
playable) titles a piece of the consumer pie.
How long will it be before we start to see some of the smaller games companies go out of business
as the ‘corporate giants’ stride across the bloody battlefield, hurling well-placed copies of ‘Fifa’ and
‘Smackdown Vs. Raw’ into the backs of the little guy?
Okay, perhaps that’s taking things a little too far - after all, Microsoft (and to a lesser extent
Nintendo) are just as responsible for flooding the market with tried and tested titles which
guarantee sales. And let’s not forget the role of the consumers themselves that have a very
important hand in all of this too (so what if you miss the latest ‘update’ of your favourite franchise
game? Wait another year for double the improvements so that you at least get more bang for your
buck).
The bottom line is this - SCEE have once again misjudged their consumer base. Their finger is no
longer on the pulse of the gaming community - it’s attached to the hand that’s hurriedly taping
figures into a calculator in an effort to make up for the 68% drop in operating profits from the 1st Q
of the current financial year.
Take care of the consumer, and they’ll take care of you by displaying brand loyalty. Screw with
them - or worse, take them for granted - and they’ll flock to the opposition.
Looking at the big picture (and ahead to the future) it’s hard to believe that the PS3 will have
much of a fan base left at all by this time next year. This is just the latest example of stupid
thinking on SCEE’s part, and one more nail in the coffin of a company that should know better.
Arrogance and stupidity are great traits for a pro-wrester - they’re not so good for a publicly funded
company.
Cry all you want about ‘Microsoft Points’ or ‘faulty 360‘s‘; the fact remains that, even though they’ve
only been in the console market since 2001, Microsoft have not only managed to compete with
Sony and Nintendo, but they’ve also succeeded in taking the entire gaming platform to the next
level.
Faulty 360’s? Hey, at least Microsoft are owning up to and fixing their mistakes, at some
considerable cost to themselves. Can you imagine the mess that Sony would make of a similar
situation?
“We are aware of problems with one or two PS3’s, however, the return rate of individual units is well
within the acceptable rates commensurate to a major console release.”
Giving the excuse that, because the PS3 arrived later in Europe than other global territories means
that it’s still too early to consider cutting the price of the machine, is quite frankly, bone-headed.
PS3 sales in Europe are apparently “not doing too badly” - so why cut the price now when units are
still being sold, and money (however small the mark-up may be) is still being squeezed out of loyal
Sony customers?
You can deliver lines like “the UK is a really competitive market” all you want - to my mind, that’s
just a cowards way of saying “we don’t like it when our consoles are reduced by UK retailers, so we’
re taking our ball and coming back when we feel like it.”
Thanks for thinking so highly of us here in Europe, SCEE - you can take your ‘PS3 Value Packs’
and…well, you know the rest.
Steven Lowis
http://www.joo-see.com/ps3pricecut002.html
-Sony really does have HUA disease!!
Comment by Jackrabbit75 — Jul 23, 2007 @ 7:16 pm
[…] Annoyed? Damn straight. I know when I start thinking about expensive things getting cheaper I just can’t stop frowning. Or tutting, for that matter. That’s how annoyed I get. INTERVIEW WITH DAVID REEVES - THE UK VALUE PACK [Three Speech] […]
Pingback by Electronic Zone » David Reeves Says: PS3 Price Cut Would Annoy A Lot Of People — Jul 23, 2007 @ 8:15 pm
“So we thought if we reduced the price, we’d annoy a lot of people.”
That’s is just so stupid!!!
I can’t even begin to come up with a comment… It’s like trying to convince a five year old kid, his father isn’t the strongest man alive.
Comment by Akisame — Jul 23, 2007 @ 8:44 pm
Hi,
We have a petition running in an attempt to get Sony to reduce the price of the PS3 in Europe.
Please come along to www.sonycon.co.uk and sign it!
Your support is appreciated.
!CS!
Comment by Counter Strike — Jul 23, 2007 @ 9:22 pm
[…] Despite the ridiculous price of the Sony� PS3 in Europe,� Reeves� comments on the lack of a price cut� in an interview� with ThreeSpeech.� ”July is not really a gamers’ month unless you get a big, big title. So we thought if we reduced the price, we’d annoy a lot of people.” […]
Pingback by Sony thinks price cuts would "annoy": PS3, Wii, Xbox 360 price war unlikely — Jul 24, 2007 @ 1:47 am
[…] 24, 2007 SCEE President Talks UK Price Cuts, Market Opportunities Posted at 6:59 pm in PS3, Industry | Share This Tags: scee, uk, europe, pal, david reeves In aninterview on semi-official Sony blog Three Speech, SCEE president David Reeves has said that they did consider a price cut in Europe, but that it was too early for it and would “annoy a lot of people.” […]
Pingback by SCEE President Talks UK Price Cuts, Market Opportunities | BDGamer — Jul 24, 2007 @ 1:59 pm
Gee whiz. The amount of astroturfing on this comment thread is appaling. At least try to hire some subtle and skilled PR folks Sony. Sheesh.
Comment by Keith Williams — Jul 25, 2007 @ 1:14 am
[…] That’s a tough ask. I’ve always thought of Phil as the gentle giant type. Making people cry, that’s more David Reeve’s territory. INTERVIEW WITH DAVID REEVES - THE UK VALUE PACK [Three Speech] […]
Pingback by consoleer » Blog Archive » Orders Are Orders: Phil Harrison Under Orders To Make Us Cry — Jul 28, 2007 @ 8:48 am
RSS feed for comments on this post. TrackBack URI
Leave a comment