February 23, 2010 -
Electronic Arts can't wait for more console price cuts.
During the Goldman Sachs Technology and Internet Conference today in San Francisco, Electronic Arts' chief financial officer Eric Brown held a talk regarding the current state of the games industry. On the subject of current console pricing strategies, Brown said he believes prices have not fallen fast enough compared to the previous console generation.
"I think pricing has not come down as much as we would have expected at this point in the cycle compared to the last," he said.
Brown highlighted two key occurrences from this past holiday to make his point. The PlayStation 3's price cut to $299 saw Sony enjoy an 84 percent increase year-over-year for the quarter, and Wal-Mart's free $50 gift card promotion on any Wii purchase helped Nintendo significantly increase sales.
"We do have a long way to go with respect to pricing. Last cycle, approximately 48 percent of PlayStation 2 units were sold at a price point of $149 or less. Clearly at $299 we're nowhere near that price point."
When asked about the expected life cycle of the current consoles, Brown noted things will be different this time around because consumers won't be able to take advantage of any noticeable graphical increase.
"It's a possibility that we don't see a sharp and distinct console transition like we've seen in the past. Today, we have two of the three consoles operating at full, high-definition and are running games at 60 frames a second," he said.
"If you have a multi-billion capital investment to develop the next generation hardware, the question I would ask is, 'If you were to produce that, what would you display it on?' There's really nothing in terms of broadly available consumer viewing technology other than 1080p televisions."
"You could upgrade in theory, but you wouldn't get the obvious graphic benefit that we saw that drove the transitions in the prior cycle," he added.
Brown also noted over time the new development focus on online multiplayer, digital content extensions, and the additions of the motion controllers from Sony and Microsoft this fall are just some of the catalysts that will extend this current console life cycle.
