Marketing Weblog: WHY DOES THE PLAYSTATION 3 COST 399€ IN EUROPE AND ONLY 238 € IN USA?

December 17, 2007

WHY DOES THE PLAYSTATION 3 COST 399€ IN EUROPE AND ONLY 238 € IN USA?

José Ignacio Gafo Gómez-Zamalloa

The same product costs 41% less in America than in Europe, which is exactly the exchange rate relationship of the Euro with US dollar.

As you can imagine, the price is not published in Euros in USA, so the comparison for the customer would therefore be 399€ vs. 399 US$. Seems to be obvious that Sony has taken advantage of the fluctuation of the exchange rate, but let’s analyze other possible reasons behind this:

ps 3 europa.jpg

1. The first and most likely one is the level of competitiveness in the Videogame Industry, which is much higher in the USA than in Europe. The latter applies both to the suppliers (in USA Microsoft is giving Sony a tough time) and to the retailers (in USA they take lower margins and face much more competition).

2. The second one has to do with the Consumer Profile. As you know the Videogame is a Blade + Razor business where you lose money selling the hardware and get it back through consumables (in this case, the games). So the key is how many videogames you are to sell per customer for it will dictate how much you can lose with the hardware. Again the Americans are behaving differently than Europeans in two respects:

i. Looks that they purchase more games than Europeans.
ii Looks that they get less pirate games than we do in Europe (you can have many games but unless they are original, the manufacturer will not get any money).

3. The third one has to with the product lifecycle. You may question me, but the truth is that the lifecycle is incredibly fast, and that the Playstation 3 was actually launched 7-8 months before in the USA than in Europe. And in that time it could have lost some of its freshness and exclusiveness.

4. And the last one that comes to my mind is related to the way prices are published: In Europe we tend to include the taxes, while in America they exclude them. Thus you have to add to the 399 US$ an approx. 7 % for the taxes (they vary from State to State). Even with them, the difference will be around 34%..

To make matters worse, you do not get exactly the same. You get more in the USA! Take for instance Best Buy, where the 399 US$ Playstation is bundled with a film priced at 30€ (specifically with Spiderman in this store). Smart move by the way, for the cost of the film for Sony (who has the rights of the film) is almost zero.

ps 3 usa.jpg

Isn’t it interesting how small the world has become? I am sure that this has been happening for many years and we didn’t have a chance to know it. God bless Internet!

Thoughts and comments are welcome.

Think Different!!!

Ignacio Gafo

PS: If anyone knows what can I do for getting the PS3 in the USA and shipped to Europe, please let me now... ; )

Posted on 17 December 2007 in Pricing, International Marketing, Distribución

Comments

Dear Ignacio,

very good article... but, about your question in the last paragraph... unfortunately you cannot have the US-PS3 in Spain... almost if you want to have original videogames... Please remember the DVD / HD-DVD zones of the world which unables to buy outside your region. It's business... God will bless Internet, soon!

Regards.

Posted by: Jesús Hernández at December 18, 2007 09:02 AM

Os adjunto un comentario de IBAI GARCIA URRUCHUA.

Primero, para comprar la consola, puedes hacerlo por e-bay (fijandote bien que sea un vendedor con muchos votos) o directamente pedirsela a algún "colega" que viaje a USA. Las tiendas online no pueden exportar aparatos electronicos. El único inconveniente es que los juegos, en general, tendras que comprarlos tambien en USA, aunque esto es más sencillo ya que el software si que se puede exportar legalmente. Luego algunos juegos españoles son "region-free" así que puedes ahorrarte la importación. Sobre el Blu-ray, tengo entendido que muchas de las peliculas editadas en españa son "region-free", pero si no...también tendrás que comprarlas en paginas americanas (si te interesa, te puedo recomendar algunas a parte de amazon, con buenos precios y buen servicio. Los coleccionistas del DVD tenemos cierta predisposición a comprar ediciones americanas y conocemos bien el mercado).

Respecto a la política de precios, que es el núcleo de la entrada, una de las cosas importantes que no has comentado es que en USA la Xbox360 ya estaba muy establecida, al contrario que en Europa que mucha gente estaba esperando a la PS3. Esto se suele llamar "fanboys" en el mundillo, gente que solo cree que existe Playstation como plataforma de juegos. Esto es especialmente flagrante en España, que durante el lanzamiento, incluso sin juegos y con un precio de el doble comparado a sus competidoras (Xbox y Wii), la Ps3 vendió más (que la Wii no estoy seguro pero si no eran similares)....es el único pais del mundo en el que pasó. Es un factor que no debería dejarse pasar por alto, la fidelidad de los clientes.

Aunque Sony está haciendo muy mal las cosas esta generación, y es probable que pierda esta fidelidad ganada durante toda una decada. Si Xbox360 consigue mejorar su hardware (el famoso death-ring, por si quieres profundizar) y la Wii consigue quitarse la etiqueta de consola de juegos "de minijuegos" con más juegos tipo Zelda, Metroid etc.

Posted by: JOSE IGNACIO GAFO at December 18, 2007 11:34 PM

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