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Location: AP Econ in the News: Unit II topics

Discussion: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ...

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jpoeschl	PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Sep 24 2008, 1:09 PM EDT Justus Poeschl This article might interest the people perhaps the most, who have Gamecubes, Playstations and Nintendos at their homes. The article here talks about the problems Sonny had, after the PlayStation 3 had come out. Demand was very at the beginning seeing that the quality was of course much better. The problem was that there wasn't enough supply of playstations to sell to everyone. In the meantime other companies have concentrated their production on newer Nintendos and Gamecubes. The prizes weren't cheap, but the quality and Supply was just better. The result, was demand decreased for playstations created by Sonny, because more people baught the newer Nintendos and Gamecubes. How Sonny exactly solved the problem was not said. Post reply 0 out of 3 found this valuable. Do you find this valuable? Do you? Keyword tags: None
AlexHan	1. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Sep 30 2008, 3:57 AM EDT As a recent purchaser of a PS3 I think i have a guess of how Sony solved this problem. When i first decided to purchase a new game console, I went through a series of marginal analyses... After analysing the marginal costs and benefits of buying an xbox 360, a wii and a PS3, I realized that the PS3 would bring me the most utility. This is because it was the newest console which means it'll be a new product for quite a long time. This is I guess what increases the demand of the PS3; the consumers "expect" the PS3 to remain new for a longer time. Also I demanded the PS3 because of my taste and preference. The sofisticated design and technology were attractive. Also I had a boost in my income. During my visit to Korea, I met a lot of relatives after a long time, who all gave me lots of pocket money. Although the PS3's price remained constant, the product APPEARED cheaper because of my lalrger income. There was also a special circumstance. I have recently moved into a newly built modern and elegant house. I felt the urge to get an upgrade in game console to my previous Gamecube. Post reply 1 out of 1 found this valuable. Do you find this valuable? Do you?
robschenck416	2. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Sep 30 2008, 1:07 PM EDT Justus, just a quick correction- the PlayStation 3's primary competitors were (and are) the Xbox 360 and the Wii. Additionally, Gamecubes were barely selling at all, and were 1/6 of the Playstation 3's price at the time. Wiis ("Nintendos") were also cheaper. As with almost all console launches, demand exceeds supply due to limited manufacturing time. However, this trend only lasts for a few months, as the manufacturers are able to catch up with the diminishing supply. More probable reasons for a surplus of Playstation 3s currently is due to the cheaper price of substitute goods (Xbox 360s, and Wiis) and market preference, again, Xbox 360s and Wiis. Another probable reason could be complimentary goods- software and peripherals are more expensive for the Playstation 3, than they are for the Wii, and interestingly enough, the Wii is currently the best selling console. With consoles, there are a lot of factors to consider- much more specific than these basic concepts, however, in economics we have to simplify, so those are some other possible reasons. Alex, the Playstation 3 is not the newest console, the Wii is. Regardless, just because a console may be new, doesn't mean that it will have the longest life time. Look at the Playstation 2, it is still selling strong and moving a lot of software, yet it has been on the market for 8 years. Both of it's competitors, the Gamecube and the Xbox, are now discontinued, even though they were both released a year after the Playstation 2! A product doesn't create sufficient demand just because it's "new", it also has to have a competitive price, and grant more satisfaction to the consumer than the products it's competing with. Products also need strong advertising campaigns to influence consumer's tastes and preferences, especially when they are directly competing with other successful products (the Xbox 360 and Wii). Post reply 1 out of 1 found this valuable. Do you find this valuable? Do you?
robschenck416	3. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Sep 30 2008, 1:09 PM EDT Correction- I mean to say "as the manufacturers are able to catch up as demand diminishes for the product, and improving production techniques (i.e. technology) allow manufacturers to produce more at cheaper costs)." Post reply 1 out of 1 found this valuable. Do you find this valuable? Do you?
FailBook	4. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Sep 30 2008, 2:34 PM EDT ok i gave up on reading the rest of your post because i just could not understand it. First its Sony not sonny and then it is was released not come out. Please explain to me how demand can be very? i know it can be high or low but very? ok just to say the GameCube was discontinued a number of years ago. So far of the next generation consoles only the xbox 360 has gone through any major hardware changes. Why are we now talking about prizes? Prizes are usually something you win for doing something not something you pay for. the second part of that sentence also makes little sense to me. Ok ignoring the last sentence this is what happened. Hardware problems in the final devlopment stages caused delays with the release of the console allowing Microsoft to gain the initial lead. On release of the console, when demand was high, they could not meet demand as well as jacked up the price because of way too high production costs. Also on release Sony ignored their most loyal console market, Europe, and did not release the console there till a number of months latter. This also put a dent in demand because people didnt want to wait. Once Sony was able to meet the initial demand they were too late as most people had moved on. Then Sony was over stocked and the price of the console was too high to attract casual gamers. the final problem is that with the changed hardware architecture the PlayStation 3 is very difficult to program for. Therefore many game studios do not make their games for the PS3. This hurts the sales because who wants to buy a gaming console that cant play the games you want? I could add in stuff about the Wii but then my post would be too long for this forum the pool is closed Post reply 4 out of 5 found this valuable. Do you find this valuable? Do you?
robschenck416	5. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Oct 1 2008, 2:59 AM EDT \| Post edited: Oct 1 2008, 2:59 AM EDT @FailBook (didn't want to quote your entire post): While the PlayStation 3 was definitely more challenging to program for (according to a lot of developers, especially Valve) this initial hurdle is overcome after developers become more and more acquainted with the hardware, to the point where we see some multi-platform games being developed initially on the PlayStation 3 and then ported to the Xbox 360. Also, keep in mind, the majority of the consumer-base purchasing the PS3 and software for it have no knowledge of how difficult it is to develop for the console, so it's doubtful that that factor played a relevant part in the PlayStation 3's success in the market (there are hardly any Xbox 360 exclusive games, so the sheer lack of software also isn't an issue...because most developers do develop for it). Additionally, the PlayStation 3 has sold 14.41 million units, with the Xbox 360 ahead at 20 million. Although the 360 is ahead, 14.41 million units is a lot of units and as development for it becomes easier, there are less and less Xbox 360 exclusive games. I don't think the development process currently plays a major role in moving units- even if it is more challenging to create software for, if there are 14.41 million units out there, developers will create PlayStation 3 games, even if the opportunity cost for creating a PlayStation 3 games is greater than an Xbox 360 game. Post reply 1 out of 3 found this valuable. Do you find this valuable? Do you?
oliverbroks	6. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Oct 2 2008, 2:09 PM EDT \| Post edited: Oct 2 2008, 2:09 PM EDT The main problem was timing on Sony's part. They did not manage to release the PS3 in Europe, Australia, the Middle East, Africa and New Zealand until after the Christmas window of 2006. While they managed to get the console out for retail in the US and Japan in November, it wasn't till March 2007 that Europe and the rest of those countries listed got their first taste of the PS3. By doing that they missed out on their biggest market at the best time of the year for console sales. And it was this same fact that drove the 360's sales up. While some were prepared to wait (for what in my opinion is a far superior console), many weren't, and instead resorted to buying the 360 instead (including many mum's looking for presents for their sons) . This meant that in Europe, Australia, the Middle East, Africa and New Zealand Sony PS3 consumers were mainly only the die hard fans which have been with them since the original PS, and a very large market for new customers was lost. Post reply Do you find this valuable?
JonathanRanstrand	7. RE: PlayStation 3 Supply Surpasses Demand - Page 1 of 1 - Gameworld ... Oct 3 2008, 7:37 AM EDT \| Post edited: Oct 3 2008, 7:37 AM EDT Ollie, you have a point in that Sony's timing was not the best in releasing the PS3. At the same time, though, PS3 sales still are not higher than the console counterparts. Naturally, because the PS3 is the most expensive console, demand will be lower than for, say, the Nintendo Wii, which has a lower price point and thus greater quantity demanded (according to the law of demand). In fact, the Wii outsells the PS3 by 3 to 1. Another issue here is the strategy that Sony decided to pursue. The PS3 is a very advanced, high-tech console. When the PS3 came out, Sony's costs for producing it were so high they made a $250 loss on each unit. On the other hand, Nintendo decided to make a less powerful console, but which would offer new ways of playing games (e.g. pointing with the controller). Thus, one might wonder if, perhaps, Sony's strategy was not as successful as that of Nintendo. Nintendo is selling more consoles and making a large profit, compared to Sony, with fewer units and, at least initially, some losses. Post reply Do you find this valuable?

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