Will Future Consoles Be Loss Leaders?

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Steve Anderson
The Video Store Guy
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Will Future Consoles Be Loss Leaders?

A common marketing move--and price is one of the most important factors in marketing--is to establish what's called a loss leader, a product specifically priced below market value in a bid to get buyers in the door in order to buy other products, priced in a fashion to make a profit for the company. An excellent example of this is game systems, which may start out priced low, but make up the losses by selling games and peripherals.

The Wii U, reportedly, is set to do exactly that, with even Nintendo president Satoru Iwata girding his stockholders for a year of profit that would be thoroughly not "Nintendo-like", as he planned to release the Wii U not at a price that would yield profit, or even match expenses, but rather be seen by the consumer as "reasonable", so that they'd be encouraged to pick a unit up close to launch.

Getting users into consoles--or to stay in consoles, depending--is likely to be a high priority for manufacturers, especially as gamers find their budgets pinched by a bad economy, and less likely to shell out the necessary money to buy consoles and games. Worse, the growing threat to console gaming that is mobile gaming is likely to keep pressure on the sector for the foreseeable future, and consoles will have to not only offer a better experience, but do so at a price that makes it worth sticking around.

Now, granted, this may not be the start of a trend. Microsoft may not follow suit with the Xbox 720. Sony's PlayStation 4 may not sell for less than a profit. But considering that Nintendo's loss leader plans are not the first of their kind, it's a safe bet that future consoles will take a cue from Nintendo, and try to get more users in the door at the cost of profit on the consoles.
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