There are quite a lot of people who are predicting the price point of Project Scorpio’s eventual release. Some of those guestimates are really quite scary, with some saying that we shouldn’t expect this system to be priced under $700 dollars. Ouch, that’s definitely a price that could put off anyone, regardless if they’re an enthusiast gamer or not.
However, I don’t think that Microsoft would launch this 4K beast at this price and for several reasons that I detail below.
Project Scorpio is for the enthusiast culture
I’m not sure that everyone got the message, but Project Scorpio isn’t aimed at the average gamer. Similar to what Sony has done with the PlayStation 4 Pro, the Scorpio will be for those who simply want the best. As such, the market for the console will be somewhat limited to enthusiasts and hardcore gamers. Microsoft has stated time and time again that this isn’t a forced upgrade and that it will co-exist alongside the Xbox One and the PC. Gamers will have a choice and a price point for when they’re ready to get involved with the Xbox/Universal Windows Platform ecosystem.
So what does that mean for a selling point? Simple, it means that unless there’s a compelling reason to own the 4K beast, this system will still be outsold when it comes to the Xbox One S and itself. If Microsoft is serious about getting this into the hands of every gamer that it can, the system simply can not be overpriced. Doing so would do more harm than good and could serve to kill any progress before the console actually takes off.
Consoles are traditionally sold at a loss
There is an old, hard truth when it comes to selling hardware; you will sell at a loss. There hasn’t been a single console for the past 10 years or more that has been profitable during the first 1-2 years of release. It happened with the PlayStation 2, PlayStation 3, Xbox 360 and even the Wii U. It just takes years to turn a profit, which is understood and is an acceptable loss when it comes to moving gaming consoles. But if this is true, how do companies make money?
“Consoles like Xboxes, PlayStations & the Wii U are sold at a loss”. “It costs more to manufacture and distribute the device than it is sold for. Console manufacturers do this because they hope to make back the money from the license fee they charge for every game sold on the system.” – Ben Cousins (@benjamincousins)
Companies make back those losses with sales on games sold, services offered such as Xbox Live/PlayStation Network and the number of units moved. And even then it isn’t enough of the software and services can’t overcome the loss of hardware pricing.
“In terms of where the console space goes, there’s some things about how the console business runs, in terms of you don’t make any money on the hardware, it’s making money on the games, making money on the service. So if you’re in a situation where you’re subsidizing the hardware, a faster refresh of the hardware really hurts you. Because obviously, any subsidy of the hardware is kind of played out over, somebody is going to buy games, they’re going to subscribe to Live, they might go subscribe to Game Pass and other things. And that’s how you kind of run a business around the console space.” – Phil Spencer (@XboxP3)
So if this a normal practice, Microsoft has to be willing to eat some of the cost it takes to produce Project Scorpio. How much depends on how badly the company wants to get these units moved and getting them into the hands of the gamers. That said, putting the price at $600-$800 would help Microsoft recoup their costs, but at what “price”? Pricing it too much can put off a potential buyer, and is exactly what Microsoft can not afford to do. The smart move is to price it at $450-$499, or $550 if it includes a bonus item, like an Xbox One Elite Controller.
This is not a forced upgrade
Now, this is the single most important reason I feel that the system won’t be priced as many think it will be. Despite what people say on Twitter, Reddit or other places on the internet where people talk video games, Project Scorpio is not a forced upgrade. It’s not mandatory, it’s not needed nor is it required. It is a desire, a want, a nice to have and nothing more. While I’m sure Microsoft would love nothing more to market this as “You Simply Need this”, however, they can’t.
They aren’t in the position to do so, and honestly, even if they were, there’s still the little issue of needing more games on the Xbox Platform. That’s not to say there aren’t games to play, but there needs to be more. But getting back to the upgrade, as mentioned before, Project Scorpio is meant to co-exist with the Xbox One and PC, each with their own performance level. Have an Xbox One, but want better graphical fidelity and better performance? Project Scorpio is here. Want even more power and have deep pockets? Then a high-end PC rig is what you’re looking for.
Microsoft is working towards multiple entries and honestly I didn’t think they could manage it. I’m still not completely sure they can, but I’ll acknowledge that they’re trying and that they’ve righted a lot of wrongs. If that is enough remains to be seen, but I definitely feel that they’re onto something with the Scorpio. Adding to that, I’m sure Microsoft knows that the sweet price point is needed to sell this system. That all said, I’m sticking to my guns and predicting a $499 price point. Could I be wrong? Sure, but It can’t be any higher if this system is to sell well.
One thing is for sure, this year’s E3 event is going to be exciting for Microsoft. Let’s just hope they can keep the hype going and then deliver on their promises.