Wedbush Morgan analyst Michael Pachter has released what expects the PlayStation 4 and Xbox One will sell for at launch. He estimates that the materials in the PlayStation 4 will cost Sony $275, while the Xbox One will cost Microsoft $325.
The PlayStation 4 is expected to launch at $349, much lower than the $499 and $599 PlayStation 3 bundles cost at launch. Pachter expects Microsoft to sell the Xbox One for $399 at launch, however he expects a subscription-based model to be sold for less.
“We believe the ability to watch live TV from a cable, telco, or satellite set-top box through Xbox One could entice an MSO to drive subscriptions through a subsidised box in exchange for a multi-year contract,” said Pachter. “The ‘always connected’ requirement for the Xbox One likely means that a broadband connection will be required, suggesting to us that ISPs may have an incentive to offer a subsidy as well.”
“In addition, Microsoft could conceivably subsidise the Xbox One through prepaid Xbox Live Gold subscriptions (as it has done on a limited basis in the past) or premium Skype functionality as well,” he added. “Similarly, Sony could subsidise the PS4 through prepaid PlayStation Network subscriptions, but unlike Microsoft, it does not have a history of doing so.”
Pachter added that Nintendo has a lot to prove at E3 and needs to show the consumers its line-up of games for the rest of the year. He says that if sales don’t pick up by the end of the year competition from the PlayStation 4 and Xbox One, and even older consoles, will be too strong for things to be able to be turned around.
“In addition, if the Wii U’s popularity does not improve by the end of the year, many third-party publishers may pass on producing games for the console,” said Pachter. “We note that EA recently announced that it had no Wii U games in development, and it remains a possibility that the publisher will abandon the platform entirely. Should other third parties follow EA’s lead, the Wii U could be relegated to a first party only platform.”
Wedbush Morgan is expecting the PlayStation 3 and Xbox 360 to both drop in price by $50 by the end of the year. Sony is also expected to drop the price of the PlayStation Vita as well and Nintendo to cut $50 off the Wii U price.