Subjects

Business

Explore Business
Search
Business blog

Marketing Strategies: PS4 is a Loss Leader in the new Console War

The launch of Sony's PS4 alongside Microsoft's XBox One signals the beginning of a highly intense competitive battle in the games console market. With both the new consoles being launched in time for the crucial Christmas sales period, pricing strategy is crucial in order to gain maximum market share.

In the US, Sony has priced the PS4 at $399 (retail). Of course that is the retail price. Distributors will be wanting to make their margin on each unit sold. So how much does it cost Sony to make a new PS4?

This video take a look at the individual component and assembly costs of a PS4. The experts involved estimate that the unit cost of a PS4 is $332 which comprises:

  • Processor: $121
  • Memory: $64
  • Hard drive: $23
  • Blu-ray drive $20
  • Power management & audio controls: $16
  • WiFi chip: $8
  • Other components & assembly: $80

The unit cost of $332 does not include packaging or the dual-shock controller which ships with the console. Allowing for a retailer's margin or mark-up, that suggests that Sony is pricing the PS4 at substantially below the variable cost of the console. This is a classic example of a loss-leader. Sony is aiming to grab maximum market share in terms of console units sold, making its main revenues from games licensing and other add-ons.

Featured
CPD courses

Teaching the New Edexcel A Level Business

Join the tutor2u Business team for a resource-packed day designed to fast-track your lesson planning and preparation for the new Edexcel A Level Business specification. We'll look at the key changes in teaching content, explore the new challenges of teaching this linear specification and dive into some brand new teaching resources designed specifically for the new Edexcel A Level Business course from September 2015.

Learn more ›

Teaching & learning products

AQA A Level Business Year 1 (AS) Course Companion

Our Year 1 (AS) Course Companion is the designed as a high quality and cost-effective replacement for expensive and overly complicated textbooks. The Course Companion maps precisely against the specification and teaching content for Year 1 (AS) and provides students with comprehensive and concise coverage of what students really need to know and understand.

£100.00

AQA A Level Business Year 1 (AS) Calculation Practice Sheets

A complete collection of editable worksheets that that enable students to practice all elements of the quantitative and data analysis skills required by the Year 1 (AS) teaching content.

£50.00

Close

Business