The EB Games Australia boss on what he sees as the problem with the PSP Go business model, and why his chain may well not stock it:
“The old business model where you sell hardware for a loss because you’re going to sell games doesn’t really work [with the download-only PSP-Go] – so we’re just trying to work out a model that allows us to make some money selling the hardware,” Wilson said.
Well, that’s of course the case for retailers, but the profit on games for the system is still going to be there – in fact, somebody’s going to be making a mint (provided that enough of the devices find their way into people’s hands), selling download-only games at the same price as retail games but without distribution, middleman and packaging costs. That somebody, of course, is Sony.
So whilst the retailers won’t want to sell the thing at a loss as usual, Sony should be selling it at even more of a loss than the earlier version. Because its business model is all about getting as many of those things in people’s homes as possible, then raking in the cash by ripping off customers by selling downloaded games at full price. Even if it had to discount them a little (because I hope consumers aren’t gullible enough to pay full price for a lesser product), it’s still cutting out the stores. If it was sensible, and not just self-destructively greedy, Sony would cut the wholesale price of the new hardware to stores significantly to give them enough profit to make stocking the Go worthwhile on its own.
The old business model still works, it’s just that Sony hasn’t clicked that it’s trying to swap the roles around – it’s taking over the role of retailer of games – and that that requires some change on its previous behaviour.
Assuming it doesn’t want the whole thing to be an enormous, well-deserved flop, that is. And given Sony’s form to date (let’s not even get started on the debacle that is not enabling existing PSP owners to get digital versions of the games they already own on UMD, and the farcical retail price of the system, $450 – even more of an insult to Australians, since it’s $US250 overseas – as if it were a new platform, not just a redesign of an existing one), maybe that’s a bigger call than you’d think.
ELSEWHERE: A big SCREW YOU to Nintendo Australia, refusing to pass on a $US 50 price cut on the Wii because, well, because Nintendo Australia likes to rip Australians off. While we’re there, how’s that Australian version of “Club Nintendo” going? Still offering absolutely nothing to loyal customers? Yup. Seriously, who works at Nintendo Australia, and why do they hate us so much?
AND BACK ON THE PSP-GO: Another area where Sony has screwed over customers to try to protect itself.
FURTHER: Making sure that the PSP ports of iphone games cost more and have fewer features is hardly a winning move, either.
UPDATE (4/10): One consumer’s thrilling evening with his new PSP-Go.