PlayStation 4 Pro Product’s Price Strategy Report

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Table of Contents

Versioning
Bundling
Conclusion
References

The upcoming PlayStation4 Pro (PS4 Pro) is likely to embrace the most innovative technologies concerning both hardware and visual effects. The PS4 Pro is the updated version of the PS4 system, which provides output images and streaming video in 4K resolution supports HDR, and is capable of smoother and more stable frame rates. In order to ensure the most effective price strategy, Sony can employ such concepts as bundling and versioning. Let us consider each option in detail.

Versioning

By the very definition, versioning assumes the release of several versions that would be suited to the expectations of different customers. It should be taken into account that some people value great storage capacity, while others tend to pay attention to the exterior of the console. At this point, price strategy can be based on hardware differences. For example, differing versions of a graphics processing unit (GPU) and a central processing unit (CPU) can be utilized. Leadbetter (2016) reckons that “the new Pro GPU shuts down half of its compute units and the rest are downclocked from 911MHz to the standard PS4’s 800MHz” (para. 6). This new console supports 4K resolution and HDR technology based on integration with a more powerful GPU. The release of the PS4 Pro by Sony follows the need to comply with the latest graphics technology. Also, Sony promises a strong integration of the new console with such streaming services like Netflix, making the key emphasis focused on 4K video. In fact, the PS4 Pro model can be useful even to those who want to enjoy high-quality modern standards without spending money on an expensive PC. The above observation can present the option of unlocking full Pro performance for a higher price, while the version lacking it would be available for a lower price.

By using the PS4 Pro, gamers can get better visual effects and stable 60 fps at full HD. Leadbetter (2016) claims that if you still have not purchased a standard PlayStation 4, the Pro is an ideal purchase. The gamers will receive a two-times-more-powerful GPU, a faster processor, support for the latest displays, and twice the hard disk space. In addition, the other characteristics of the console are enumerated below in Figure 1.

Fig. 1. PS4 and PS4 Pro (Leadbetter, 2016).

Another option of versioning can be built on the amount of memory or the CPU. Traditionally, the lifecycle of modern consoles comprises five to seven years. At least, this was true for PlayStation 2 and 3. However, today, these figures seem to be a relic of the past in connection with the announcement of the PlayStation 4 Pro as a more powerful version of the consoles from Sony. Recently, in an interview with media, Mark Cerny, a leading architect of the system, declared that the PS4 Pro will get an additional gigabyte of Double Data Rate Type Three (DDR3) memory (Hruska, 2016). However, the above option is not for playing games. According to Cerny, additional capacity is essential to work with applications such as Netflix or YouTube in a more effective manner (Hruska, 2016).

Before the implementation of the S4 Pro, they were discharged into the main memory of the console, running in the background and, thereby, reducing the console’s performance. At present, an extra gigabyte of memory will work with third-party programs. Due to this latest update, video games will receive an additional 512 MB of Random Access Memory (RAM) that “would leave more of the PS4’s GDDR5 main memory pool available for other tasks” (Hruska, 2016). In total, the video games will require 5.5 GB or more, out of 8 GB. Virtually the entire remaining array involves the adaptation of the PS4 Pro interface. According to experts, the gamers will have an additional 512 MB of RAM for video games (Crossley, 2016). The total capacity of the unit is estimated to be 4.2 teraflops. At the same time, the minimum amount of memory on the PlayStation 4 Pro will be one terabyte. From the above observations, it becomes evident that a price strategy can be based on memory amount versioning.

Furthermore, power consumption can also be used as a means of versioning. The following chart presents the characteristics of power consumption for different versions of the PS4 Pro (Fig. 2).

Fig. 2. PS4 Pro versions’ power consumption (Leadbetter, 2016).

There are a slim version and a launch version of the PS 4 Pro. The company can also release a whole series of smaller devices and accessories that complement the PlayStation ecosystem.

Bundling

Bundling (or a package deal) is the sale of a group of multiple products or services as a whole. By offering product packages, software vendors (ISV) seek to increase sales in the segments in which potential customers would otherwise have bought only one product. There are several significant differences between price bundling and product bundling. While the first is a means of promotion and pricing, the second is mostly a strategic tool as it creates additional value for consumers. Product bundling conducted by Sony in relation to the PS4 Pro refers to the integration and sale of several products as a whole. The paramount goal is the creation of a combined product having greater value to customers than its individual parts. According to Crossley (2016), the PS4 Pro “is designed to play the full library of PS4 games and has no exclusives of its own” (para. 8). It is emphasized by Sony that all the games for the original PS4 will run on the PS4 Pro and vice versa. Plenty of released games get updates on a schedule so that it is unnecessary to purchase them once more.

As previously stated, the Pro model offers graphical improvements, yet not so many games have been optimized for the more powerful version of the console. However, if a person has a high definition television (HDTV) that does not support 4K and HDR, it still can be possible to note the difference in using the PS4 due to its 1080p resolution. This option of the PS4 Pro is an excellent choice for those who want to stay on the cutting edge of technological progress. The gamers can get enhanced digital video noise reduction, especially in Titanfall 2 and the reissue of the Rise of the Tomb Raider games that were closer to the PC version graphics. Figure 3 demonstrates a list of some games supported and improved by the PS4 Pro.

Fig. 3. A list of some games supported and improved by the PS4 Pro (Reynolds, 2016).

Another possible approach to PS4 Pro bundling is pointed out by Khan (2016) who states that “TV itself costs $900 on Best Buy’s website at the moment but the bundle will cost $999, meaning you save $300 as the PS4 Pro is priced at $400” (para. 2). This strategy is likely to boost sales by attracting more customers due to the opportunity to save their money.

The official website of PS asserts: “redefine your expectations of immersion in gaming with moments so intense your intuition takes over” (Discover a new world of unexpected gaming and entertainment experiences with PlayStation®VR, 2016). This statement introduces the PS4 Pro along with a Virtual Reality (VR) system. Developed using advanced technologies, the PS4 Pro offers the most dynamic, precise, and responsive gameplay. PS4 Pro VR games hit brilliant graphics that are incredibly detailed, making it possible for customers to explore new realities. It also should be noted that the VR system provides warmer skin tones and more realistic textures of objects. Thus, S4 Pro bundling assumes its integration with other products to sell them as a whole for a lower price. Moreover, the basic price for such bundling can include only VR, while improved variants can involve a camera and move controller. Among other accessories for the PS4 Pro, one might note a gamepad, headphones, and other items.

Conclusion

In conclusion, it should be emphasized that both versioning and bundling concepts are beneficial in designing an appropriate price strategy. The first assumes variations of GPU, CPU, and the exterior, while the second focuses on integration with games or TV and console with VR. The core of the price strategy, however, lies in the fact of correlation between price and the presence of a certain option, be it hardware characteristics or games’ support.