Friday, August 28, 2009

They Just Don't Learn (XBox 360)

Microsoft finally lowered the price on their Elites! Yay for them! They're clearing out the Pros so that there will only be two models, the Arcade and the Elite, with the high end sitting at $299! This is fantastic news for everyone-

Oh.  So now there's a SUPER Elite that they're talking about. I follow. THAT point of entry looks to be at about $450. Instead of a price drop, it turns out to be, in consumers eyes, a price INCREASE. How do you figure? Well, consider this: Right now, in order to get the best possible PS3, it's $299. You have the absolute best system that they offer. In order to get the best possible XBox 360, it's $299. After this bomb drops, in order to get the best possible 360, you'll be paying $450, and for what? A bigger hard drive?

(What got into these console makers that they started making multiple and increasingly confusing SKUs during this console generation? They never did this before. Sega wasn't even this stupid, and they made some extremely questionable decisions.)

You know, when we worked at Best Buy, they talked about different segments of the population that you could market to. Some were more reliable than others. Best Buy's sweet spot was the squishy middle ground of soccer moms and wealthy 50+ guys. Those were the people who spent the most, per capita, and were more likely to stay loyal in the long run. The ones who were least likely to stay loyal in the long run were the 20-35 year old male. They were just looking for the latest and greatest and would go wherever they could get it, whether it was online or at a store. They really weren't Best Buy's target because they knew that those people weren't going to stick around. Best Buy, so far, is the most successful electronics retailer in the world.

What does this mean? Well, there isn't really ANY loyalty in the console race. One generation, Nintendo will be on top. Then Sony. Now Nintendo again, although a lot of people like Microsoft. People keep switching around. Why?

BECAUSE THE TARGET MARKET IS FICKLE 20-35 YEAR OLDS. They're the ones who check specs and actually care about larger hard drive sizes. You can't count on this demographic forever, since they grow up and have families and can't be bothered to put in the time and effort needed to keep up with the constantly changing consoles. The demographic you can COUNT on is the middle range, the 30-55 year old group who has families and has brand loyalty. Plus, just as a point of comparison, looking at those numbers, how long to you have people from 20 to 35? 15 years. How long does the second demographic last? 25 years. It makes sense to target the second group.

Crap like this is why the console race is getting wacky and Nintendo keeps curb-stomping the competition month after month. They picked the most loyal demographic and they're serving them. They don't have to worry about the 20-35 year old male. They'll get them on the way, but they won't focus on the young male because the young male will get distracted by the next bright shiny that comes along with a new 250 GB hard drive that does absolutely nothing for gameplay.

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