Why it’s SEGA’s Fault for the Next-Gen Price Secrecy War

Monday, June 29th, 2020

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Price | Xbox Series X and PlayStation 5
With both the Xbox Series X and the PlayStation 5 being released during the 2020 Holiday season, we have discovered a lot of information about what the new consoles will look like, what games will be coming out for them, the specs for each, and more. One thing we haven’t found out about yet though is the price. This single bit of information has eluded the gaming public so far to a frustrating degree, beyond just the constant drip-drip-drip of information that has been given out over the past several months. While this is undoubtedly part of both company’s marketing plans, there is another factor at play and it is all SEGA’s fault. To understand why, we have to go back to the very first E3 that occurred in 1995…
Picture it: it is E3 1995, and SEGA has just announced the SEGA Saturn. During their press briefing, then-SEGA of America CEO Tom Kalinske announced that the SEGA Saturn, the company’s next-generation console, was not only receiving “high consumer demand”, was not only being sold for $399 dollars but it was in stores RIGHT NOW. And not only that, amazing games like Panzer DragoonVirtua FighterDaytona USA, and Clockwork Knight were shown in gorgeous 32-bit gameplay.
This was as big of a competitive splash as people thought possible. A new console, just announced and available NOW? It seemed too good to be true. There was simply no way that Sony, with their first entry into the video game marketplace, could compete.
That was, until then-SCEA President Steve Race stepped up to make an announcement during the Sony PlayStation press briefing. As the audience waited in silence, he said only one thing:
“$299.”
And with that, the crowd lost it with cheers as he exited the stage.
The first-ever E3 in 1995 was very different from today’s gaming and marketing spectacle.
One single lesser number simultaneously started both the fall of SEGA as a mainstream console producer (which would end a year-and-a-half after the SEGA Dreamcast was released in North America on 9/9/99), and the rise of Sony as a video game powerhouse to this very day.
History then repeated itself when the PlayStation 4 and the Xbox One was released practically head-to-head during Holiday 2013.
The PlayStation 4 launched with the console, a single controller, and relevant cords for $399. The Xbox One was released with not just the console, cords, a controller, but the latest version of the motion-capturing Kinect…for the tidy sum of $499 dollars. Corporate Vice President Phil Harrison had previously staked the importance of the Kinect to Xbox, saying that “Xbox One is Kinect” during Gamescom 2013 and that there will never be a Kinect-less Xbox One console.
Microsoft and Sony initially launched to nearly the same sales numbers of two million consoles each. By the end of 2013 however, Sony managed to sell 1.2 million more PlayStation 4 consoles than Xbox One consoles. As the months grew and Xbox sales continued to slog behind PlayStation 4’s sales dominance, Microsoft announced that a Kinect-less Xbox One would release June 9, 2014.
While Phil Spencer, Head of Xbox, stated that this change was about “making sure that there is a version of Xbox that really meets the exact needs” of fans “just like to play games with a controller in their hand and play multiplayer through Xbox Live”, the new $399 price point that placed the Xbox One console on price parity with the PlayStation 4 sent a different message to the gaming public: the price of Xbox needed to come down to the PlayStation 4 level to try to boost sales.
In this video, Microsoft continued to tout the value of Kinect, but this was a far cry from the persisting statement that “Xbox One is Kinect” just the year prior.
And yes, there are other facts that played into Xbox sale issues: Microsoft’s confusing messaging about game sharing, the lack of decent third-party launch games, and even privacy concerns about the Kinect itself. But all that absolutely does not negate the fact that the Xbox One launched at a fully 20% more expensive price point than its major competitor.
And this brings us now to the newest console generation. PlayStation 5 and Xbox Series X are both next-generation consoles from two companies who are going head to head for the first time in seven years. And yes, as I stated at the top of this article, both Sony and Microsoft have a clear market strategy of dripping news out slowly over the months to both build speculation and hype for their newest gaming consoles.
But it is clear that both companies remember what happened in 2013, as no one wants to be the first one to make the Xbox One mistake of pricing far above the competitor and risk losing massive market share. This is especially so when they were both willing to sell their consoles at either a loss or at a break-even price-point last generation. And certainly neither industry leader wants to repeat the embarrassing 1995 E3 moment where SEGA was first upstaged and then later conquered by Sony because of one simple number: “$299”. History matters, and with the console cycle lengths getting ever-increasingly longer, neither Sony nor Microsoft wants to start from behind by simply pricing their product higher than the other.
In other words, everything ultimately goes back to SEGA and that fateful, but unknowing and unintentional decision, to release a console that was more expensive than the competitor. And so, until we get closer to launch, this war of price secrecy will continue.


Which console do you want to get?
What do you think the price for these new consoles should be?
Let us know in the comments below!

About Quentin H.

I have been a journalist for oprainfall since 2015, and I have loved every moment of it. Do you want to do an interview? You can reach me at interviews@oprainfall.com