Given the current economic downturn, many people have to curtail their luxury spending, and unfortunately, that includes cutting into our leisure activities. However, one analyst believes we may enjoy temporary relief with a software price cut.
As GameDaily reports, Signal Hill analyst Todd Greenwald hinted that the standard $59.99 price point for next-gen software may be in danger. This could be construed as good news from a consumer's standpoint, but from the publisher's perspective, this could be a devastating move. The profit margin on new software isn't that great to begin with, and says Greenwald:
"To us, the biggest risk facing all publishers is the demise of $59.99 pricing for front-line 360 and PS3 software titles. With all of the price-reductions made during the holiday season, funded jointly by both retailers and publishers, there is obviously a concern that $59.99 goes away, which would be fairly devastating for margins, as development and publishing costs would stay virtually flat, while sales would take a 20% hit."
However, despite all this, publishers really aren't having any trouble selling new games (well, provided the game is good). Last year's financial numbers showed a 20% growth and most analysts are predicting that the slumping economy can't really hurt the "cocooned" game industry. Until the $59.99 price point becomes a legitimate drain, we can't really can't see an across-the-board price cut on software. You might see more retail sales, but that's about as far as things will go…we're not analysts, though. What do we know?