Why $ 249 is an unsustainable price for the first all-digital Xbox

The announcement made today of the "new digital edition" of the Xbox One S, which had already been the subject of rumors, is one of the few cases in which a redesigned version From a home console is, from the point of view of functionality, strictly worse than the previous version. Removing the disk drive means that the all-digital edition can not play Blu-ray Discs, DVDs, or old disk games that you (or GameStop) are dragging, and do not allow you to resell games that you you could create. buy for it. The new box is not even smaller, even though the bulky optical drive has been removed.

Microsoft intends to offset this loss of functionality with a price lower than the price of the new unit, which will sell for $ 249 on May 7. But this suggested price, although technically lower than the official price of $ 299 for an Xbox One 1TB bundle – does not seem to convince many people to invest in the future of the diskless console.

An old low price?

To understand why $ 249 is such a strange PDSF for this newer, less capable Xbox One, we need to go back over the history of Xbox One pricing. After a higher-than-expected $ 499 launch with a built-in Kinect, the Xbox One experienced relatively quick price reductions after the 2014 Kinect unbundling. By September 2016, players could already access the Xbox ecosystem One (with a built-in game) at the lowest price of $ 249.

Yes, this price was for the larger original design of the Xbox One, which included only a 500GB hard drive. But this unit, available 32 months ago at $ 249, plays all the same games as the all-digital Xbox One announced today for the same MSRP. And the old unit can play these games on disk, to boot.

Similar prices for the new version of the Xbox One S – disc drive and others – have not been hard to come by in the past. The 500GB version of the system was available for $ 249 in 2016 in Black Friday offers. After the holidays, Microsoft has again offered an official offer Xbox One S 500 GB to 249 USD. Minecraft in March 2017. In the summer of 2017, you could spend $ 249 for a 500GB Xbox One S and get a $ 50 gift card. At the end of this year, the 500 GB systems cost $ 189 at the closing of Black Friday.

Of course, all-digital editing has twice as much disk space as these old offers. But the 1 TB Xbox One S systems, with disk drives, were priced at $ 249 with a game provided almost a year ago. And while $ 299 is the "official" MSRP of a 1TB Xbox One package in recent days, the price cut has de facto been extended to $ 249 at all major retailers (including Microsoft's own retail stores ) since the end of January.

Unlike a temporary vacation sale, the multiple months spent at the lowest price of $ 249 will make it difficult to convince customers (and retailers) to return to the "suggested retail price" of $ 299. This becomes even more difficult when you consider that a 1TB Xbox One system with Battlefield V is currently available for $ 199 at Walmart or $ 219 at Amazon.

And yes, the all-digital edition comes with three downloadable games rather than the only disc usually provided with Xbox One S compatible drives with the disc drive. But these games …Sea of ​​Thieves, Forza Horizon 3, and Minecraft– are cheap conventional titles that were published a year ago, two and a half years ago and four and a half years ago, respectively. The three digital games are also available for free via an Xbox Game Pass subscription. The bundles currently offered by Microsoft for the original Xbox One S allow customers to choose from the most recent (and most expensive) hits: Division 2, Anthem, Fallout 76, Forza Horizon 4, Battlefield V, and NBA 2K19.

Inapplicable MSRP

Historically, console manufacturers have been able to impose their PRS with an iron fist. Companies such as Sony, Nintendo and Microsoft would impose conditions on distributors and retailers on the "minimum advertised price" and then refuse to provide future stocks to stores that dare to try to harm the competition.

By officially retaining the Xbox One S with full features at a suggested retail price of $ 299, Microsoft manages to maintain its lower-performing hardware at parity with Sony, which sells bundled 1TB PS4 bundles at this price for a while . But with the de facto retail price of the Xbox One, things get a little weird. Yesterday when I asked my followers on Twitter Regardless of the MSRP for a 1TB Xbox One S bundle, nearly half of them chose the $ 249 price tag. This is not a scientific inquiry or anything, but it is not surprising either, since the price that retailers are paying for the system for 24 months is $ 249.

It's a perception problem that Microsoft's platform and device manager, Jeff Gattis, told Ars that he was "painfully conscious". But the official pricing of the new system does not show such an awareness. For this new material to really have an impact, Microsoft should have launched it at a suggested retail price of $ 199, a deceptive console hardware crossing the $ 200 mark (before sales pricing) for the first time this generation . That could have been packaged with an official drop to $ 249 for the Xbox One S's disk-drive version, blocking a price that has been the de facto standard for retailers for months.

In the current state of things, this type of price below the MSRP is probably what we will see happen retail anyway. Stores currently selling an Xbox One with a $ 249 disk drive can not really afford to sell the same console without a disk drive. for the same price. If they do, they will soon find customers ignoring the 100% digital edition until the price drops under the unsustainable MSRP of Microsoft.

We have long argued that there is a market for an all-digital console whose price is aggressive compared to the competition. But for this type of pricing to work, Microsoft must stop pretending that the 1 TB Xbox One S is still a $ 299 system.