by Craig Medlin

Created on: September 01, 2008   Last Updated: September 28, 2010

Are video game consoles too expensive? Let's think about the question for a moment. The word expensive, like everything else, is relative. Expensive to who? You? The consumer? Certainly not the manufacturer. The consumer may believe that the console they are about to purchase or consider purchasing is too expensive, but is it?

For the current generation of consoles (i.e. PlayStation 3, Xbox 360) the consumer pays considerably less than the actual cost of producing the game system. When the Xbox 360 was first released, Microsoft only charged consumers $399 with an average production cost of $715 per unit. Every time a Xbox 360 was sold, Microsoft lost $316. Sony also lost money with PlayStation 3 sales. For every console sold, in both variations (20gb and 60gb), the company lost an estimated $250. Sure, dropping four hundred or six hundred dollars on a game system is a lot of money, but when you look at the total production costs, the consumer seems to be getting a great deal on something that could cost a lot more. So why are they so cheap?

There are things in the video game industry that are way too expensive, but the actual gaming console is not one of them. The companies charge so little for the console, and by 'so little' i mean less than their production costs, because they garner profit from other means. Whether it be price mark-ups on games, accessories, online marketplace, extended warranties, or the like, these companies make tons of profit in the long run. By charging the consumer less for the console, they are betting that you are going to spend extra money on things that cost a bit more then they should, like an extra controller, or a memory card. Just because they lose money initially, doesn't mean they lose money altogether.

Still not convinced that video game consoles are not too expensive? Look at the features of current gaming consoles. The PlayStation 3 for example, doubles as a Blu-Ray player. At the time of launch the PS3 was the absolute cheapest Blu-Ray disc player on the market. With the next in line costing well over a thousand dollars (US). With that alone you are getting more then your money's worth when it comes to the PlayStation 3. Not to mention the fact that it plays regular DVD's, next-gen games in 1080p resolution, music cd's, and connects to the internet wirelessly. The list goes on.

In the end, a game console is a great buy. Providing entertainment value from home dvd's, downloaded music and movies, and high quality games, the price of the console is a small price to pay. These big corporations are able to take a three hundred plus dollar hit on each console because of the amount of revenue they currently make in other fields, passing on a great deal of savings to you. In a sense, they are doing us a favor. But if they wanted to make only one dollar profit on each console, you could be paying upwords of $700 for an Xbox 360 or $800 for each PlayStation 3. Even then, how could you say that they were too expensive? These companies have to stay in business some how.

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