Analyst: PS3 price bad news for publishers, industry

It's been over a week since Sony revealed that the PlayStation 3 would launch in November at two price points--$499 for a stripped-down 20GB model and $599 for the tricked-out 60GB model. However, the news is still reverberating through the industry, with more and more analysts weighing in on the matter in the form of notes to investors.

The latest firm to join the fray is DFC intelligence, which predicts the PS3's steep sticker price could cost it--and the game industry--dearly. "The higher priced the hardware, the lower overall industry growth will be," read a report the company issued this week. "The video game business model has been to build an installed base of tens of millions of users in a very short time frame. A key factor in this model is relatively low cost hardware... Unfortunately, there is a sinking feeling that things may have spun out of control for Sony and thus price cuts will be slow in coming."

Indeed, DFC says that the PS3's high price will make--or has already made--many consumers side with a next-gen rival. "With a $200 price difference now announced, consumers that were sitting on the fence can feel free to go buy an Xbox 360," read the report.

Along with the price, DFC reasons that the 360's stout software lineup will be another factor possibly causing consumers to shy away from the PS3. "In terms of game software it currently looks like the Xbox 360 will be able to match the PS3 punch-for-punch in the important genres like shooting, RPGs, racing, sports, Grand Theft Auto IV and others," asserts DFC. "Will Sony's brand name alone explain a $200 price difference to the gaming audience?"

While a shrinking Sony market share will be music to Microsoft and Nintendo's ears, DFC worries it might have have long-term negative impact on third-party publishers and developers. "Hardcore video junkies may go for the PS3's Blu-ray capabilities, as $600 is cheap for a new high-end technology like Blu-ray," said the report. "But if those guys are not buying game software, that does not do game publishers any good."