Xbox 720, PS4 could start at $350, says analyst

According to one analyst, the cost of entry for next-generation consoles will be lower than prior system launches. Robert W. Baird industry watcher Colin Sebastian issued a note to investors today, predicting that the Xbox 720 and PlayStation 4 could debut at $350-$400.

The Xbox 360 launched in 2005 at $400, with the PlayStation 3 debuting in 2006 beginning at $500.

Sebastian's estimations are based on conversations with a range of game developers and distributors held last week during the 2013 Consumer Electronics Show. Sebastian explained that these conversations yielded "interesting takeaways with respect to next-generation game development and more broadly, the intensifying battle for the living room."

Sebastian also predicted that the Xbox 720 and PS4 will be built using existing "off-the-shelf" high-end PC components. Other features may include a hybrid physical-digital distribution model, "enhanced" voice controls and motion sensing, as well as "broad multimedia capabilities."

What's more, Sebastian estimates that the PC-based architecture of the new consoles will carry a range of advantages, the first of which is a shorter learning curve for developers compared to existing technology. In addition, this will allow developers to more easily build online services and capabilities, including free-to-play and subscriptions.

Regarding the PS4 specifically, Baird said some production snags may limit the console's launch quantities or timing. According to field checks, these production issues could negatively affect the console's launch, though Baird said these snags are "not necessarily fatal, or even unusual."

As for when the Xbox 720 and PS4 may be announced, Sebastian believes Sony and Microsoft will hold dedicated events prior to the 2013 Electronic Entertainment Expo (June 11-13, 2013) to finally unveil these machines. If all goes to Sebastian's prediction, Sony and Microsoft will hype the consoles during E3 2013 itself before shipping the systems to retail during October and November, respectively. This timetable is in line with previous predictions.

Also in Sebastian's note to investors today, the analyst said Nintendo may be facing an uphill battle with its recently launched Wii U. He predicted that Nintendo will shift to a "niche category" and is concerned that the console will lack broad appeal beyond the dedicated fans.

He said following the Wii U's "lackluster" launch and holiday sales (the Wii U did not outsell the 2006 original Wii during the period), Nintendo must release major first-party games, including the rumored Wii U Zelda title. This would be the only way to "retain the support of key third-party developers and reduce marketshare loss."

In the bleakest of scenarios, Sebastian said Nintendo would be forced to lower the Wii U price point earlier than it would like and even give consideration to releasing first-party titles--like Mario and Donkey Kong--on other platforms.