GameStop expects $50 PS3, 360 price cuts

Specialty retailer assures investors that lofty full-year guidance factors in an incremental reduction in price for Sony and Microsoft's consoles.

208 Comments

GameStop may not create video games, but it sure does make a killing selling them. Yesterday, the world's largest specialty-gaming retailer announced second-quarter net earnings to the tune of $57.2 million--nearly triple its profits from a year ago--on revenues of $1.8 billion. As part of the better-than-expected results, GameStop also said that it was revising upward its full-year guidance to investors, projecting its total sales in 2008 to climb 23 to 25 percent.

Interestingly, those estimates take into consideration a $50 price cut for both the Xbox 360 and PlayStation 3. Speaking to analysts in a postearnings conference call, GameStop chief operations officer and vice chair Dan DeMatteo commented, "Our guidance continues to assume the hardware price cut we talked about at the very beginning of the year, assuming there is about a $50 price cut on both the [Xbox 360] and PS3 going into the holiday season."

DeMatteo went on to say that GameStop expects sales of consoles in 2009 to continue unabated, "because most likely what will happen is the manufacturers will begin lowering the price to keep the velocity going."

Neither Microsoft nor Sony's consoles have had a price-cut proper in 2008, though both have seen hardware revisions. During this year's E3 Media & Business Summit, Microsoft announced that it would be discounting its 20GB Xbox 360 Pro to $299, but then discontinuing the SKU and replacing it with a 60GB system once supplies of the former dried up. Increasingly convincing rumors indicate that Microsoft will soon slash the price of all three of its SKUs, with the 120GB Elite and 60GB Pro shedding $50 each from their respective sticker tags of $449 and $349, and the HDD-less Arcade model dropping $80 to $199.

After saying that it would not discount the PS3 this year on the eve of E3, Sony revealed at its E3 press conference that it, too, would be tweaking its hardware strategy. The publisher said that it would replace its current 40GB PS3 with a similarly non-backward-compatible 80GB model at the same $399 price point. Just this week, Sony introduced a 160GB PS3 bundled with Uncharted: Drake's Fortune that will ship in November for $499.

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magusat999

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Seems like no matter what the change is, the prices to features ratio is always the same. How about giving us a real discount and dropping that Xbox pro 60 gig to @199.00? $349.00 is rather steep and $449.00 is ridiculous. Don't even get me started on Sony's PS3. Yikes.

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q_oats

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nice

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Hvac0120

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[quote]Who has the gamers in mind? Sony? Nintendo? PFF! Microsoft baby![/quote] You really feel that way? This made me slap a MS fanboy stereotype sticker on your identity now. All 3 manufacturers have gamers in mind and are doing what they can to get gamers to buy their console instead of their competitors. I don't think Microsoft had gamers in mind when they decided to use propriety hard drives in the console. Now they overcharge for hard drives and gamers do not have the choice to upgrade using a third party because it's not an option. That's just one example discrediting your statement. Also you just look bad knocking on the other consoles. Someone who is really just in it for the games and the industry will take a critical look into all 3 companies strategies and will be willing to talk about the problems that each have. They don't talk smack without justification or a source for their claims. Because at that point you become a fanboy and your statements no longer mean anything to anybody reading them. In fact, I would go as far as to say that your claim is basically spam and should be completely ignored.

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darkride66

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Tandem_Toad said "4quarters, you probably haven't had a problem with your PS3 because there are no games worth playing on it!" That's a laugh riot! That's hilarious, and would have been true, back in 2007. However, in the land of today the PS3 has about 100 great games with scores of 75 and up on metacritic. If you play 2 hours a day, everyday that will give you about 2 years worth of gaming. Sure the 360 has more titles, it's been out longer, but even when you look at the speed and quality of games being released the PS3 has matched the trail laid down by the 360 before it. Seriously, the "no games" argument regarding the PS3 just illustrates an absolute ignorance of the reality of the current games industry and needs to be put to bed.

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Tandem_Toad

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I hope they do reduce the prices! The more consoles that are sold the bigger and better the industry becomes.

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Tandem_Toad

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4quarters, you probably haven't had a problem with your PS3 because there are no games worth playing on it! Take a look at the 360's line-up for the last 2 years and this coming holiday season. Who has the gamers in mind? Sony? Nintendo? PFF! Microsoft baby! You and everyone else who has a 360 plays the crap out of it, because all the good games go to Microsoft.

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waheeb2020

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will GameStop remand me of DRIBEN

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runstalker

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Look in the latest Best Buy/Future Shop (eh?) flyers. Witness the Blu-ray movie player price drops. You can buy a Blu-ray player for $199 now! So that side of the PS3 hardware is clearly coming down in price, thus allowing some leverage for small price cuts.

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bcrenton

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apparently, 4 quarters below never had to turn his PS1 upside down...

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residentzombie2

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Here in Milwaukee, WI we have a small used chain called CD Max that is awesome. They only have 3 stores around here, but they have on business card for every $5 spent you get a stamp and 20 stamps equals $10 off your next purchase. Not only do they sell used games, but big into movies and CDs as well. They may not know alot per say about video games, but that is why we have review sites like Gamespot amongst others to help us in choosing a quality fun game.

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4quarters

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My money is on Sony- People want a quality product.....I'm on my 3rd 360 already, and my PS3 has NEVER had a problem and can easily be upgraded to 320gb for $99 @ newegg.com( with a Samsung drive)! Blu-ray looks awesome, it can't be denied.

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tevic

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About scratched DVDs, this isnt a problem because they can be repaired almost for free in a special scratch-removing machine. already used it twice it works very well. I only buy used games btw.

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Autolycus

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Sony is not even close to an affordable state of being able to drop the price.... don't expect much of any good price drops from the $ony factory this year.

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valcrist09

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I am happy spending the 600$ for my 60gb which is now a 320gb, it is a solid product.. unlike my 360 which i have gone through multi purchases and lots of warrenty support... I am tired of rebuying Xboxs just to buy a fix that should of not been there to begin with.. 3 years to fix the red light issue? unexcepptible.

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valcrist09

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if you were smart sony you would put the PS3 at a crazy low price for awhile just to get system out there even more and force microsoft to force even lower prices to compete.

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Humidity

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AgileNate, Wal-Mart and Best Buy were just the two first alternatives that sprang to mind. Of course, to hear it here even those two are better than GameStop. At least they don't open games and try to sell them as "new" (one of the chief complaints I hear here). Maybe if everyone would stop shopping at GameStop some mom & pop stores could open and have half a chance of succeeding.

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vertigopm

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50 dollar games... hell thats good enough for me

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Punisher197

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Wish I would've known this before I bought a Wii.

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AgileNate

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C'mon Sony, you know price is a concern but yet you keep releasing more costly versions. We people are broke!! The Arcade 360 is a stripped version of the console but the price will catch peoples eyes. EDIT: About Gamestop, they dont like to employ actual gamers(at least were I live) because they get a lot of games at a lower cost. They rather have someone who is casual. 'Humidity', Wal-Mart and Best Buy are both bad choices as well. They no nothing AT ALL about the games and their value. We need more independent gaming shops that unlike Gamestop, take gaming more seriously.

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Humidity

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[This message was deleted at the request of the original poster]

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Humidity

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grognard and briph24, am I not being clear? STOP SHOPPING AT GAMESTOP. Don't just complain about trade-in values or getting an opened game as "new". Vote with your wallets and your feet. Take the pledge: not just to "avoid it whenever possible" but to NEVER shop at GameStop again.

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briph24

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I will never forget going into GameSpot and I wanted to buy a "New" game, they tried to sell me a copy that was in a sleve case and they said. "the game is new, but you will get a used case"....what the heck, if im buying a new game, I WANT A NEW SEALED GAME!

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grognard

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The 360 price drop is pretty much confirmed at this point, but I doubt PS3 will follow. Sony seems really committed to the profitability over market share strategy they've indicated to their shareholders so I think they'll see how things play out this Holiday Season before making a move. I think the new SKU is further confirmation that they'd rather show additional value (which is also more profitable) than a price drop at this stage. Regarding Gamestop, I avoid it whenever possible. Trading sites like Goozex represent far greater value than the pittance Gamestop offers.

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shoeman12

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i figure that the 60 gig 360 will drop to $300 pretty quickly but i'm not so sure about a ps3 price cut.

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Humidity

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"I believe that a lot of GameStop employees are jaded and untrustworthy. I also understand that a lot of their sales are BS." Let me tell you, ALL GameStop employees are jaded; I don't know about untrustworthy. The corporate offices use people up and spit them out. The employees you see in stores are by-and-large minimum wage cogs in the GameStop machine. Little or no benefits, no overtime, easily replaced, and expected to do whatever they are told and keep their mouths shut. Yet another reason to STOP SHOPPING AT GAMESTOP.

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Dualmask

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Sony ditching BC completely...I guess they feel it's about time they phase it out for real. But their previous console was backwards compatible, and that was one of the PS2's strongest selling points. Heck, they practically coined the phrase 'backwards compatible'. Me, I'm happy that I have an 80GB PS3 with BC so I can catch up on all the great PS2 games I missed out on when my PS2 died. The hard drive can be switched out so if there are any 80GB PS3s with BC left, I still think that's the best value. As for Gamespot, well, they're the only place close to where I live that even sells games anyway, so I have little choice in the matter. But my experience has been that new games are rarely worth the investment, unfortunately, because they do try to sell you opened games as new (I always tell them I want a sealed copy) and the used games are rarely in bad condition. Again, that's my experience. They often have those "buy two used get one used free" promotions that I like a lot too. So all in all, I don't have much to complain about when dealing with Gamespot.

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Hvac0120

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About Shopping at GameStop: I enjoy the fact that some people can utilize the system. People who beat games quickly and don't play them again can turn them in and get a discount on their next game. The people that come in can get used games for a farely good price. Gamestop takes advantage of non-aware customers, but that's just the way business works. I believe that a lot of GameStop employees are jaded and untrustworthy. I also understand that a lot of their sales are BS. However, if I want to go get a used game, I know that they are the best place to go for reliability and for the fact that I can trade it back in for a replacement if something is wrong with the game. So, sure; GameStop is the EA equivalent for the games retail space. However, they also provide a lot of services that are worth it for many people. If we didn't have to witness Grandma's, Grandpa's and all other unaware adults get duped into a stupid promotion by the GameStop employees, we wouldn't have such a bad view of the company.

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Hvac0120

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We may not see price cuts in 2009 either. There is the possibility that we will see more hardware revisions. However, I think that by August 2009 we will see console sales start to slip and the manufacturers will fee the pressure to cut the prices in order to keep sales number up month over month. In 2010, we should see both a 360 Pro and a PS3 under $300.

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Avatar image for Humidity
Humidity

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Again, I beg all of you...STOP SHOPPING AT GAMESTOP!! There are many reasons to never set foot in that store again. Opened games being sold as new, crap trade-in values, customer-unfriendly return policies, always being pestered to get a GameInformer subscription or preorder a game, I could go on and on. If everyone would stop complaining on websites like this one even though you know you still go there, GameStop would fall and we would all be able to get our games at Wal-Mart or Best Buy.

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guile_charlie

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Emplyees can check out games for about a week, then bring them back. They can do this to used and new games if there are enough copies of it available for sale in the store. Yes, they can become scratched. Just ask for a sealed copy of the game!

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zeke2040

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wow

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Gaming-Fanatic

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Not bad, yet I still can't afford either.

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digitalisfx

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@ Jeffosoft: You're right they do sell opened games as new. But here's the worse part, alot of them arent the "Shelf" box as they would claim them to be. Some employees play the games at home. Then they bring them back and tell you its a "shelf" box. I know alot of people will disagree but i know this from people who work there. They do it all the time. I once bought one of those copies, and saw the immense amount of scratches on it and it didnt even play. I would really suggest never buying those copies. You might as well buy a used (since thats what your buying anyway) for 10 dollars less.

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jtthegame316

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the 360 had a good price cut here in the uk so it is good if they give the americans a price cut. the ps 3 could do with a price cut people who payed its current price point or it are mad. why is it such a probelm for sony to do backwards compatiblity now after they did it with the ps 2 lol. the wii seems to do that bests now. with gamecube disks working from the console. at least ms let you play some xbox originals on there console.

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jtthegame316

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darkride66

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bassbomber20 said "and Sony's removing all the backwards compat. ones aswell? No way in hell I'm buying one now..." Play a lot of PSone games on the PS2? I know, for one, I played zero. PS2 games on a PS3? I've got the old 60gb model, I played one, God of War 2. Seriously, no one buys new consoles to play old games. Sony knows that. And besides, if you want to play PS2 games, buy a PS2. There are plenty of them out there. The PS3 doesn't need to be a PS2 and a PS3.

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ognen

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Cool news

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bassbomber20

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And the $50 still isn't enough to give me reason to buying a bugged system when my PC still can max all next-gen titles... and Sony's removing all the backwards compat. ones aswell? No way in hell I'm buying one now...

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squarejp

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mrklorox, your math is wrong. The Elite also comes with one month free XBOX LIVE, wired headset, HDMI cable, component cable for HDTV, and Ethernet cable. Do you think paying $30 more can get you all the stuff above in equal or better quality? Probably not.

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squarejp

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mrklorox

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I still think $450 is too much for an Elite when one could buy an Arcade plus 120gb HDD for $420.

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maximo

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PS3 is still overpriced

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DiscGuru101

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PS3 with BC $299 for the win.

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Hackeysacked

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I Definitly buy one now

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trw534

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cool a cheaper xbox

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invictuslemming

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I cant see the PS3 dropping below the $399 price point. The PS3's price has to remain high enough for people to even consider a stand-alone Blu-ray player. If Sony drops the price too much, they force their business partners (Pioneer, Samsung, Panasonic, etc) to cut their pricing on the stand-alones. This does not bode well for relations with these companies. The 360 arcade dropping to 199 seems a bit steep ($230-250 maybe). It'd be great for them to undercut Nintendo, but by over $50? It seems a bit extreme, Nindendo of course won't be making any cuts in the near future.

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thunderground2

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" I really hope digital distribution takes hold soon because we knowingly sell defective games all the time" You bastards >.> JK kinda.

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iesexywarden

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jefff. do u mean display boxes... ive never seen gamespot try and sell a used game as new.. i mean it makes sence for ps3 owners to buy used since the blu-ray cant really be scratched/currupted...but then again publishers deserve there money. -Anyway i hope this is a good prediction...cheaper games means more ppl will buy them..i know that xtra 10 bucks is keeping me away.

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jeffosoft

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I'm suprized some lawyer hasnt tried to file a class action lawsuit agaist GameStop... They sell OPENED games as NEW. If you are getting a game that doesnt come wrapped in selophne?? (plastic) then its considered OPENED and really shouldnt be sold as NEW why do they find it nessary to open the Games if they are going to sell them as new? If you need shelf space then print cards or something.

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-HaloHitman-

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Woah.

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