For one, getting market-share using predatory pricing is a crime. If the pricing is within sustainable parameters, then Sony will match it. There is nothing wrong in loss-leading pricing, but pricing cannot be used to kill competition(taking market share / driving competitor into losses).
“From what I’ve seen, Sony’s going to have to charge $500 for their PS5, and Microsoft has a big balance sheet,” Pachter said, “if they want to cut the price by $100, just price below and subsidize the first ten million, they will.”
Now if MS does this, Sony will file an Anti-Trust suit. Headlines will read "a 1.4 trillion Microsoft trying to kill a small 80 billion enterprise".
Uh...I'd just like to remind you that a certain Atari president made a
very similar claim about Sony back in the mid '90s when they were competing with the Jaguar. They basically accused Sony of price-fixing if they sold the PS1 for $299 in America and (IIRC) would take them to court over it.
Well, PS1 released in America for $299, and nothing happened
. Truth of the matter is anti-competitive practices like predatory pricing are only a crime when the company is proven to 1: pricing severely lower than manufacturing and production costs
and 2: actively stifling/preventing competitors from being able to fairly compete in the same marketplace.
This is why MS went to trail in the late '90s over things like Internet Explorer vs Netscape Navigator; since they owned the OS (Windows), they also bundled in IE for free and conducted practices where 3rd-party web browsers either couldn't get full access to Windows APIs or could not realistically offer their alternative on a platform Microsoft owned.
THAT is predatory pricing and business tactics, not selling XSX for $399 (and that's even considering they can justify pricing it that low), because they don't own the retail chains, they don't own Sony's online distribution network, and nothing really stops Sony from pricing PS5 at $399 either other than financial reasons tied to their own vested interests and forecast market performance.
By your notion any company that prices their hardware well below production costs even if to liquidate stock is effectively doing some form of predatory pricing, since it is effectively them losing money on hardware sales. SEGA basically gave the Dreamcast away in late 2000/early 2001 by throwing in some years of SEGANet for free that cancelled out the cost of the hardware through rebates, don't think you can claim such is predatory pricing or business practices however. Likewise, SEGA could've accused Sony of predatory pricing and business practices during the '90s since Sony leveraged their in-house chip fabrication, optical disc drive production and various hardware from their other divisions (plus their vast distribution network) against SEGA and Nintendo..but they didn't.
In fact the only time a video game company has been found guilty of any type of widespread predatory pricing or anti-competitive business practices was Nintendo of America when they were taken to the US courts and found guilty of anti trust violations in 1991. They had to offer rebates to NES owners of some amount (I don't remember the actual amount) due to them leveraging their near virtual monopoly at the time against competitors like SEGA, NEC and Atari. So basically, the one time any company has done anything to a near equivalent of what you're suggesting in the gaming industry, wasn't even Microsoft, but Nintendo of America xD.
If a corporation has the financial means to basically fight with money, they have the legal freedom to do so. So long as they don't break any laws and, again, pricing a console with a possible BOM of $500 for an MSRP of $400 is nowhere
near skirting the line of predatory pricing or any other illegal business practices.
There is nothing wrong in loss-leading pricing, but pricing cannot be used to kill competition(taking market share / driving competitor into losses).
Just noticed this part and have to add: Sony arguably did this to SEGA. They leveraged the fact they didn't need to pay licensing fees for CDs (and later DVDs), plus the fact they could just take CD and DVD drives made in-house through other divisions and product lines, into managing costs of PS1 and PS2 in a way SEGA could not do with Saturn and Dreamcast. So again where is the outcry that Sony drove SEGA out of the console market as a platform holder?
Now the sensible side could frame it as SEGA drove themselves out and that's mostly true (sadly), but if a company like Sony took SEGA's circumstances and played off them to gain market advantage and push SEGA into taking even bigger losses, does that suddenly not qualify as a practice of predatory pricing on their end? Either you apply that type of stuff across the board with everyone, or you realize the definition you have in mind for the idea in question is way too loose and would indite a LOT of other gaming companies as being guilty of such practice.
Bernkastel
www.gamesindustry.biz
DaGwaphics
US is not the only market. Google being fined for monopoly, is just the begining. Big Tech is increasingly being looked at suspiciously.
thicc_girls_are_teh_best
There is no objective yardstick to measure a predatory price. If a competitor is forced to go into losses trying to match your price ( when both of you are below manufacturing/servicing cost ) that is an unsustainable pricing. British Vodafaone was one of the recent victims of this.
thenerdstash.com
