The Xbox One’s UK price cut is a clear reaction to pressure, should spread to other countries
The news that Microsoft will be discounting the Xbox One in the UK come February 28 is an ironic and bittersweet announcement indeed. After innumerable cries of “overpriced” and demands for a price reduction around and before launch time, actually seeing that reduction has left early adopters spiteful, and has drawn the ire of eager consumers outside of the UK who can’t get in on the deal. It has also, as was undoubtedly Microsoft’s intent, made the Xbox One more competitive and appealing, and helped to alleviate that most troublesome deterrent, price.
But the location of this first price cut is the detail to hold onto. A prettier price tag has long been expected from the Xbox One and although it came a bit early, it isn’t too surprising. However, that Microsoft elected to start reducing prices with the UK speaks to the system’s position within the country, and how we can expect MS to act in other regions. Granting special treatment to a particular market can only mean that market is in some way special, right?
Speaking of special.
A quick look at recent sales figures (available on VGChartz) will show that PlayStation 4 has a strong lead over XOne in the states, with a reported 46,764 and 30,975 sales in the past week, respectively. Sales in the UK, on the other hand show far more drastic disparity: PS4 is sitting at 57,200 while XOne has brought in 10,562 this previous week. More jarring, however, is the gap between total system sales for the UK: Xbox One is behind by approximately 280,000 units in the states (11-12%), but by 1.3 million in the UK, comprising an almost 242% lead for PS4.
Addressing the price drop (in an interview with OXM), Xbox UK marketing director Harvey Eagle said that there are “no announcements in other countries planned, so it’s a UK-only adjustment and we feel this is the right thing to do in our market.” Just shy of a verbatim admission, Eagle’s comment confirms that Microsoft is, at least for the time being, most concerned with their UK standing—and looking at the above numbers, it’s not hard to see why. However, despite Eagle speaking against it, it’s far from unreasonable to expect the same marketing ploys to pop up in other regions.
Not the least of which is the world's most populous nation.
Microsoft is clearly under greater pressure in the UK—possibly the greatest, though Japan will surely be a trial in the coming quarter—which explains their decision to cut prices there (first). But the unspoken factor here, which should prove instrumental in predicting Microsoft’s next actions, is that of demographics.
In terms of global sales, PS4 is ahead of XOne by approximately 1.9 million units. There’s little doubt that this lead was in part built through Sony’s pursuit of a larger market; access to more demographics means access to more consumers, after all. For comparison’s sake: PS4 was available in 48 countries as of December 13, 2013 after launching in 23, while Xbox One is currently being sold in a scant 13.
It follows, then, that Microsoft will want to improve their standing in the demographics they have broken into. And what better way to do so than to bring “the UK price” (as a disgruntled consumer might call it) to other regions? It’s certainly not the only option, but if MS is willing to make adjustments to keep one market afloat, there’s no reason to think they won’t do the same elsewhere. Perhaps not in the US, the XOne's strongest zone, but in other parts of the world.
That new Titanfall bundle is nice and all, but not quite as nice as a bundle and a price drop.