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Game Console Prices to Fall?

Techstination feature for Monday, February 16, 2004

Video game console prices ready to fall again. Bloomberg Boot Camp, a report on today's technology. Companies that make video games are counting on more price cuts from Microsoft and Sony to keep sales growing this year. At THQ, which saw a ten fold increase in its profit in the last quarter thanks to games based on Finding Nemo and SpongeBob SquarePants, CEO Brian Farrell expects to see prices for the PlayStation2 and Xbox drop….

"Well for the entire industry the way the model works is as we get deeper into a console cycle the hardware prices do tend to come down. There's some speculation out there that the prices of the hardware will go to 129 this year, we think it's 149. But our estimation of 6 to 8 percent growth is predicated on 149, if it goes to 129 that growth rate could grow much higher."

Farrell says he expects either Microsoft, Sony or Nintendo to introduce a new console in 2005….with the others following. And while developing games for that next generation will be more expensive, Farrell says he doesn't expect consumers will have to spend more to buy them…

"Traditionally the game prices have been 49.99 and below and we don't see any change in that. What I think you'll see is what we've been delivering over the last ten or fifteen years in the video game industry. And that's better value to consumers. Beautiful games, they've been improving in graphics and game play."

THQ chief executive Brian Farrell. Bloomberg Boot Camp, I'm Fred Fishkin.