Bruno Bonnell's logic (re European subsidising of TDU)- does it make sense?

[MoonWalkinYiddo]

“The US and Europe are very different markets in terms of the penetration of Xbox 360 and HDTV,” explained CEO Bruno Bonnell. “The US is much more advanced than Europe so we believe the time is right to introduce a lower price point. This is why we have chosen to be aggressive. But we won’t do that in Europe."


I am lost. If you are trying to push a product and be 'aggressive', traditional business sense leads one to believe that you will introduce a low price to penetrate the market. If a Market has already been penetrated (as he is implying the USA is with HDTV and Xbox 360 compared with Europe), then how does his logic work? If you're trying to push something that has not been fully penetrated into the market you lower the price.

However what he is saying is a load of rubbish in my opinion anyway. Sales in Europe of the 360 and all the games such as GRAW, Oblivion etc haven't been that far off the USA, so his 'reasoning' of the difference in price is highly dubious.

If the game were made available on the XBL Marketplace at a $20 higher price than the USA, people would be screaming. The way Atari have done it screams of Europeans subsidising the US.

[the_gaming_guy]

This makes me very angry........

:mad: :mad: :mad: :mad:

[Vieon]

/sigh

Wheres T when you need her? tonguegre

[NWATA]

I would pay ten times as much than the people in America for TDU, don't hate, appreciate :respect:

[MoonWalkinYiddo]

This makes me very angry........

:mad: :mad: :mad: :mad:


What makes you very angry?

[MoonWalkinYiddo]

I would pay ten times as much than the people in America for TDU, don't hate, appreciate :respect:


Why would you pay ten times more than someone else for the same product? What exactly am I supposed to be appreciating? Do you not see this as a worrying trend? Top Spin was the same and now this. At which point would you deem this unacceptable? Would the price hike have to be $40? $50? $100?

[tenebra_uk]

I'm here ;) Always behind you, like the Boogeyman.

MoonWalkinYiddo, I think the guys are a little irritated as there have been already 4 threads on the different pricing strategy between the US and Europe.

If I have some spare time tonight I'll try to show you the logic in Bonnell's explanation.

Everyone, no flaming, huh? :nono:

[stalker700]

Oh please do stop whit these threads.

[Crazed_Dodgem]

perhaps we aren't less advanced, we're just richer, take us for all we have got i suppose :nuts:

[the_woozle]

What makes you very angry?

People are getting a little exasperated with the topic I think is all.

Have a look through this thread Boycott... (http://forums.eu.atari.com/showthread.php?t=39859) if you are interested in people's opinion on this. A lot of heated comments and aggression has already been exchanged on this issue and I think people are worn out.

[Eagle_Legend]

Discrimination!! That's all i've gotta say..

[steve30x]

This is total discrimination against europeans. It doesnt make me angry but it is very unfair. Xbox 360 games here in Ireland are already €70 and over.

[NWATA]

Why would you pay ten times more than someone else for the same product? What exactly am I supposed to be appreciating? Do you not see this as a worrying trend? Top Spin was the same and now this. At which point would you deem this unacceptable? Would the price hike have to be $40? $50? $100?

But say minimum wage in the USA $5 and minimum wage in U.k is £5, technically the U.S ends up having to work more for there games.

[steve30x]

But say minimum wage in the USA $5 and minimum wage in U.k is £5, technically the U.S ends up having to work more for there games.

Here in Ireland jobs are getting far and few between. This country is going downhill very fast. I say this because of the way this has turned out with this game and NWATA's comment

[ChewbaccaIV]

Perhaps the PAL version has nicer graphics :)

By the way, the minimum wage per hour in the US varies by states, but I think you could average it at $6.50

[Vieon]

I'm here ;) Always behind you, like the Boogeyman.

MoonWalkinYiddo, I think the guys are a little irritated as there have been already 4 threads on the different pricing strategy between the US and Europe.

If I have some spare time tonight I'll try to show you the logic in Bonnell's explanation.

Everyone, no flaming, huh? :nono:

Yay. Thanks T, keep the peace guys.

And no more threads on this, ok?

[davie18]

But say minimum wage in the USA $5 and minimum wage in U.k is £5, technically the U.S ends up having to work more for there games.
Not really, when you see how much tax we pay :nuts:

[diorbaby]

next it will be the fuel debate and how much we pay for oil, compared to usa, then how much VAT we pay, does the price include VAT in america.

same products, different econimic strategys.

no politics here please :nono:

[the_woozle]

does the price include VAT in america.

This is a good point actually as it probably does not. Sales tax varies a little from state to state I believe so figures like this are usually quoted without. That's how it worked when I was living in Canada and I believe it was the same.

[KoenigViper]

I don't understand some of you. You were preparred to pay this price before months ago, but 1 price cut somewhere else were $40 for a X360 will lure gamers in means it's an outrage?

Why have I only seen Europeans get mad about this? Australia pays $110 for their games from what I've heard and they aren't complaining on any other forums I'm on. You'll be paying 70 Euros at most and that's $90.

So maybe you should stop complaining because people in other places are paying much more.

[the_gaming_guy]

102.00 Aud (tdu) = 41.6401 Gbp
40.00 Gbp = 75.0330 Usd

[Eagle_Legend]

So they're getting it half the price. :noooo:

[MoonWalkinYiddo]

I understand the point some of you are making re: there are differing prices to suit different economies. However this is already the case with games, cars, clothes etc. The point is that games over here have always costed more and still do cost more. Xbox 360 games cost £50 over here and $60 in the US.

HOWEVER with TDU they have lowered the price even more in order to sell more copies or whatever their idea is. This has nothing to do with politics as some of you are saying. The price cut has gone over and beyond the regular price difference because there has been a price cut in only one territory. Per game Atari will be gaining a much larger profit per game sold in Europe than the US. I would understand if this were being done in Japan where MS hasn't sold many consoles, however the US has the most 360s out of all the territories.

In effect Europe are paying so that America can have this price cut which I don't think is on to be fair. Obviously they are going to have to make up the money somewhere - and where do you think that's going to be?

[tenebra_uk]

however the US has the most 360s out of all the territories.
Bang on, you've hit the point.

Say there are 100,000 consoles in the US (I'm making numbers up for the sake of argument) and you reckon you can sell to 10% of those console owners - that makes 10,000 copies of the game. Your sales target is $500,000, so you can lower the price to $50 hoping that such an attractive price will boost sales and you can possibly make some extra sales.

Say that in Europe there are 50,000 consoles, and again you reckon that the game will appeal 10% of these people, which means that to reach the same sales target you'll have to sell games at $100 each.

Where there is a bigger opportunity to sell in big volumes prices tend to go down. Does it make sense?

If anything, you should be pleased that Atari is ready to experiment lower prices and keep your fingers crossed that it goes down well and they sell tons of TDU copies. If that works, you might hope to see Atari driving the price down everywhere else ;)

[KoenigViper]

102.00 Aud (tdu) = 41.6401 Gbp
40.00 Gbp = 75.0330 Usd
Ah ok. Disregard my statement.

I must give you credit Moon. You're making a good arguement, dare I say, one that's actually civilized?
:)

[the_gaming_guy]

Bang on, you've hit the point.

Say there are 100,000 consoles in the US (I'm making numbers up for the sake of argument) and you reckon you can sell to 10% of those console owners - that makes 10,000 copies of the game. Your sales target is $500,000, so you can lower the price to $50 hoping that such an attractive price will boost sales and you can possibly make some extra sales.

Say that in Europe there are 50,000 consoles, and again you reckon that the game will appeal 10% of these people, which means that to reach the same sales target you'll have to sell games at $100 each.

Where there is a bigger opportunity to sell in big volumes prices tend to go down. Does it make sense?

If anything, you should be pleased that Atari is ready to experiment lower prices and keep your fingers crossed that it goes down well and they sell tons of TDU copies. If that works, you might hope to see Atari driving the price down everywhere else ;)

I get that. But to say that the US is more "advanced than Europe" makes us feel bad. We are always second to the US in technology, and its ridiculous. But oh well, Atari's choice.

[tenebra_uk]

I get that. But to say that the US is more "advanced than Europe" makes us feel bad. We are always second to the US in technology, and its ridiculous. But oh well, Atari's choice.
Nonono, by "more advanced" he means the market, ie the number of people owning latest generation consoles. You've got to forgive business people, that's how we speak. You don't wanna hear me Mon-Fri 9am-6pm, you'd just punch me in the face :hallucin:

[the_gaming_guy]

Oh ok then, misunderstanding.

Shame though, I could really do with a saving. I'm not exactly rich.

[tenebra_uk]

I know, I've never said it's ideal and never will. But this could be the start of a price reduction, so fingers crossed ;)

[MoonWalkinYiddo]

Bang on, you've hit the point.

Say there are 100,000 consoles in the US (I'm making numbers up for the sake of argument) and you reckon you can sell to 10% of those console owners - that makes 10,000 copies of the game. Your sales target is $500,000, so you can lower the price to $50 hoping that such an attractive price will boost sales and you can possibly make some extra sales.

Say that in Europe there are 50,000 consoles, and again you reckon that the game will appeal 10% of these people, which means that to reach the same sales target you'll have to sell games at $100 each.

Where there is a bigger opportunity to sell in big volumes prices tend to go down. Does it make sense?

If anything, you should be pleased that Atari is ready to experiment lower prices and keep your fingers crossed that it goes down well and they sell tons of TDU copies. If that works, you might hope to see Atari driving the price down everywhere else ;)

I would just like to point out that when I said the USA had more consoles it was relative to the point I was making when describing price penetration. The sales are not far from eachother at all.

I understand the theory behind your argument, however in reality no business person would create sales revenue targets of $500,000 each when one territory has double the console user base (based on your numbers). That would mean your marketing and financial teams were not really doing their job properly.

If you are confident that you have a very high quality product, you would not need to go down the road of price penetration. This isn't a dig at TDU at all, but if you have a product which does similar things to what is already on the market and you are trying to establish yourself, you will go through the route of price penetration. The reasons organisations go via this route are to establish themselves, create a customer base and therefore benefit from that customer base.

What I am assuming is that Atari wants to benefit as much as it possibly can by selling TDU to as many 360 owners as possible. This leads me to believe they will be offering vast amounts of downloadable content and maybe there is some type of contractual negotiation with MS and developers relating to rewards for games played most over Xbox Live. The infrastructure for Broadband in Europe is obviously not as widespread as it is in the USA and therefore the benefits via Euro Xbox Live will not be as apparant for Atari.

However that does not in my eyes mean that Europe should have to pay a $20 higher price. In my opinion Europe is subsidising this experiment by Atari who are looking to benefit through the wonders of Xbox Live.

If you are going to start charging people for goods they do not own, then that is a dangerous precendent. You can see that Bruno Bonnell's comments actually equate to this in his initial quotes "The US and Europe are very different markets in terms of the penetration of Xbox 360 and HDTV". He is stating that due to the fact the USA has more HDTVs and Xbox 360s they will sell it to the American public at a cheaper price and thus punishing everyone else.

The price should not be lowered for one region and not the other when they are both on virtually a level playing field.

[diorbaby]

Tenebra

Punch you in the face??????

Never.

who would cool all the arguments around here then?

[tenebra_uk]

Diorbaby, it'd have to be a fairly hard punch to knock me out ;) But to my disappointment, I've discovered that my knees still bleed when I fall on concrete :mefiant: (no funny comments, no alcohol was involved, I was running and one of my shoes got caught in the trousers lightbulb )

MoonWalkinYiddo, I'm not a fan of dramatically different pricing strategies (I was a pricing analyst at pre-euro launch phase, you can imagine what I've been though). Bear in mind that my explanation was a really stupidly simplified one. Surely there is no perfect 50-50 split between sales targets between the 2 markets, nor I'd expect the same appeal of the product in the 2 markets. In all truth, whilst normally I talk about all sort of confidential things with Atari, I deliberately avoided to ask any questions about this for a purely ethical reason - if I knew anything about the actual strategy, I'd feel I couldn't discuss it here as I couldn't be completely open. I'd rather talk out of assumptions but freely in this occasion.

You mention Europe subsiding an experiment - sorry, I question that. You're not paying a premium, you're paying the standard price. Testing in Europe - given the less developed market - would have been pricey and impossible, you can only test where you can reduce the impact on profit.

[the_gaming_guy]

Diorbaby, it'd have to be a fairly hard punch to knock me out ;) But to my disappointment, I've discovered that my knees still bleed when I fall on concrete :mefiant: (no funny comments, no alcohol was involved, I was running and one of my shoes got caught in the trousers lightbulb )


HAHAHAHAHAHAHA!

lolblue: :laugh: :chapeau: :) :p :bravo: :laugh:

[Crazed_Dodgem]

tenerbra, if i didnt see you at the atari event i would be really scared

going by signatures and random stuff from the forums then my mental image of you would include

Blonde hair
Iron toes
Glass arms
Bleeding knees
really short :nuts:
dressed in an army camoflauge ninga suit with atari logo's on the back (camoflauge atari ninga)
obbsession with sledgies (probably has one for a head :nuts: )

scary weirdblue

[tdu12]

I so want to know what she really looks like. I image a 90 foot robot with sledge hammers for arms

[Insecure_n00b]

she looks like this in real life :guns:

jokes :nuts:

[tenebra_uk]

What do you mean, Lwsbrck, I didn't scare you in real life? eekblue: Mind you, I toned it down knowing that your parents would be around tonguegre

Ok, some explanation is required, methinks lightbulb Yes, I'm blonde and short - 160cm or just over 5'3''. The camouflage Atari ninja comes from the fact that I'm training hardcore Shaoling kung fu with a Shaolin monk, and since I'd run out of t-shirts for training, I turned up wearing a camouflage green Atari tee. Undies trains with me and I appeared from the ladies changing room, went to him and declared "I'm an Atari ninja!"
Glass arms - kung fu again. Normal people get hurt by sparring, I got stomped in my hand and arm whilst we were doing wheel barrow last week. How lame is that? It's not even worth mentioning :cry:
Bleeding knee - kung fu again, last night. We were running outdoors, my right shoe got caught in the left trouser leg. Slow motion, me struggling to keep the balance and miserably failed. Ended up with left knee and both hands being nicely (not really) grated on concrete. I bravely stood up, noticed that there was a hole in my trousers but set off to start running again. My Shifu (the Shaolin monk) kindly pointed out that I was bleeding and that I should clean myself and get a plaster lightbulb
So there you go, the signature stuff is my nincompoopness, usually kung fu related when I'm at my stupidness best ;)

[MoonWalkinYiddo]

I have to say I think I am being proven right with my 'income via downloads' theory Atari will want to push with this game...

http://www.game.co.uk/ViewProduct.aspx?cat=11293&mid=326930

Here, GAME.co.uk are saying that you can get a free downloadable car if you pre-order with them. Everyone else? Well purchase it from DAY ONE on the XBL marketplace. This isn't in the game from day one why? The same thing will happen in the US, but I think will be much more prevalent. They will put a lot of downloads on the marketplace imo.

Just my opinion, don't shoot.

:atari:

[herr_lehmann]

where does it say that you have to purchase it from marketplace?

if you preorder you get a macca right from the start, but everyone else can buy it later in the game via an ingame dealer with ingame money.