The best-selling traditional video game console of each generation in the last 35 years has been priced between $422 and $566 at launch*

 * Adjusted for inflation as of 2022. Where stripped-down and full-featured versions were launched in parallel I use the full-featured version for the price analysis.

Perhaps even more surprising: During the 25 years that I've been tracking this pattern for my "Console Wars" conference presentations (starting in 1998), the "Goldilocks zone" window for launch pricing has remained about the same when adjusted for inflation.

Note: This article discusses list prices. With recent pandemic-seeded chip shortages and other supply issues, many systems are sold as part of special bundles at higher prices than the list price for the console by itself.

Scroll down for the charts

Introduction

The launch of a major new game console can be a multi-billion dollar risk for their large corporate parents. Many systems are sold for less money than it costs to manufacture them, a sacrifice made to speed market penetration and build public confidence. Manufacturers use sophisticated analysis to set the right launch price to gain long-term market share with acceptable short-term losses.

Yet pricing mistakes on many hardware generations -- both too high and too low -- have repeatedly cost the console makers billions of dollars in revenue.

I first analyzed these historical patterns in the late 1990s as part of a series of "Console Wars" presentations I did each year at GDC and other conferences, sessions that launched the term Console Wars into the games industry vocabulary.

I had always been amazed that the leading console on every cycle up to the 1990s had lost its leadership crown to a rival in the following generation:

• The Atari 2600 was (after a hiatus for consoles) replaced by the Nintendo NES
• The SNES did better worldwide, but in North America the NES was supplanted by the Sega Genesis
• The Genesis, in turn, was supplanted as #1 by the original Sony PlayStation, now called PS1

As a game developer in each of these generations I can confirm that game devs talked about hardware makers growing overconfident and believing that their market dominance could be leveraged to raise prices. We discussed looming pricing problems over lunches and at events, and history proved that the rank-and-file game developers were right.

In almost every generation of console games, the launch price of new systems was a key to their success... or to their failure.

Why was the PS4 less expensive at launch than the PS3, despite its radical new technology, higher manufacturing cost and seven years of inflation?

Because it had to be less expensive to succeed.

Ever since my old GDC Console Wars presentations I have updated this chart of launch prices, adjusted for inflation. You're looking at the version from Spring, 2022.

The bottom line: Over 35 years and all the intervening hardware generations, once the numbers are adjusted for inflation the relatively narrow window for success remains about the same.

The corollary: A console with a launch price of $549 and a system priced at $425 are both in the winners' zone in their pricing. If they are competing head-to-head, however, history says that the more expensive console must have clear superiority in features that matter to consumers in order to overcome its price disadvantage.

You may be thinking, "But Nintendo broke from these patterns of pricing over the last 20 years, and they succeeded twice." You're right, and I'll summarize below how it takes that kind of  "blue ocean' strategy" to break through these barriers.

Late is Better than Never

Some of the machines that were not initially priced in the "Goldilocks Zone" and were not the best-sellers of their generation still racked up impressive levels of sales. If you go back and look at the data, however, those systems only became best-sellers after price adjustments brought them into the Goldilocks Zone of $422 to $566 2022 U.S. dollars. 

For example, in September of 2008 there were two major price cuts: Microsoft lowered the price of the premium 120GB Xbox 360 to $399. Sony lowered the price of the 80GB PS3 to the same price of $399, which equals about $534 in 2022 dollars. This was the moment when the Xbox 360 and the PS3 first entered the Goldilocks Zone with their front-line systems.

It took three more years, however, for the PS3 and Xbox 360 to surpass the Wii's annual sales, which didn't happen until 2011.

There are multiple reasons why the uniquely-designed Wii established such a big lead and sold the most units in that 2006-2013 hardware cycle. The price drops that started in 2008 aren't the only reason that Sony and Microsoft won the annual sales races in the last two years of competition before the PS4 and Xbox One were introduced.

Looking back at how these console introductions took place, it's clear that PS3 and Xbox 360 were launched at a price that was above the Goldilocks Zone. This created especially large problems because they faced a far less expensive competitor (the Nintendo Wii) with simpler games aimed at a mass audience.

Launch prices matter, even when you cut hardware prices later, because "you only get one chance to make a first impression."

What About Core Versions?

A "core version" of a new console has become a trade term for "a stripped down model sold for a lower price." The most common downgraded features in modern machines are memory and hard disk size.

I found no evidence that a core version priced inside the Goldilocks Zone materially changed the fate of a platform whose primary configurations were priced above the appropriate window.

My theory about why: Gamers who upgrade to new systems early in each console cycle buy new systems in order to experience great new graphical and audio features, and to play the most stunning games. Core systems do add initial sales volume for manufacturers. But the trade-offs they offer limit the game experience on top titles, since they can't show the most advanced graphics and have limited storage space for multiple games. This makes stripped-down models a bad match for the passionate game fans who drive the early-cycle sales for the console industry.

As the market matures for each generation of hardware, core systems become obsolete very quickly, and budget-constrained users have learned that waiting will give them the chance to buy a full-featured machine at an affordable price.

Why the Label of "Traditional" Console?

Twice in the last 16 years -- with the Wii in 2006 and the Switch in 2017 -- Nintendo has turned the games world on its head by shipping a successful video game console that "broke the console rules."

• The Wii had a processor like that of the old PS2 and Xbox, rather than its multi-threading CPU-driven contemporary competitors. It featured a motion-control interface rather than regular controllers, and highlighted games that "core gamers" found boring but that appealed to a broad market of families and older players
  
  
• The Switch is a hybrid console and hand-held game system that uses a less powerful CPU than PS4 and Xbox One, with a built-in high-res display

Both of these systems shipped at prices that were about 20% below the bottom of the Goldilocks Zone, because Nintendo isn't trying to create traditional consoles like Sony and Microsoft. They're selling a completely different kind of video game experience aimed at a wider audience that has its own, separate pricing Goldilocks Zone.

Looking at this pattern, I saw two related pricing windows, not one. Traditional video game consoles need to be in that $422 to $566 zone. Nintendo has launched its non-traditional systems in the super-narrow $352-$357 range in 2022 dollars (yes, just $5 wide!, defining its own very specific price window for success.

The Recipe for the Research

I started with the list of the 20 most prominent console launches of the last 35 years. Estimated worldwide sales data for all but one of them have been collected on Wikipedia, VGChartz and Statista, and I used this data to divide them into "Console War Leaders" and "Console War Non-Leaders." 

Note: Since the Switch predates the PS5 and Xbox System X by three years, I'm treating them as separate categories. After a pandemic, chip shortages and logistics delays, I think it's too soon to make a call on which system will outpace the other in the long run, so for now I have listed both as "winners."

Note: In the case of the Genesis and the SNES, I continue to find partisan data published online. In the early 1990's the consensus opinion in the industry was that the Genesis won handily in North America but the SNES won in worldwide sales. To avoid any question of who should be included I declared it a tie and have listed both on the "Winners" chart.

I took the launch price for the full-featured version of each machine for its North American launch, rounded all $199 prices into $200 etc., and converted those launch prices into 2022 dollars. This adjusts all the numbers for inflation, which had been low before the pandemic but is much higher recently, and also had waves of higher costs earlier in the video game era.

I then ranked both sets of machines by launch price, and voila!  The winners were clustered together, and most of the non-winners did not meet those same criteria. I placed a "Yes" in the far right "Zone?" column for systems that met these "Goldilocks Zone" price criteria.

Here are the two tables:

Table 1: Console War Leaders 1985-2022

Table 2: Console War Non-Leaders 1985-2022

Data Sources:  Wikipedia, VGChartz, Statista.