We reached out to PlayStation India head Atindriya Bose to talk about the console's pricing, and address some of your concerns as well. Here's what went down.
Could you explain the thought process that went behind the PS4's local pricing?
Certainly. In India, gaming products unfortunately attract a heavier duty. Let's assume you're importing a product that costs Rs 100. Your duty on that product will roughly amount to 24-25% of the cost of that product, and this is just the import duty. Add to this local customs clearance cost as well as port handling cost, and you're looking at a 2-3% increase.
Over and above all of this comes the VAT (value added tax), which for items of this category amounts to roughly 13.5-14.2%. When you add it all together, you're looking at a pretty substantial amount that goes into the hands of the government.
Even when you consider the price of this product in the US, once you add the 36% duty upon that number, you get a much higher price than you would with a simple dollar-to-rupee conversion.
People are contemplating importing the console from abroad through a friend or a relative, but that same logic cannot be applied for a proper business model, where you have to import larger quantities. Even if you import the console from Amazon, you will be slapped with some import duties that will raise the price of the product.
People also need to understand that India has a multi-layered distribution system market, so you are talking about a straight deal between 10-15% that is fed into distribution channels. This is not the case in bigger, more developed markets like the US.
The PS3 and PS Vita aren't locally manufactured either, so how have you managed to keep their prices in check?
In the US, a 250GB PlayStation 3 retails for around $299 (Rs 18,492) while for us, the 12GB PS3 variant is Rs 16,990. As you can see, there is a substantial gap between both prices. Not everything is a linear equation. In some cases, you also have to look at the maturity of a business since you cannot treat a console's price structure the same way you would treat consumer electronics.
What we're trying to sell in the Indian market is the complete solution, and so the business model has to take into account the console, the games, as well as the peripherals. All put together, their prices have to be such that they are in the positive with respect to the cost price, and only then can you have a viable business.
What I'm trying to say is that the PS3 has been in the Indian market for a longer time, and even though it is selling well, it cannot dictate how we price the PS4, which is essentially a new console entering the market.
The average American gamer is supposed to be 30 years-old, but in India, most gamers are still in school or college. How do you expect them to pay these premium prices for both hardware and software? Have you seen a lot of pre-order cancellations after the price was announced?
Video game software also unfortunately attracts high duties in our country. All the points I mentioned in my first answer are applicable to software, so naturally the price will be higher.
That being said, this is a challenge that is not just thrown to the consumer, but it is one we face constantly as well. Even then, we have enough early adopters who can buy the console from their pocket money if they're still in school/college, or they could be (unmarried) individuals who have just started earning and are open to spending money on technology. They look at gaming as a very meaningful hobby, so this ultimately comes down to a value equation.
Contrary to what you may have heard, we have not seen a lot of people cancelling their pre-orders. There are a few, of course, but most of them have stuck to their pre-orders.
In case there is a price cut for PS4 in the future in the European and American markets, can a price cut be expected for PS4 in India as well?
Every time there has been a price cut in Europe, it has invariably trickled down to India, so I don't see why that shouldn't happen with the PS4.
Will the PS3 get a price drop once the PS4 launches?
No, we have no such plans as of now.
Will PS4 first-party titles eventually be locally replicated? When that happens, will they be sold for a lesser price?
It's too early to say now, but once we have an established base, that opportunity looks extremely viable given that we already have a Sony disc replication plant. But even then, people shouldn't expect drastically lower prices. A locally replicated game may go down from Rs 3,999 to roughly Rs 3,499. We unfortunately do not have a magic wand that can take the price all the way down to Rs 2,499.
What are your launch plans for the PS4?
We are already in talks with high-end stores like Chroma, Landmark etc as well as Sony Centre stores all over India. Come January 6th, each of them will have PS4 kiosks that will give potential gamers a chance to try out the system first-hand. Besides launching the PS4, we also really want to educate people who enter these stores to evaluate the PS4.
Gaming store chains like Games The Shop and Game4u will have their own demonstration stations and they'll also be conducting their own midnight launch events.
By March, we also plan on restarting our PlayStation Experience, so that's something gamers can look forward too.
Will there be any PS4 Bundles available at launch?
There will be no bundles at launch. Our immediate focus is to get the launch quantity in and focus on the second wave of products. We may start looking at bundles by the time mid-summer rolls in.
How come the PlayStation monitor never made it to India? This time around, will the PS4 accessories be available here locally?
The demand for the PS monitor wasn't that high to begin with, and considering the tax structure that I just explained earlier, it just didn't make sense to us. However, this time around, first-party accessories like the controller, and camera will be available at launch.
Will non-gaming content find its way to PlayStation Network eventually?
Sony is very uniquely poised in this regard. We have access to a lot of diverse content, and we're currently evaluating what we can do for the PlayStation community. As of now, I have nothing to declare, but this is definitely an opportunity we are looking at, especially since we have used this content successfully in our other product categories like the Sony Xperia, Vaio, etc. It gives us a lot of confidence that it can be done.
We've heard certain debit/credit cards do not work on PSN. Any idea why this is happening?
Debit cards don't work on the store, and we don't have plans to add in debit card support. Most of the international credit cards like Visa and Master Card work, but cards from local or corporate banks will not work.
When will PSN cards be available locally?
That again, unfortunately, ties into our complex tax structure. It's not about how much, but more about which tax structure is applicable to PSN cards. We nearly scrapped the idea of bringing in PSN cards completely, but now we are seeing some crystallization with Steam cards and iTunes cards being sold locally.
Once the provision of the tax structure applicable to PSN cards becomes clear to us, we will go back to the drawing board to work on pricing the cards for India. So somewhere at the start of the next fiscal year, we'll be in a better position to make a comment.
Why are the digital prices of PS4 games on the Indian PSN Store so high?
I haven't gone through the entire listing, but first-party games are actually cheaper than retail. Take Killzone: Shadow Fall for example. It's Rs 3,499 on PSN, while it costs Rs 3,999 at retail.
Certain PS3 titles that are being sold at retail for Rs 3,499 are available digitally for Rs 2,799 or less. On the third-party side, we have had some great rates on the PS3. Take Call of Duty: Ghosts for example. It's Rs 4,299 at retail, whereas on PSN, it's available for Rs 2,799 only.
What kind of warranty/support can gamers expect on imported PS4s?
Any console that is purchased from a PAL territory (Europe, Dubai and Australia) will not have warranty in India, but you will be able to avail of our service facility. This means if your imported PS4 dies, you can exchange it from our service centre for a brand new Indian unit at 50% of the cost of a new console. Anything that comes from a non-PAL territory like the US will not receive warranty or service facility support.
For how long do you plan to continue supporting the PS3?
Next year's PS3 line-up with regards to both first and third-party games is looking solid so far. Considering the console's price as well as its huge library of games that starts at Rs 1,399 today, I see a very robust life cycle for the PS3 both worldwide and in India. Also, a person who is coming in as a new gamer may see more value with the PS3's affordable pricing as well as its repertoire of varied games.
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