'Pachter Factor': Let's Talk PS4 Neo And VR, E3 Conference And Upgrade Cycles

Michael Pachter is a video game analyst who does a weekly round up on questions posed to him through SIFTD.net Games. Here is a recap from Episode 26.

Sony, PS4 Neo, VR

Sony Corp (ADR) (NYSE: SNE) has an exciting year ahead with the launch of its new console PS4 Neo, as well as its virtual reality apparatus PlayStation VR.

Sony hasn't set a solid date for either launch, but Pachter is almost certain that both the Neo and VR headset will be launched at the same time in some sort of bundle deal. The price is likely to reflect a $50 discount, as the bundle will give you the VR headset for $50 cheaper.

However, Sony runs the risk of "confusing consumers," Pachter noted. If the PS4 is discontinued, then the PS4 Neo will sell tremendously well. But, Sony has yet to divulge what it plans to do with the PlayStation franchise. In Pachter's opinion, if the PS4 system is kept for another year or two, there will most likely be a $100 price differential between both the systems.

Related Link: "Pacher Factor" Talks Nintendo, Virtual Reality And Gaming

E3 Conference

E3 will realistically never be discontinued. It draws media coverage from all major news companies as well as specialty media outlets.

The conference has the most media coverage than any other conference. In addition to the great coverage, the cost of advertisement is minuscule when compared to similar paid coverage on news outlets.

The cost of a full-length press conference for most companies is somewhere in the range of $50,000 and $100,000 at E3. Where a minute of advertisement on ABC News can cost up to $100,000 or more, Pachter said. Couple that with the multiple news outlets companies have to pay to get their products out to wider consumer base, the cost can reach up to $10 million.

How Realistic Is The Upgrade Cycle For Electronics?

For phones, Pachter noted it is a much more cost effective option to outright buy an Apple Inc. (NASDAQ: AAPL) iPhone and hold onto it for three to four years rather than upgrading every one or two years.

The iPhone-for-life plan gives the user a new phone every year, but cost is about $32 per month — totaling at $384 per year. In addition, you have to trade in your phone that is worth a couple hundred dollars to get the latest iPhone. The cost comes out to around $500, Pachter said. To buy the phone outright costs $850, but with phone not changing drastically in hardware it is worth the one-time larger fee to get the iPhone and update to new software as it comes out. It is very unrealistic to pay such high prices every year for a phone that doesn't change that dramatically, Pachter stated.

Regarding gaming consoles, a new console generally comes out every four to five years. But companies upgrade the console as the parts become cheaper to produce. The Xbox 360 started out with a 60 gigabyte hard drive, but by the last year of its production, it was boasting a 200 gigabyte hard drive. As CPU and GPU units become cheaper, companies are able to upgrade their consoles to keep them up to date and attractive for consumers.