Have you ever had a moment where you realized something you thought you understood worked in a completely different way than you’d ever imagined? Razors and blades is a great example. Razor manufacturers sell the actual razors at a loss (or even give them away) knowing that their real profit margin is on the blades. If they can get you hooked on their product, you’ll keep buying blades and they’ll make more money in the long run than if they’d priced their razors according to what they cost to produce. It’s the same deal with printers and ink. When the ink refills cost more than 50% of the cost of a printer, you should know something’s up.

This brings me to the topic of today’s rant. Consoles accessories… they’re outrageously priced. Plain and simple. The margin on these things has to be INSANE! Look at controllers for example. Microsoft and Sony are selling their controllers for $50. How many controllers have been made? The install base of each is in the millions and a large portion of customers own more than one controller. It doesn’t take a rocket scientist to look at a controller and realize, yeah, I’m sure it costs a lot to design something like this, but there’s no way it costs remotely near $50 to manufacture and package these things… especially at that quantity. They have to be getting bulk discounts up the wazoo on their materials. my guess? Easily 40-50% margins on controllers.

Videogame cables? Ouch! Cables in general. The key here is the console manufacturers need to create proprietary cables to keep the ball in their court. Any “custom” A/V cable is a potential source of a lot of income. Think about it for a second… if a console is being sold at a loss, and a video cable or some other accessory is being sold at say $10 profit, which would you rather sell? Okay, well, maybe video cables aren’t the best example since most people need at most one, but you get the point.

When the PS3 and later the 360 went to HDMI, suddenly we were at a point where the cables were standard again and you were free to shop around and buy a reasonably cheap cable. Microsoft had already thought of this though… you need to purchase a $50 adapter to allow you to use optical audio out. Those guys are smart! Smart I tell you!

My current sore spot is the 120GB hard drive Microsoft’s selling for $180. I’m just not sure how much more blatant you can get on the “we’ll charge what we want because we’ve eliminated the possibility of competition” front. It’s so bad that I won’t consider downloading anything of substantial size on my 360 because I don’t want to clog up my already packed hard drive and I’ll be damned if I’ll purchase things and then manually delete/redownload all the time because I don’t have enough space to store it all at once. When I can buy what I consider a fairly priced hard drive for the system, I’ll open the possibility of downloading original Xbox games or video content. Until then, I’ll enjoy my money thank you very much.  I won’t even get into the $99 Wifi adapter for the 360…

When you tack on the fact that third party accessories often have to be licensed, then you start to realize Microsoft, Sony, and Nintendo are even getting cuts of their (potential) competitor’s products as well. What a racket! I want a market like that where I can dictate the products sold, sell mine at amazing profits, and then also require my competition to pitch in some coin when they sell something!

While there are third party accessories that aren’t licensed, I’m not exactly sure what the ramifications are there… you can at least bet if they try to go “legit” and get their products licensed in the future that someone, somewhere at the platform owner’s company will remember the time they didn’t pay the license fee… my guess is it won’t result in any favors.

Lastly, we have the games. While I don’t know the specifics of any of the current-gen consoles’ licensing fees, it’s long since been a tradition that to get your game on a closed system like a videogame console, you had to pay licensing fees and pass some level of certification. While certification does (you’d think) act as a rudimentary filter to keep blatantly troublesome products from being released (although Lair and Vampire Rain made it through), it also acts as a choke point to make sure the platform owner gets their cut of the profits as well. It’s really quite ingenious for the platform owners.

When you look at someone like Nintendo that manages to do all of the above PLUS actually sell their console at a profit, it just boggles the mind how much cash they must be sitting on. They probably have to spend some just to pay people to count and manage their money. I can’t even imagine having so much money I need to pay someone to count it… *sigh*

Do you ever stop to think about why you’re paying the money you’re paying or where it’s likely going? Is having all versions of an item priced similarly all it takes for you to accept that price as valid? Are there accessories that you want but the price has caused you not to buy them? Are you tired of investing in peripherals such as guitars only to have newer and/or better versions come out annually with each game? Sound off, let’s hear what you have to rant about on this topic!

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