RCBH928 wrote:
Well, if the decisions makers feel that it was a smart decision to give a free dreamcast for 2 years subscription with their ISP is profitable, then we can only imagine what other horrendous business decisions they made that made Sega quit the hardware market.
from the EGM article I mentioned:RCBH928 wrote: Well, if the decisions makers feel that it was a smart decision to give a free dreamcast for 2 years subscription with their ISP is profitable, then we can only imagine what other horrendous business decisions they made that made Sega quit the hardware market.
Or as AJ pointed out, you commit to spend $528 + you buy a Dreamcast for $200. They give you the $200 back and you may very well spend that $200 on DC games. So at the least they were getting $528 from you, or possibly $728. Not to mention now you're committed to their network so were less likely to get into Xbox or PS2 online gaming at that time. Instead, now you're part of the DC install base and probably going to buy some more DC games.And if you think Sega's burning money by giving away free DC's, thing again. If Sega.com can convince the 2 Million current US DC owners to commit to SegaNet, the company will make $1 billion.
I see what you are trying to say but you are not calculating this right. When Sega paid you back $200 , they actually made a loss of -$200 on each Dreamcast unit. Somebody has to pay for the hardware manufacturing . So when you sign a $528 subscription, you deduct the price of the Dreamcast , they are only getting $328 from you. Divided by 24 months of subscription they are making just $14 a month. Calculate the cost of running a new ISP company with employees, IT infrastructure , etc etc and you will realise they are making a measly profit from you.noiseredux wrote: Or as AJ pointed out, you commit to spend $528 + you buy a Dreamcast for $200. They give you the $200 back and you may very well spend that $200 on DC games. So at the least they were getting $528 from you, or possibly $728. Not to mention now you're committed to their network so were less likely to get into Xbox or PS2 online gaming at that time. Instead, now you're part of the DC install base and probably going to buy some more DC games.
RCBH928 wrote:@Aj if that is a good idea, why didn't Microsoft and Playstation use the same strategy,
What you are not understanding is that most consoles do sell at a loss. As AJ said, it's the software that they're making the real money on. So in the case of the Dreamcast rebate, the idea is like "ok, we already sell at a loss, but at least we know that we now have a contractual 2 yrs worth of subscription fees coming in, PLUS the games that those users will buy."I see what you are trying to say but you are not calculating this right. When Sega paid you back $200 , they actually made a loss of -$200 on each Dreamcast unit.
I understand what you're getting at, but I feel like you're disregarding the SegaNet subscription. They were losing some money to then gain monthly income. Of course not every DC owner was going to sign up. But the ones that did, that was guaranteed known $ coming in each month right? Then the thought is that the user would figure "well, I'm paying for this service, might as well buy some more games to play on it" y'know? On top of that, as the install-base grew and dudes had more friends to play with online they're less likely to stop paying that monthly fee. Notice how many guys even on here pay for XBLA every month just because that's where most of their friends play games online - even though PSN or Steam would be free? That's guaranteed monthly income.RCBH928 wrote:they sell at loss not absolute 0 return. A 360 costs $500 , they sell it for $400 or $350 . They lose $100-150 per console, they don't give them out for free. There is a difference. Imagine you buy 10 games at $10 each . There is a huge difference if you can sell them at a loss of $1 , or give them away from. First strategy you will still have cash of $90 , strategy 2 you won't have the cash OR the games.
