Companies rarely make money on the game consoles (for example, Xbox and PlayStation): most of the money made is from selling the games themselves, which cannot be used on other game consoles. How does this allow these companies to price discriminate?

Question

Quizplus · Accepted Answer

By making the majority of their profits from game sales, companies are able to price discriminate by charging more for individuals who are willing to pay a higher price for their desired video games. These individuals are typically avid gamers who purchase a large volume of games. On the other hand, individuals who refuse to play video games or play them infrequently may not purchase as many games, so companies may charge them a lower price to attract their business.

Companies Rarely Make Money on the Game Consoles (For Example