I think Xbox One is a perfect compliment to any PC gamer. The price is right with a game bundled in, it is enough for PC gamers to satiate their appetite for console game action outside of their main interest in PC gaming.
Don't think it's race to the bottom per se, it however requires a different business approach to content creation. You mention the overseas outsourcing, others stay within local and go indie. The game industry is getting bigger and the medium is seeing a schism of either going multinational giants or going indie and staying small and fleet of operations. The medium sized developer is where the current situation is hitting very hard, there is hardly a studio not vulnerable of surviving to their next projects. But then again, Kickstarter throws in another kink to the usual retail model and although not entirely successful has become a way to survive in this climate. What I think has happened is that the gaming audience, once very specific and experienced in their tastes has reached mainstream critical point and is diverging in many maturing ways, with prices becoming a big attraction due to the situation with economy. The result of this change in demographics can be seen in recent developments that previously were considered unthinkable : Origin and GOG offers no question asked refund policy. The gamers have become more selective with how they dispense with their money although their Steam libraries have become full of games they bought but never touched. There should be a balance in how the game prices are set, but with DLCs and whatnot inflating the price of the original game, the gamers have become a lot more shrewd in sensing the true value of a game, so I'd say it is the ironically the pricing scheme and botched digital rights management by the publishers, to maximize profits and bottom line, managed to drive down the price of games.
If Sony is now legally selling in China, it might have a bit more clout in terms of representing its intellectual property and get the problem with piracy there more exposed and discussed with recent corruption crackdown with Xi Jin Ping in charge. I don't know about the income level of the Chinese, but their middle class is probably a lot more than 200 million. That is why they consume a lot more products ranging from beef, dairy products, and etc. raising their prices on a global scale, and if Sony wants to start to tap this tremendously albeit potentially lucrative market (China's most popular game industry is in the online arena, and one Chinese online company dwarfs the likes of Blizzard/Activision with products that Western audiences never heard about), what else to do with other than perhaps their most popular product to come in a generation.
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