There's the justification that Sony Corp should take a loss on PS5 because its gaming division is its most profitable division. Transitioning those PS4 owners to PS5 is probably their top priority.
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There's the justification that Sony Corp should take a loss on PS5 because its gaming division is its most profitable division. Transitioning those PS4 owners to PS5 is probably their top priority.
Isn't the PS4 Pro RRP $399 at the moment? They'll probably reduce that but they're not going to price a next gen machine the same as their current gen one. Unless they take a sizable hit (like MS), this isn't happening. They would have announced it by now, as that price has historically been a successful one, but decided to wait, longer then they have before.
100 mil is ambitious ... but everybody I know in my gaming sphere, and I mean everyone (PS1 to PS4 owners included) are absolutely buzzing about both the S and the X. Mostly S leaning, though.
100 million, really? Cheap. But anyway inflation on top of that.
I'm not sure if they've ever said that they don't "care" about selling consoles. Of course they care.
Rather, the point I've seen them make is that seling consoles isn't their primary goal.
These mean different things.
Someone made a good point that the S is also designed to be a secondary console for those who are traditionally Sony/Nintendo gamers, without the steep buy in.
Because they are catering to all gamers. The most powerful console available can be yours for 499. That price is low enough for people looking to finally make the 4k upgrade which is what Xbox has been preaching the past few years. The more gamers that can play is good for everyone
They will discontinue the ps pro or, they most likely already stop producing it.
I listened to the interview live. They don't care where you play, but that doesn't necessarily mean they don't care about how many units they sell. The primary delivery system of the gamepass platform is via console, and to keep that market wedge and grow, they need to remain competitive. Or else gamepass will fizzle out and wither and die. That does not = not caring about how many units they sell, nor does it = trying to sell more units than Sony or Nintendo. This is a long term plan to have gamepass on every platform willing to have it.
Not true. Nintendo usually does not sell at a loss. Wii U is the rare exception.
It doesn't have to be that high. They'll sell millions of these things this holiday. If they only lost 50 bucks per console...that's so much money gone. Also, diminished as they are from the beefier consoles, these specs aren't anything to sneeze at.
Because Sony aren't going to be able to sustain those levels of losses. They'll need to turn a profit by the end of each gen.
They make more money off of their console users. With this in mind, acting like they don't care where their users play cannot be true. All things being equal if they had a choice between someone buying a console or buying their games on PC they'd choose the former. It makes sense, they control everything on the console.
You're right and that is the more precise take. But I believe any engagement that gets the person into the ecosystem and making purchases counts as a win for them, and a strong console market presence (but not necessarily "winning" market position) is key to achieving this. It's the driving pillar of the model - and not just for a 30% revenue increase per purchase.
Also the ARPU on PS+ users is going to be probably a quarter of the average Gamepass user.
When a product goes through a chain of manufacturing lines, each part of the chain need to have a cut from the shared profit. Perhaps there is a lot of parts to form the chain.
Oh agreed. And I think it's the right idea to say hey we probably weren't going to get those PC players so might as well support them on the PC the way they are.
I'd argue the opposite. Xbox ranks #3 as far as Microsoft's earnings go. It's a valuable brand, but it's not the main money-maker, so the Xbox division has more leeway in terms of risks it can take, especially with respect to taking large losses on hardware. After all, the larger the Xbox ecosystem is in terms of users (even on different systems), the more Microsoft's #2 earner (Azure) will benefit. I don't see how it makes sense to take a substantial loss on hardware within the most profitable division of a company. A small loss? Sure. The sort of loss Sony needs to take to compete with Microsoft on price? Nah.
They've said that it isn't "a big profit play right now." With all of the introductory pricing stuff, people doing $1 a month, PC at $5 until they go up to $10, including it in a payment plan for the next systems, etc. all screams "loss leader." Once they have enough people vested in that ecosystem, prices will shoot up.
The cash on hand they report in their earnings are a good indicator of how much losses a company can stand to take.
Sony has roughly $30-40bn on hand and Microsoft about $150bn. Remember this cash pile is spread across the whole business so if investments need to happen in say Cameras or TVs, Sony will spend it from there (or borrow it).
Given the current situation with COVID companies want to make sure they're not dipping into that fund too readily as its essentially their 'rainy day'/investment fund. But based on those numbers MS is better equipped for a longer term investment like this.
One could also argue that why would Microsoft wait until next week (as Spencer said the original plan was) to announce a $299 Series S if $399 is so historically successful and they had a $299 system. It can work both ways. Microsoft wasn't in a hurry to announce their system prices either, and they had the cheapest one out there.
Yes, but that was not the point, the point he has making is that Sony couldn't afford taking losses,.
They have never got close to that number and I don't think Gamepass is the system seller some think it is, it's a good addition but it's not enough to sell systems.
I think the better point to make is not that Sony cannot afford to take losses (they can). It's more that Sony and its shareholders will be less willing to take losses if they affect Sony's ability to invest in all areas of its business down the line.
MS are likely more able to do this from their cash position.
But agreed it's not like Sony can't take a loss but there's certainly reason to believe they're less able to than MS are.
I guess with so much revenue coming from the monthly Gamepass fees, you have a pretty nice cushion to do so.
Genuinely considering the Series S on launch day.
Genuinely considering the Series S on launch day.
The PS4 Pro hasn't seen a price drop sense it launched. I think sony is fine with launching at that price and selling out PS4 pro stock at 299 for a few months.
Sony is far more reliant on PlayStation to keep the company profitable than Microsoft is on Xbox, and have far less cash in the bank.
Sony could definitely take some losses if they saw a potential for profit after a period of time, but they don't currently have a business model that would make that a viable option. If they made a loss over the course of the PS5 gen, where are they likely to make it up from in the next gen?
Microsoft is all in on a business model which could provide huge amounts of recurring revenue, entirely divorced from needing to make and sell hardware, but which could take a very long time to become profitable, but they also have the size and cash reserves to take those losses for a long time to reach that point.
Sony's business model is based on selling hardware and then profiting from sales and subs on their platform. If their platform doesn't make a profit for an entire gen, they will find it difficult to sustain themselves until a point where they do reach profitability.
Christ dude. Don't just spout shit off like that if you have no clue what you are talking about. The PS4 did not make profit on day one. They lost something like $60/unit at launch of the PS4.
I like your enthusiasm but I think Xbox cap at 80 million consoles but gamepass subs could crack 100 million with Xcloud
Considering the cost of the drive, 499/399 would mean a $75 bigger loss on the DE but it would become only $25 on average if launch sales ratio is 66/33 (from polls). It seems like a good idea, but it could backfire if the sales ratio become a lot more lopsided than predicted. Which very much could happen if they price so aggressively.
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Right. And, over the past several years, Sony has relied more and more on PlayStation to pay its bills. Its cell phone division has been a total boondoggle... Plus they probably have a lot of confidence coming off the last generation. Microsoft's price will push them to either try to compete or ignore it altogether. I'd guess it's either the same ($499) or it'll be a "premium" system for $600+.
The current ARPU of PS+/PS Now (which are both $60/year or $10/month sub) is $6.02/month
Calculated with 44.9M PS+ sub and a generous 3.1M PS Now sub (2.2M as of end of April 2020, up from 1M from Oct 2019)
And that's with Sony doing only $45/year PS+/Now sale, twice a year
You expect GamePass ARPU to be minimum $24/month ?
Yeah it's obvious that they are selling the Series S and X at a loss. The hardware you are getting for these prices is insane.
They are aiming to recoup those losses with GamePass/digital sales and the crazy expensive (if the leaks are true) Expansion Cards though.
They are aiming to recoup those losses with GamePass/digital sales and the crazy expensive (if the leaks are true) Expansion Cards though.
Simple. You make more money on software than hardware. The more customers you have, the more potential revenue you can earn. It's not Sony's most profitable division because of the hardware alone. The hardware is just a means for them to extract money out of you through software and services. It's in Sony's best interest to convert as many PS4 owners to PS5 as quickly as possible. I'm not saying that PS5 will be significantly less than XSX. It will probably cost the same, but since they now know the XSX price, it would be insane for them to charge more than that. For some reason some people are predicting that PS5 will cost more, even ridiculous pricing as high as $600, and that makes absolutely no sense to me.
Microsoft had a $299 console that was only announced today. Why didnt they announce it earlier if we are going by this theory?
PSN alone could support massive losses before they'd start actually losing money. It's been comfortably covering the R&D costs with record profits. If Sony wanna keep it dominant they'd certainly have a lot of room to do so. Will probably depend on how worried they are more than anything though.