Of course Sony is making more money right now. What MS is reporting is that the gap in physical sales does not mean an equal gap in software sales.
Yep totally.
AND it might be slightly closer because those extra 40 million consoles had to be made, plus they will generate extra support queries need more warranty etc.
I'm sure it will be a net positive to profit, but not a straight doubling of profit by any means.
I'm pulling these figures out of thin air, they will be wrong but the point is to show how important engagement is to profit.
Let's say profit is very slim in hardware, say 10 percent. Let's say people buy 2 games a year on ps and 3 a year on Xbox, and they get their 30 percent cut of the digital sale (£40 games)
Total profit per person is say £20 to £30 for hardware, £24 from games for Sony and £40 from games for Xbox. So Sony may sell double the consoles but "only" have 108 from 2 customers whilst Xbox has 70 profit from its 1 customer. Sony has 50 percent extra profit, not double. Still a lot more!!
From a business point of view its very important that the games sales are an annual recurring profit stream as well. This is much more stable, and so easier to manage etc.
Now let's factor in that point. Let's assume customers hang around for 4 years (for the financial people I'm ignoring the time value of money so truncating the life span is an approximation for it).
Sonys profit is 60 in hardware plus 4 years of 48 which is 252.
Xbox profit is 30 in hardware plus 4 years of 40 so 190.
The difference then is around 30 percent.
Judging from some previous posts, a lot of people think this kind of maths or analysis is total marketing bullshit, defence force posting etc.
All I can say is that big business is fucking serious business. If this kind of analysis was bullshit (my numbers are! The logic is not), investors and their analysts would scream it from the hills and run like mad.
No big company would get away with marketing bullshit, or nonsensical metrics. Their exec team would get sacked, and/or their share price would collapse into administration and/or they'd get bought.
Angry forum users can shake their fists at the sky all they want, but it's still a mass of gaseous particles made up of several elements, a lot of water vapour, and some pollution.
