Pachter's 2008 hardware sales forecast

[AlNom]

So why not offer the basic features for free. They already do that for Windows Live. Are they so afraid everyone would stop paying for the extra features (matchmaking, achievements, trueskill matching) ? Apparently, people pay for extras they might not use, so offering basic online play for free shouldn't affect them.

Or will it? *dun dun duuuun*

 

[Shifty Geezer]

There is no comparable service being offered to Live that is free. Period.

That's true, but 1) Some people don't care for the extras, and don't see it was worth paying for them. If all they want is playing online, the extra features are an unwanted cost. Why not offer online gameplay on Silver for free without any of the messaging etc.?

2) Sony will be rolling out the same key features 'any time now'. Okay, they're taking their sweet time about it and I've complained myself now I'm trying to meet up with folk online, but 'real soon' Live! will be competing with a similar platform that's free. If PSN was a fee-paying service, or we weren't expecting a full-featured online service, I doubt people would complain about paying for Live! It's only the promise of Live! type functions without a fee that makes people question why they're paying for Live! Plenty of people are happy to pay cable TV subscriptions, but if they heard that their neighbour was getting the same cable services from a different company without having to pay for it, don't you think they'd consider switching, or start grumbling about having to pay when other folk don't? I think the expectations of PSN have seriously devalued Live! for some.

 

[Scott_Arm]

All this talk of the price of live is kind of unecessary. They obviously have all kinds of metrics that they watch to make sure their subscriber base is increasing at a rate that's acceptable to them. If things really slowed down, they can always decide to make the gold membership free or drop the price. Microsoft is always in a position to be cost competitive. For now, gold membership appears to be working in their favor from a financial standpoint. They obviously feel the customers they're losing to free services do not outweigh the membership fees they're collecting.

 

[Shifty Geezer]

All this talk of the price of live is kind of unecessary.

Pretty much all our talk is unnecessary!

They obviously feel the customers they're losing to free services do not outweigh the membership fees they're collecting.

Is there any way of measuring how many people haven't bought their platform because of online play costs though? Perhaps the strongest USP of XB360 is the online experience, but the associated cost may be more of a deterrent than the features are an attraction. I've no idea what the impact is on sales. The only thing I know for sure is people who currently don't pay for Live! tend to turn their nose up when they learn that it's £40 a year or what-have-you to play online with XB360 where it's free for every other platform. If the value of Live! is there, I don't feel MS are marketing the point strongly, with a 'look at all this great stuff that no-one else has, and it only costs you a dollar a week' campaign.

BTW If multiple people have accounts on a box, how does Live! subscription work? Is it one payment per piece of hardware, or for different accounts? I presume it's a single price per box.

 

[mrcorbo]

All this talk of the price of live is kind of unecessary. They obviously have all kinds of metrics that they watch to make sure their subscriber base is increasing at a rate that's acceptable to them. If things really slowed down, they can always decide to make the gold membership free or drop the price. Microsoft is always in a position to be cost competitive. For now, gold membership appears to be working in their favor from a financial standpoint. They obviously feel the customers they're losing to free services do not outweigh the membership fees they're collecting.

Yup.

I think the sentiment that Live should be free now because PSN is going to have all the same features "eventually" is kind of strange. Maybe that is a discussion that should be had when the services actually do reach parity. Until then, you are paying a premium for a better service. That's not an outrageous concept. And it's a very mild premium, too. I bought a card that could be redeemed for 13 months of service (Standard 12 + 1 bonus month) from Amazon for $44.99 with free shipping. That's $3.50 a month.

Another aspect of this is that free Live sets a precedent. Not only will they cut off the revenues they are receiving for it today, but once people can get it for free MS wil be hard-pressed to convinve people to ever pay for it again. That's not a trivial comiitment to make from a business standpoint. It's possible they are waiting until the point that their revenues from the various Live marketplaces are high enough that the subscription fees become less important relative to getting more people to "Jump In".

 

[Johnny Awesome]

As I've been stating recently. MS doesn't care about anyone that isn't willing to pay. There's no point in taking over the living room if you can't make any money off it.

 

[AlNom]

Is there any way of measuring how many people haven't bought their platform because of online play costs though? Perhaps the strongest USP of XB360 is the online experience, but the associated cost may be more of a deterrent than the features are an attraction.

Start the tally with me as the first. I play online very rarely, and it's mostly an inconvenience to hook it up to the internet. Either I buy a $70+ wireless adapter or I buy an extremely long and nasty cable to run through the house. I suppose I could bridge the internet with my laptop, but the NAT settings aren't good for online gaming.

Not that I'm strapped for cash, but fundamentally it seems wrong to me to have to pay to play online (say that really fast ) when it's free on other platforms (obviously not counting typical MMOs). Nevermind the perks of the service, they couldn't get away with it with Windows Live. Online play is a basic capability. Why should they get away with it on console?

BTW If multiple people have accounts on a box, how does Live! subscription work? Is it one payment per piece of hardware, or for different accounts? I presume it's a single price per box.

The Gold subscription is attached to the gamer profile/windows live ID account instead of the console. If you want to play splitscreen online, the other players must sign in as guests of the Gold Member p).

 

[Scott_Arm]

As I've been stating recently. MS doesn't care about anyone that isn't willing to pay. There's no point in taking over the living room if you can't make any money off it.

I don't think that's really true. If someone else is offering the service for "free", then no one is going to pay for theirs. They either continue charging for their service and make sure they have desirable features over the competition, or they make the basic services free and find other ways to make money. I'm sure Microsoft has strategies for either scenario. Right now, the "loss" of customers to free services doesn't seem to bother them. A year from now, if gold subscription starts to slow, or drop, maybe we'll see a change. Either way, the price and feature sets of the gold and silver memberships are not set in stone.

 

[zed]

i find the wii numbers surprisingly low, NPD +japan == 800k a month, yet nintendo say theyre making 1.8million, where are they all going? sure a lots going to europe but surely not more than the US+japan combined

practer agrees with me here

"Since April 2007, Nintendo has manufactured 1.8 million Wiis per month, implying that U.S. share should be somewhere between 720,000 - 900,000 units per month"

http://www.gamasutra.com/php-bin/news_index.php?story=18233

he's predicting 700k this time, i believe if the wii doesnt do 600k this time then somethings screwy

 

[mrcorbo]

i find the wii numbers surprisingly low, NPD +japan == 800k a month, yet nintendo say theyre making 1.8million, where are they all going? sure a lots going to europe but surely not more than the US+japan combined

I was listening to a podcast today (might have been Game Theory) that theorized that, in fact, Europe may be getting a larger share of Wii shipments simply because of the greater value of the Euro vs. the Dollar. It does make sense, in that context.

 

[StefanS]

practer agrees with me here

"Since April 2007, Nintendo has manufactured 1.8 million Wiis per month, implying that U.S. share should be somewhere between 720,000 - 900,000 units per month"

http://www.gamasutra.com/php-bin/news_index.php?story=18233

he's predicting 700k this time, i believe if the wii doesnt do 600k this time then somethings screwy

There's a difference between monthly sales and monthly production. While the former fluctuate a lot (e.g. Christmas sales), the latter do not. If you look Nintendo's numbers for the last year you will find that they've sold on average 1.8 million units per month worldwide in the last year...

 

[Cheezdoodles]

Is there any way of measuring how many people haven't bought their platform because of online play costs though? Perhaps the strongest USP of XB360 is the online experience, but the associated cost may be more of a deterrent than the features are an attraction. I've no idea what the impact is on sales

Yeah, just get somebody ask a population of 10,000 people that demographically make up the same population segment that buy consoles a couple of questions and you should be able to get very good esitmates.

 

[Shifty Geezer]

Short of paying for a MORI poll, I meant

 

[Cheezdoodles]

Short of paying for a MORI poll, I meant

With enough data, you could apply microeconomics and regression, and as long as MS would have changed their price of XBL once or twice, we could get something meaningful.

 

[eastmen]

Start the tally with me as the first. I play online very rarely, and it's mostly an inconvenience to hook it up to the internet. Either I buy a $70+ wireless adapter or I buy an extremely long and nasty cable to run through the house. I suppose I could bridge the internet with my laptop, but the NAT settings aren't good for online gaming.

you can buy a $20 wireless bridge and have it work you know.

 

[dobwal]

I think the part of the console market where cost of Live is a real barrier and pushes those people to purchase PS3es is relatively small.

For the hardcore crowd thats really into online gaming you have a bunch of people who are willing to pay a premium for upper tiered broadband packages so their connections are blazing fast. Paying 4 dollars a month isn't a big impediment especially when you willing to 5X-10X more a month for those upper tiered broadband packages. The more likely you are hardcore online gamer the less likely 4 dollars a month for Live becomes an issue.

Its like ordering a double pound quadruple cheese bacon burger and a bucket of chili cheese frito pie curly fries and then getting upset because Colonel Jack in the MC-Fatso Burger Bell doesn't offer diet drinks. Whats an extra 100 calories when you are about to indulge in a 4000 calorie main course.

For the casual crowd where 4 dollars a month can be a big issue, you have a large chunk of this crowd where online gaming isn't really important, thus the cost of Live really has no impact on their console choice.

I don't have the DVR feature through my cable company because I don't want to pay an extra $5-$10 a month for the DVR box. However, tivoing hasn't never been a desirable must have feature for me. I watch whats ever on at the time and I am not a big enough fan of any show to want access to any missed episodes. So while DVR cost too much for me to indulge with my current cable provider, I am not encouraged enough by DVR features to find a new cable provider, which offers free DVR or at reduced cost because the DVR feature itself has little value to me.

Where you have millions of people willing to pay $15 dollars a month for one game to have access to their favorite MMO, its hard to believe there exist a large marketshare of gamers where paying $4 dollars a month, to have online access to any 360 games that offer online gaming, is too much.

 

[zed]

There's a difference between monthly sales and monthly production. While the former fluctuate a lot (e.g. Christmas sales), the latter do not. If you look Nintendo's numbers for the last year you will find that they've sold on average 1.8 million units per month worldwide in the last year...

whilst thats true, im not 100% in agreement if its the case here, for the last 6months (sep->feb ie including the stellar months of nov+dec ) the wii has averaged a bit less than a million a month in japan + the US combined. wheres the other 800k going? (btw i just read the wii launched last week in south korea)

the 1.8million per month figure is quite old, i assume they're producing more than that now, at least they should be if nintendo is smart + they cant satisfy demand.

theres a few scenarios
A/ the wii isnt selling as well as most ppl believe
B/ PAL is the largest market for game consoles at the moment by quite a big margin
C/ theyre producing less than 1.8m per month

like i say march NPD needs to be at least 600k for wii ( which still will mean a total with japan == 850k for the month, but even with 600k NPD+japan together equals <50% of expected monthly sales)

 

[StefanS]

whilst thats true, im not 100% in agreement if its the case here, for the last 6months (sep->feb ie including the stellar months of nov+dec ) the wii has averaged a bit less than a million a month in japan + the US combined. wheres the other 800k going? (btw i just read the wii launched last week in south korea)

the 1.8million per month figure is quite old, i assume they're producing more than that now, at least they should be if nintendo is smart + they cant satisfy demand.

theres a few scenarios
A/ the wii isnt selling as well as most ppl believe
B/ PAL is the largest market for game consoles at the moment by quite a big margin
C/ theyre producing less than 1.8m per month

like i say march NPD needs to be at least 600k for wii ( which still will mean a total with japan == 850k for the month, but even with 600k NPD+japan together equals <50% of expected monthly sales)

The 1.8 million number still their current output. A Nintendo spokesman said in a recent interview that it would remain unchanged until March 31st, i.e. the end of their fiscal year. At point in time they would reevaluate their output and might increase it.

As for the 1.8 million units per months, let me clarify that: Nintendo's own numbers from their quarterly reports shows that they've sold 1.8 million units per month on average from Jan 07 to Dec 31st 2007 worldwide. They've listed the regions "The Americas", "Japan" and "Other".
You can check it yourself, their quarterly reports are freely available on their HP.

Comparing a single month like for instance March is entirely useless, because during slower months the gap between their monthly sales and the average montly sales will be quite wide. The contrary is true of the high sales period during the christmas quarter, when their monthly sales will be much higher than their monthly average.

 

[one]

For the casual crowd where 4 dollars a month can be a big issue, you have a large chunk of this crowd where online gaming isn't really important, thus the cost of Live really has no impact on their console choice.

How did you conclude that casual crowd don't care about online gaming? WoW is a social online game casual crowd are interested in. In a country like China or Korea, online gaming is the only genre that matters unless it's on DS/PSP/Wii.

Though I don't expect there are many PS3 buyers who are informed that PSN is free and decide to buy a console primarily based on that information, third-parties care. 4 dollars a month is $50 a year, or one game a year. There's a limit of disposable income regardless of what people want to buy and how they are bad at calculating their budget. For hardcore gamers with a very high tie ratio it's less clear, but casual gamers are more likely to notice it. So this goes back to a classic problem that Xbox 1 faced, can hardcore gamers sustain a console platform?

The 1.8million per month figure is quite old, i assume they're producing more than that now, at least they should be if nintendo is smart + they cant satisfy demand.

theres a few scenarios
A/ the wii isnt selling as well as most ppl believe
B/ PAL is the largest market for game consoles at the moment by quite a big margin
C/ theyre producing less than 1.8m per month

IMO Nintendo is stacking up Wii for the Wii Fit launch, it's hard to relate the current sales to the production figures.

 

[zed]

As for the 1.8 million units per months, let me clarify that: Nintendo's own numbers from their quarterly reports shows that they've sold 1.8 million units per month on average from Jan 07 to Dec 31st 2007 worldwide. They've listed the regions "The Americas", "Japan" and "Other".
You can check it yourself, their quarterly reports are freely available on their HP.

ill take your word for it (i could only find the total for the first 6months of the fiscal year ie mar-sep2007 which averaged 1million a month total for US/japan+europe, thus to make 1.8 over the next 6months theyld have to sell at nearly 3x the rate of the first 6 months)

but dont dispair all will be revealed
i did find they will release their data at the 24th of april ie just over a week