Playstation 5 [PS5] [Release November 12 2020]

[Johnny Awesome]

Er right. We weren't talking just about current Playstation owners switching though. Plus not all console gamers are loyalists. Hence why the XBOX is struggling to retain it's old userbase. XBOX is a testament of how people are abandoning a platform or not joining a platform when it's games are available elsewhere. Likewise someone who didn't buy a PS5 yet isn't necessarily tied to the platform. They play on whatever is convenient. Especially casuals and pretty much everyone owns a PC. Its only just a tiny step to play on that which they already own.

We'll have to agree to disagree on this one, but I believe that for the most part console gamers are console gamers and PC gamers are PC gamers. Xbox had 57 million sold last gen and they have 25 million sold after 3 years this gen and are going to get pretty close to 57 million sold by year 7, which is basically the same as last time. They might come up a little short at 50 million or so, but I don't think it has anything to do with Xbox gamers fleeing to PC. The console market isn't growing. It might even be shrinking.

 

[iroboto]

The essential question is whether or not the hardware platform a gamer adopts follows the games or if other factors are more important.

We were more discussing why MS and Sony are making the moves that they are. I think Nesh and I are somewhat aligned that something is happening, I personally think they arrived to similar conclusions as to the writing on the wall about where console growth is negative trajectory and they are looking to expand the user base outside of what they have, Nesh I think believes that bean counters are ruining Sony.

So where we are in agreement that both are them are taking actions, we are in disagreement as to why, there is clearly some cannibalization happening at the expense of the hardware, but if the growth is very positive elsewhere, than this is fine. The reason I disagree with his theory is that all companies, will optimize towards growth and stability, and the fact that they are moving away from a tried tested and true path that has lead them to complete leadership dominance since their inception is now being shifted away from is a sign that the formula no longer works.

This is no different than when MS aborted Windows to move towards Cloud. They were on their way to death with Windows back in 2015, Balmer lead them down the path that investors felt was the end of MS. Satya rebuilt the entire company around subscriptions and cloud, and now they are richest company in the world. So these changes are dramatic for a company to do, so imo Sony is taking the moves to secure the next generation of gaming now, before it gets too late and they don't have the funds to pivot.

 

[Scott_Arm]

@iroboto There are likely a lot of things at play. The EU is basically forcing cellphones to allow sideloading and alternate stores, so the closed systems are falling. If that happens with consoles, the console makers will no longer be able to sell their hardware at break-even pricing (or even a small loss). Sony could be preparing for stagnant growth, or even contraction, in the console space. They could be building some safety into their plans in case something happens like the EU forcing them to allow alternative storefronts on their consoles. I'm sure they've also realized they hit a wall on game pricing. If they raise prices another $10 it will likely be very poorly received, so it's easier to expand into PC to generate more revenue without pissing off their customers. It's nice to say they should just lower their game budgets, but their customers expect a certain high-bar AAA experience that will never be cheap to make.

Overall, I'm in agreement with the people saying Sony understand the market better than we do. They likely have data and we don't. Not that companies can't make bad decisions, but the decision to expand to PC was likely not done on a whim.

 

[Nesh]

We'll have to agree to disagree on this one, but I believe that for the most part console gamers are console gamers and PC gamers are PC gamers. Xbox had 57 million sold last gen and they have 25 million sold after 3 years this gen and are going to get pretty close to 57 million sold by year 7, which is basically the same as last time. They might come up a little short at 50 million or so, but I don't think it has anything to do with Xbox gamers fleeing to PC. The console market isn't growing. It might even be shrinking.

Growth of sales for XBOX Series are diminishing and is now selling at lower rates than XBOX One during the same period of its lifespan, while the Series X is significantly a much better product than One and while it simultaneously sells a version that is significantly cheaper. It should have been outselling One and competing Switch with S. It fails in both.

PS5 is also expected to have diminishing sales and might barely reach PS4 sales

Meanwhile Switch is now second only to PS2 in sales.

All these numbers show more people exiting and less entering PS and XBOX compared to past generations whereas Nintendo kept the interest high.

All historical data show that people can switch platforms or lose interest.

 

[metacore]

https://x.com/jasonschreier/status/1762503092593999913?s=20


Another one "Live service" crashed and burned. You have to wonder how those executives didn't realize that Fortnite and other successes is once lightning in a bottle type story. Even if you have idea perfectly leaning into such stuff , other half of it becoming "live" success depends on if it somehow become a meme which you cant reliably force or market. . Very risky stuff, lets sink half of our studios in that even if they don't have any experience with that.

 

[iroboto]

@iroboto There are likely a lot of things at play. The EU is basically forcing cellphones to allow sideloading and alternate stores, so the closed systems are falling. If that happens with consoles, the console makers will no longer be able to sell their hardware at break-even pricing (or even a small loss). Sony could be preparing for stagnant growth, or even contraction, in the console space. They could be building some safety into their plans in case something happens like the EU forcing them to allow alternative storefronts on their consoles. I'm sure they've also realized they hit a wall on game pricing. If they raise prices another $10 it will likely be very poorly received, so it's easier to expand into PC to generate more revenue without pissing off their customers. It's nice to say they should just lower their game budgets, but their customers expect a certain high-bar AAA experience that will never be cheap to make.

Overall, I'm in agreement with the people saying Sony understand the market better than we do. They likely have data and we don't. Not that companies can't make bad decisions, but the decision to expand to PC was likely not done on a whim.

great summary. Feels like we are almost at the point of being able to come together to draft a SWOT analysis. You touched on a lot great other potential threats to their business.

 

[Johnny Awesome]

Growth of sales for XBOX Series are diminishing and is now selling at lower rates than XBOX One during the same period of its lifespan,

Not by much though. There's likely a better tail due to GamePass and all the acquired studios starting to put games out. We'll see, but I think they'll have 50+ million users by 2027.

while the Series X is significantly a much better product than One and while it simultaneously sells a version that is significantly cheaper. It should have been outselling One and competing Switch with S. It fails in both.

$100 cheaper isn't that much cheaper really. Especially after prices of most other goods rose 25% in the last 3 years.

PS5 is also expected to have diminishing sales and might barely reach PS4 sales

Meanwhile Switch is now second only to PS2 in sales.

All these numbers show more people exiting and less entering PS and XBOX compared to past generations whereas Nintendo kept the interest high.

All historical data show that people can switch platforms or lose interest.

All the more reason to publish on more platforms.

 

[Globalisateur]

Growth of sales for XBOX Series are diminishing and is now selling at lower rates than XBOX One during the same period of its lifespan, while the Series X is significantly a much better product than One and while it simultaneously sells a version that is significantly cheaper. It should have been outselling One and competing Switch with S. It fails in both.

PS5 is also expected to have diminishing sales and might barely reach PS4 sales

Meanwhile Switch is now second only to PS2 in sales.

All these numbers show more people exiting and less entering PS and XBOX compared to past generations whereas Nintendo kept the interest high.

All historical data show that people can switch platforms or lose interest.

Currently the price of PS5 in EU and Japan is way too high. Still 550€ in Europe (twice the price of a Switch) and in Japan it's often sold 75k yens, twice more of Switch OLED. Used price on Amazon Japan starts at 64k yens (twice the price of a OG Switch)! This is ridiculous and it is selling very well at that price as it's currently 2nd or 3rd rank thanks to FF7 Rebirth.

Sales of PS5s in US are actually outpacing PS4 because of a more favorable price.

 

[Nesh]

Not by much though. There's likely a better tail due to GamePass and all the acquired studios starting to put games out. We'll see, but I think they'll have 50+ million users by 2027.

Still doing worse than One, not better. Why do you think is that?

$100 cheaper isn't that much cheaper really. Especially after prices of most other goods rose 25% in the last 3 years.

What do you mean $100 cheaper? Series S is sold at $300. Thats the same price as the Switch and cheaper than the OLED Switch. Switch is a much older and weaker product.
Whats so special about Switch compared to Series S? Games you can't play anywhere else

All the more reason to publish on more platforms.

See all other points

 

[Nesh]

Currently the price of PS5 in EU and Japan is way too high. Still 550€ in Europe (twice the price of a Switch) and in Japan it's often sold 75k yens, twice more of Switch OLED. Used price on Amazon Japan starts at 64k yens (twice the price of a OG Switch)! This is ridiculous and it is selling very well at that price as it's currently 2nd or 3rd rank thanks to FF7 Rebirth.

Sales of PS5s in US is actually outpacing PS4 because of a more favorable price.

If thats any indication, it appears that Sony is saturating the sales of the current price point. This is probably the only generation where Sony had not reduced at all the price of the console after 3+ years and even increased it in some territories.
I believe the improved affordability of the PS1 and PS2 during their lifespan, established these consoles as a popular and common household entertainment device.
It seems impossible now. Probably Sony's biggest problem is the imploding manufacturing costs

 

[wco81]

Have they had a die shrink?

After 3 years, that should offer some relief on costs?

SSD, RAM?

 

[metacore]

Briefly looking at headlines

Density scaling of 5nm process compared to 7nm is 1.8x
Wafer price was 10000$ for compared to 16000$ for 5nm

and before that there is few hundred milion dollars to port and tapeout chip, because nothing between big nodes is simple optical shrink anymore.

¯\_(ツ)_/¯


Then there are news like this

TSMC's average wafer price jumped 22% in one year — nearly all semiconductor industry growth now comes from more expensive products, not higher production volumes

Shipments of 3nm wafers account for 15% of the company's revenues.

www.tomshardware.com

I think in case of DRAM scaling down is currently even slower.

 

[Johnny Awesome]

Still doing worse than One, not better. Why do you think is that?

The Xbox brand was stronger when the One launched.

What do you mean $100 cheaper? Series S is sold at $300.

Yes. The One was $400 after they dropped Kinect.

Thats the same price as the Switch and cheaper than the OLED Switch. Switch is a much older and weaker product.
Whats so special about Switch compared to Series S? Games you can't play anywhere else

Nintendo portable. None has ever failed.

 

[Johnny Awesome]

There are almost no meaningful cost reductions going to 5nm, like MS predicted.

Also, the PS5 Slim is more like a PS5 Fat instead of the Morbidly Obese original.

 

[Nesh]

The Xbox brand was stronger when the One launched.

You aren't answering to the point. You are diverting.

Yes. The One was $400 after they dropped Kinect.

I am talking about Series and you are ignoring it.

Nintendo portable. None has ever failed.

If that was the case, Vita would have been selling by the droves. Switch still functions like a console and provides the console gaming experience.

 

[eastmen]

There are almost no meaningful cost reductions going to 5nm, like MS predicted.

Also, the PS5 Slim is more like a PS5 Fat instead of the Morbidly Obese original.

the problem is relying on die shrinks vs relying on new generations of cpu/gpu. The newer zens offer much better performance over zen 2. Of course rdna 2-3 isn't much of a difference.

 

[Seanspeed]

I think people forget that there's a lot more cost cuttings switching to a smaller node than just the die costs. These are all things you can take advantage of with a major node change and revision:

- Smaller/cheaper power supply
- Smaller/cheaper fans
- Smaller/cheaper heatsink
- Smaller motherboard with less components
- Smaller overall form factor with less material cost
- Smaller overall product package that also helps reduce distribution and warehousing costs

It can also be an opportunity to simplify the SSD setup now that prices on that have come way down since 2020 and they dont need any custom 12 channel controller or anything anymore to hit desired performance.

Lastly, there's a lot of consumers who would appreciate a smaller PS5, and new hardware is always a nice marketing boost.

Overall, I think a 5nm shrink makes a lot of sense in the big picture, and I'm pretty confident we'll see it in time.

 

[metacore]

I think people forget that there's a lot more cost cuttings switching to a smaller node than just the die costs. These are all things you can take advantage of with a major node change and revision:

- Smaller/cheaper power supply
- Smaller/cheaper fans
- Smaller/cheaper heatsink
- Smaller motherboard with less components
- Smaller overall form factor with less material cost
- Smaller overall product package that also helps reduce distribution and warehousing costs

It can also be an opportunity to simplify the SSD setup now that prices on that have come way down since 2020 and they dont need any custom 12 channel controller or anything anymore to hit desired performance.

Lastly, there's a lot of consumers who would appreciate a smaller PS5, and new hardware is always a nice marketing boost.

Overall, I think a 5nm shrink makes a lot of sense in the big picture, and I'm pretty confident we'll see it in time.

Yes, historically console manufactures had heavenly leaned on that compounded cost reductions, quickly jumping on new node.
Last time in 2016 with ps4 slim and pro, Sony jumped on 16nm FINfet almost at the same time as nvidia /amd. How it is now? 5nm is available since later 2020. Yes i get it, nowadays initial year capacity is reserved for Apple, then other mobile vendors. AMD is producing high powered 5nm chips since the beginning of 2022 and consoles moving there are still nowhere in sight.

This time around this huge holdup, which you could say is almost shaking entire hardware business plan may only be explained by price gouging from last man standing competent fab - TSMC.

 

[Johnny Awesome]

You aren't answering to the point. You are diverting.

You were confused by my post and I was clarifying, not diverting.

I am talking about Series and you are ignoring it.

So am I. The S is $299 which is only $100 lower than the prevailing price point last gen.

If that was the case, Vita would have been selling by the droves. Switch still functions like a console and provides the console gaming experience.

I said "Nintendo" portables have never failed.

 

[Johnny Awesome]

I think people forget that there's a lot more cost cuttings switching to a smaller node than just the die costs. These are all things you can take advantage of with a major node change and revision:

- Smaller/cheaper power supply
- Smaller/cheaper fans
- Smaller/cheaper heatsink
- Smaller motherboard with less components
- Smaller overall form factor with less material cost
- Smaller overall product package that also helps reduce distribution and warehousing costs

The problem is that all that stuff is only $50, not $200 like it used to be, hence the word "meaningful". No doubt Sony will do it to save $75 (including the node shrink), but it's not going to change the landscape much.