All purpose sales and sales rumors/anecdotes thread next gen+

Discussion in 'Console Industry' started by Rangers, Dec 6, 2013.

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  1. Arwin

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    I actually disagree about the predictions. Most people did in fact predict that Microsoft would take November, between the price drop and Halo:MCC. December will be interestimg, they can take that too, but it will probably be closer at the very least and it will hurt hard if they don't.
     
  2. AlphaWolf

    AlphaWolf Specious Misanthrope
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    It only hurts if they don't sell well, not being first isn't as big a deal as most forum warriors like to think.
     
  3. eastmen

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    Yup even if the xbox one sells the same in the end as the xbox 360 maybe even less it will still most likely make more money. There is no RROD which was what a Billion dollar write off ? The console wasn't sold at a loss from the start of the generation and they have a bunch more first party titles that sell millions of copies.

    For sony even if they only sell what the ps3 did , they will have bypassed the crazy losses per unit they faced last generation for the first 2-3 years of its life.

    For both companies it seems like remastered last gen games are big sellers and they should be cheap and easy to make bringing in even more profits.
     
  4. ArcticCircle

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    Anything can happen and predictions can be wrong but US lead in gen 7 for Xbox is so massive that I think more casual and price sensitive customers might choose Xbox in this gen again. Sony was in good position when there was internal battle inside MS about the Xbox and should it exist at all (or at least make nice profit from the start). Ballmer is out and so is Don Mattrick. And Kinect too.

    I personally don't think Sony should cut prices because they have such nice lead in rest of the world. And Sony could use all the profits they can get to cover TV and Mobile sector losses. MS don't have that problem. They can spend billions for various projects that may or may not be profitable in the end.

    But in the end you're right. MS could make bizzare move like drop Xbox support if they don't reach some internal sales goal or they can revert price back up where it was before the holiday sales. I think Sony would start a party if that happens :D
     
  5. DSoup

    DSoup meh
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    This is true. But Microsoft had a far grander plan for Xbox One when they designed it. The whole plan, how it was 'sold' to internal management before it was greenlit, was based on a bunch of factors that didn't pan out. Revenue streams that didn't pan out. If they were willing to invest $400m in their five year NFL deal, the anticipated return must have been considerably larger. But this seems to have fallen by the wayside. On side of revenue/profit Microsoft never planned to sell an Xbox One without Kinect. Probably because the perceived value of Kinect is $100-125 whereas the BOM was estimated at around $75 at launch - with a few people in this forum believed that was high, making the profitability of the Kinect 2 hardware sale (even as part of the console package) massively high. It was $25-50 clear profit, possibly more.

    A single console sale doesn't usually equate to profit (on a per customer basis) until the customer has bought x number of full prices games (or equivalent spending on PSN/Live, movie rentals etc). The attach rate of games and services. Microsoft's great deal of selling Xbox One cheap with several cool games has likely deferred the real profit turnaround on many of those particular sales to some point far in the future. Not all but those were great games and not everybody buys lots of games - I reckon I average 20 full priced games per year.

    Businesses don't look things like you and I do. They look at the original plan, the revenue predictions and the reality. We have no idea how much pressure Phil Spencer is under. We have no idea how he managed to fund his two-month US sale of the decade. Has he just blown a significant amount of his budget for some good PR?

    The goal isn't about maximum console sell-through, it's about the bottom line. Revenue and profit. Part of that equation is growing the customer base but it's not everything. Look at Apple, who have about 25% of the global smartphone market share but have over 70% of the profits because their customer spend, spend, spend.

    When Sony say they are happy with PlayStation 4 it's easy to believe because they're delivering on their vision (apart from the fucking sleep mode - still MIA!) and selling more than they expected to.
     
    #4785 DSoup, Dec 14, 2014
    Last edited: Dec 14, 2014
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  6. Dave Baumann

    Dave Baumann Gamerscore Wh...
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    "The management" you refer to was the old management, a sea change has recently occurred as MS and the new management has stayed the course fully in light of the current market situation; arguably moves made since the new management have been put in place indicate they are perfectly willing to get aggressive (Tomb Rider, pricing etc.).
     
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  7. DSoup

    DSoup meh
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    Microsoft's entire management structure hasn't changed, nor has their board of directors. It's not as though the senior management and board are unaware of the change in strategy regarding Xbox, nor does this being necessary mean it's any more palatable. I can certainly see Phil Spencer believing an aggressive spend to drive interest but what I'm more curious about is Xbox Division's standing within Microsoft.

    ArcticCircle speculated/claimed "Now that "should Xbox stay or go" tug-of-war in MS is over, warchest is open" but I disagree this is a sign that Microsoft are throwing money at Xbox's lower marketshare. All you can say is somebody has spent a lot of money clambering for market share. Whether that's Microsoft or Xbox Division is the question.
     
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  8. eastmen

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    I read your previous post but this is alot less to quote.

    One of the majory complaints from investors is the lack of performance in the xbox group. The xbox one can still bring in alot of profit for the company even in its current form. That is the most important thing when considering if MS will continue with the next xbox.

    People assume the war chest is open at MS but I don't believe so. I have a source I trust telling me that they are breaking even at the $350 price point. Which means only limited sales during nov at the $330 price point would loose them money and depending on the deal for the pack in games.
     
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  9. zupallinere

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    If it serves some sort nationalistic symmetry I guess there is some sort of logic to your feelings but quite honestly if you are a consumer of console video games it would be kind of a bummer. First you end up with some sort of duopoly where geography allows for a monopolistic mindset and seeing how that works out for US broadband I wouldn't wish that on any consumer. Secondly having the company with the most resources being the hungrier of the 2 would seem to be a good thing for more competitive market. Meritocratic issues aside if you were to 'game' who should be 1st and 2nd this generation seems to be quite useful in that respect.

    If MS would be, say behind everywhere but hardly out of the game, then it will likely force them to shake off some of their profits and/or add some value to their product far earlier than they would otherwise do ( so far so good in that respect). Sony as a company is going through it's own changes and being number one along with maybe some pricing power ( as in sticking 399 out for a bit ) might allow for more resources to be funneled the Playstation's way. Now personally I would love to see a PS4 price cut or some more useful bundles but if a couple of extra quarters where the PS arm of the company increases market share and keeps margins about where they are that would be quite beneficial at this point in the company I would think at least for now. Anything that allows PSN the resources needed to stay up more frequently under load would be a good thing as well ;-)

    Forward going anything that pushes both companies to press on with the next generation either introducing it earlier or being a bit more innovative or both would also be in every console consumers interest IMHO. VR stuff and innovations in memory management/"compute" being the big innovations assuming neither of them go the ARM route next time.
     
    #4789 zupallinere, Dec 14, 2014
    Last edited: Dec 14, 2014
  10. DSoup

    DSoup meh
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    Xbox certainly brings in revenue but it's the profit margin that interests many (myself included) and which even after 15 years of operation, remains clouded in mystery. Microsoft talk sales and occasionally revenue but never profit.

    If you look at their FY 2013 report the entire Entertainment and Devices Division (EDD) has a annual revenue of $10Bn and an operating income (the estimate of how much becomes profit, pre-tax) of £948m. EDD covers (quoting the report) "Xbox entertainment platform (which includes the Xbox 360 gaming and entertainment console, Kinect for Xbox 360, Xbox 360 video games, Xbox LIVE, and Xbox 360 accessories), Skype, and Windows Phone, including related patent licensing revenue (this is Android licensing)"

    I don't know what profitability the non-Xbox stuff comprises but I bet the patent licensing to Android vendors is a fair chunk of change, but this (< $1Bn) does not seem a lot of profit for a whole year. If anybody can make sense of the 2014 report, please post interpret and post. It's complicated by a re-organisation, Surface stock write downs and the Nokia acquisition.

    Is that hardware only or with the bundled games included? I'm curious about the economics of bundling games, i.e. how much of the usual publisher/developer cut (on a retail/digital game sale) do Microsoft and Sony pay the publisher for bundling in? I'm not asking you. Unless you happen to know ;)

    edit: grammar.
     
    #4790 DSoup, Dec 14, 2014
    Last edited: Dec 14, 2014
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  11. Dominik D

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    "A glimpse was revealed when Microsoft said in a legal filing that Samsung, the biggest Android phonemaker in the world, paid the software maker more than $1 billion a year to use its technology in Samsung phones."
    http://qz.com/276242/microsoft-make...n-from-skype-windows-phone-and-xbox-combined/

    AFAIR Skype was never profitable (even before acquisition) but Skype probably doesn't cost that much to operate (relative to other things). Windows Phone probably has some ability to hide development costs as part of Windows R&D. Weird Surface is not on that list. If it's part of EDD, that's probably a huge money drain.
     
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  12. AlphaWolf

    AlphaWolf Specious Misanthrope
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    None of those comparisons are that useful without knowing how much each product made or lost. Did windows phone make money? Not likely.
     
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  13. east of eastside

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    Apples to oranges, Sony has a console business model currently keeping the business afloat and Xbox is part of a bigger plan and integrated vision for Microsoft. Focusing on Xbox division profitability as a concern is just not getting Microsoft's long-term strategy.
     
  14. DSoup

    DSoup meh
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    This is patently nonsense. Looking at Sony's Q1 2014 (quarter ending 30 June 2014) you see the following profit (loss):

    Mobile Communications (MC) - ($2.2m)
    Game & Network Services (G&NS) - $4.3m
    Imaging Products & Solutions (IP&S) - $17.4m
    Home Entertainment & Sound (HE&S) - $7.7m
    Devices - $12.5m
    Pictures - $7.8m
    Music - $11.4m
    Financial Services - $43.8m
    All Other - ($18.4m)
    Ignoring the losses, PlayStation is Sony's least profitable business. For now. But they're expecting it to reach PlayStation 2 heights.
     
  15. Dave Baumann

    Dave Baumann Gamerscore Wh...
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  16. DSoup

    DSoup meh
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    Yup and probably more to come until Sony realise that mobile isn't worth chasing given the current market conditions. But the misconception I'm disproving is that PlayStation is keeping Sony afloat, whereas infact it's way down there just hanging in above the loss making divisions.
     
  17. Dave Baumann

    Dave Baumann Gamerscore Wh...
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    Yes the management structure has changed since the XBOX One launched, they re-orged the entire business and put new or different management into the new divisions. They then subsequently changed the CEO and the CEO has to have board buy-in to a plan, so if Nadella believes in the current plan that the team has brought to him and accepted it, so too has the board. For sure, its a group of people with different opinions and objectives, but they have consensus on the plan as it stands.
     
  18. Dave Baumann

    Dave Baumann Gamerscore Wh...
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    I think the reference comes from more recent reports like this: http://www.engadget.com/2014/12/09/sony-leaning-on-playstation/
     
  19. dobwal

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    Hard to know how much MS profits from its ancillary businesses. But MS tends to avoid or dump "me too strategies" when those strategies tend to be lossy. MS controls a lot of its phone business from top to bottom as they control most of the hardware and app store. Unlike most android manufacturers, they aren't dependent solely on revenue generated from the sale of the hardware.

    http://www.ubergizmo.com/2014/02/windows-phone-store-revenue-almost-on-par-with-android/

    According to this link WP app revenue is not far behind what Google pulls from android (1.2 billion vs 0.95 billion).

    Surface pro is selling well and not by trying undercut the iPad with price. And here too, they can count on contribution from their app store sales unlike most android tab manufacturers.

    Their strategies usually employ a hybrid approach allowing flexibility. RT versus Pro. Third party phone hardware licensing their OS versus Lumina. Poor RT sales and low adoption of their OS by third party manufacturer haven't killed their businesses.

    MS tends to be sensitive about profit and readily find ways to monetize their hardware.
     
    #4799 dobwal, Dec 14, 2014
    Last edited: Dec 14, 2014
  20. DSoup

    DSoup meh
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    For the future, I can see that. Gaming consoles is one of the few markets which Sony a) understands, b) can compete, and c) has growth potential. If you look at back at Sony's financials during the PlayStation 2 years it was providing them over $40m in profit annually and that was a much smaller market than existed last generation - both in terms of consoles sold and revenue taken. I believe gaming overtook Hollywood some years ago which is also good news given Sony's movie studio performance :)
     
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