Alternative distribution to optical disks : SSD, cards, and download*

[Shifty Geezer]

You don't know the profit margins on those devices. Sometimes stores sell some products at negligible profit to help move other more profitable items. And sometimes they dump stock at cost/loss. We need cost prices, not retail prices. Furthermore, even if right about the price that's additional cost, as we keep saying. If games cost $12-15 more to account for the more expensive medium, it'd work well, but will consumers be willing to pay that? Plus you only save the optical drive. The HDD (or onboard flash) is necessary for OS and downloads and patches and whatnot. So you save an optical drive at $30 ($35 retail price) and add a minimum extra $10 to every game.

 

[Lalaland]

Yeah comparing retail costs to cost of production is not a useful exercise. The same pressures that mean consumers benefit more from physical media than the all digital future apply here. Clearance sales, excess inventory, etc. More to the point who needs flash media for s/w distribution, the 5-10 wait for an install is a fair trade for the $5-10 cost of flash. In an era when inflation has eroded the real margins on console software thanks to fixed $60-70 price point those costs are getting passed straight on to us.

Discussing SSD endurance with an OEM partner raised a good point yesterday. Their sweet spot for drive endurance w/128Gb modules is 512GB (ie the point at which wear due to writes and defective chips are equally low) you can see this in the write endurance specs. Drives below that have a lower endurance and drives w/greater capacity are not rated any higher. In 2-3 years when 256Gb or 512Gb chips are the standard you'd need to spec a 1-2TB SSD for optimal service cost. I believe this to be a highly unlikely scenario.

 

[MrFox]

The PS4 still requires an expensive optical solution at $30-$40

Bluray drive cost according to iSuppli PS3/PS4 tear down:
2006 PS3: $125
2009 PS3: $66
2013 PS4: $28
2019 PS5: ????

As a reference, DVD drives also started in the hundreds in 1995, and were $19 by 2006, and today they are around $10. Optical drive generations have always been 10 years-to-peak and 20 years life span, with the price bottoming out with chinese suppliers. Obviously MS will pay more for their drive than Sony, as Sony is making their own and receives money from MS for using their technology, but it's not going to be the 30-40 you are estimating.

Future higher capacities will not bring back $125 drives on the BOM. In contrast with CD and DVD, Bluray was designed to be extensible using the same mechanism/optics/laser and only the electronics and disc pressing will have to change to reach 500GB on 3 layers. From what I read, the optical disc pressing technology have always been designed to remain below $1 with good yield and massive volume, hence the BDA decision to stay at 3 layers and ditching the 6 layers experiments from 2010.

Also listening to the latest bombcast it doesn't sound like progressive install is that great. They've talked about loading into Aliens and none of the ai working or loading into phatom pain and just running around in a non game enviorment and various other issues.

I had no such problem with any of my games, ever. All of them were playable within about 30 seconds. You are cherry picking exceptions which have nothing to do with the technology. Some third party devs fucked up. (and MS fucked up as a whole, by not mandating progressive install)

 

[eastmen]

You don't know the profit margins on those devices. Sometimes stores sell some products at negligible profit to help move other more profitable items. And sometimes they dump stock at cost/loss. We need cost prices, not retail prices. Furthermore, even if right about the price that's additional cost, as we keep saying. If games cost $12-15 more to account for the more expensive medium, it'd work well, but will consumers be willing to pay that? Plus you only save the optical drive. The HDD (or onboard flash) is necessary for OS and downloads and patches and whatnot. So you save an optical drive at $30 ($35 retail price) and add a minimum extra $10 to every game.

Retail media doesn't mater does it ? DD games cost the same at release as optical. And even at launch vita games cost $30-$40 and 3ds games cost $30-40 both on flash media .

There was a difference back when the n64 launched because you were talking about $20-$40 for a 64meg cart vs $1-2 for a 750 meg cd

At 15 cents for a gig for flash you'd look at $4.80 for 32 gigs and $9.6 for 64 gigs

Bluray drive cost according to iSuppli PS3/PS4 tear down:

And the UHD Bluray drives cost what now ? And you also have to add in the cost of the hardrive. Also DVD drives were mass produced in orders of magnitude more than Bluray drives and Bluray drives will be produced in orders of magnitude more than Bluray UHD

Your going to also have to pay for a larger system , higher cost of packaging and shipping and so on . Your also introducing two points of failure into your console the optical and hardrive. Even if your spending $18 on your optical your still spending another $30 on the hardrive. So your close to $50 on just the components. $50 at 30m means sony has spent $1.5B so far just on optical a cost which wouldn't have to exist with a flash console.

I had no such problem with any of my games, ever. All of them were playable within about 30 seconds. You are cherry picking exceptions which have nothing to do with the technology. Some third party devs fucked up. (and MS fucked up as a whole, by not mandating progressive install)

I am only posting impressions from Giant Bomb , they discussed the problems for quite a while in a recent podcast. You wouldn't need to install anything with a flash solution

 

[Shifty Geezer]

Retail media doesn't mater does it ? DD games cost the same at release as optical. And even at launch vita games cost $30-$40 and 3ds games cost $30-40 both on flash media .

That proves the point - retail price doesn't represent the costs. Certainly the cost of flash in a consumer deal doesn't represent the base cost to a console manufacturer as a wide game media, for all the points previously outlined. Retail price neither proves nor disproves the costs of flash as a distribution format.

At 15 cents for a gig for flash you'd look at $4.80 for 32 gigs and $9.6 for 64 gigs

There's your $10, excluding whatever the costs of replication are.

And you also have to add in the cost of the hardrive.

You need that with flash storage as I said.

...introducing two points of failure into your console the optical and hardrive.

HDD still required. Card reader is a point of failure, although probably more reliable that ODD. I've had a couple of card readers die on me over the years though. Only had PS2 drive die eventually, DIY repaired by greasing rails.

...your still spending another $30 on the hardrive.

HDD still needed.

So your close to $50 on just the components. $50 at 30m means sony has spent $1.5B so far just on optical a cost which wouldn't have to exist with a flash console.

Then they sell 250M games with a $30 margin instead of a $20 margin and make $6B profit instead of $3.5B. Or they sell the flash games at a higher price with same $30 margin but sell less of them.

 

[MrFox]

And the UHD Bluray drives cost what now ?

It's just a ROM version of BDXL 100GB 3-layers discs.

The UHD bluray drive is physically the same drive. There's a bit of additional DSP work for iMLSE (provides the small upgrade from 25GB to 33GB per layer) and the three layers support is just a firmware update. The drive doesn't care about the number of layers as long as it's transmissivity is fine when focussing on the deepest layer, which is a disc manufacturing question independent of the drive itself.

 

[BRiT]

I dont see why anyone is bothering to fight about physical media when on the long enough timeline the obvious winner is downloads or streaming. It's like you're fighting for second to last place.

 

[MrFox]

No idea, it must have something to do with DRM and ownership... somehow...

There must be a locked thread somewhere where you'll find out why physical media is still 80% of full game sales, and where some people correctly figured out the market while MS offered the generation to Sony on a silver platter... and Sony would have been stupid not to take it.

Or why this is about having both, where everybody get what they prefer, and is not about one winning over the other, as they add up to a total market.

 

[BRiT]

No idea, it must have something to do with DRM and ownership... somehow...

There must be a locked thread somewhere where you'll find out why physical media is still 80% of full game sales, and where some people correctly figured out the market while MS offered the generation to Sony on a silver platter... and Sony would have been stupid not to take it.

Or why this is about having both, where everybody get what they prefer, and is not about one winning over the other, as they add up to a total market.

Or maybe there are open threads about how game publishers are having less and less of their revenue coming from physical sales. It is no longer 80% of their sales. It is shrinking significantly.

Also, I did say long enough time line.

 

[MrFox]

The increased revenues are DLC, micro transactions, mobile, and PC. This keeps the AAA console game sales at 80%, according to both EA and Ubisoft earnings.

It's basic logic that as long as this 80% doesn't fall to financially neglible levels, the consoles will need some form of physical media to reach a wide market. The predictions are that it will still be 50% at the start of next gen. Does it qualify? Do you predict next gen will not have any form of physical media?

 

[BRiT]

I would not be surprised if next-gen's next-gen having no physical media. Then again I would not be surprised if there will always be physical media for the software.

I don't know about the breakdown, but from what I see all the young children are growing up with tablets, phones, and other devices that have no physical media at all for their games and music. Having a physical item is a foreign concept to them. It will depend on how that generation reacts and grows into the consumer market.

I also see more PC gamers move completely to digital without ever having physical media. If this market grows then physical media will shrink.

 

[Silent_Buddha]

The increased revenues are DLC, micro transactions, mobile, and PC. This keeps the AAA console game sales at 80%, according to both EA and Ubisoft earnings.

It's basic logic that as long as this 80% doesn't fall to financially neglible levels, the consoles will need some form of physical media to reach a wide market. The predictions are that it will still be 50% at the start of next gen. Does it qualify? Do you predict next gen will not have any form of physical media?

Not according to UBIsoft. And I doubt it applies to EA anymore either. I posted a bit on this in the sales thread.

Mobile and PC revenue isn't increasing. UBIsoft saw a 1% increase in non-console sales while digital sales increased from 27% to 48% (in other words almost entirely in the console space). For EA, consoles make up almost 70% (sometimes lower, sometimes higher) of their sales. Digital represents around 60% of their sales (sometimes 55% sometimes over 70%). For EA digital sales are going up steadily while PC and mobile sales are not.

Physical sales are a rapidly diminishing proportion of sales. It's still the majority of console sales, but it would not surprise me if for some publishers Digital moves into the dominant position within 2 years.

Regards,
SB

 

[Shifty Geezer]

Aren't some of Ubi's titles download only, like Child of Light and Rayman? It'd be important to compare revenue from download and physical of only the titles that have physical as an option to get percentage breakdown. So how much does BLOPS sell on disc versus download, etc.?

 

[Sigfried1977]

Nah, you can buy Rayman (both of them) on a disc/card for just about any system under the sun. CoL was download-only, but it still saw a simultaneous boxed release, albeit with a code in it.

 

[Silent_Buddha]

Just took a look at Activision-Blizzard. And even for them, console vs non-console is roughly the same versus the previous year. However, digital is steadily increasing versus physical sales.

Another weird trend I've noticed that I don't know how to explain. For a few years Europe was closing the gap to NA with regards to revenue generated for publishers. And for a few publishers Europe had actually generated more revenue than NA. But in the past year or two, NA has started to pull away from Europe again for almost all publishers. Granted, I've only looked at UBIsoft, EA, Activision-Blizzard, Square-Enix, and Capcom. Europe weirdly enough seems to absolutely hate Capcom.

Also tried to look at 2k games but they are a privately held company so there's little to no public financial information for them.

Regards,
SB

 

[MrFox]

November 2015
Electronic Arts
Blake Jorgensen, CFO
https://cc.talkpoint.com/ubsx001/111...ity=40_UQQX1EY

Last quarter, 20% of XB1 and PS4 full game sales were digital.
They hope this will grow to 40% in the next 4 years.

Revenues and unit sales are very different.

 

[eastmen]

That proves the point - retail price doesn't represent the costs. Certainly the cost of flash in a consumer deal doesn't represent the base cost to a console manufacturer as a wide game media, for all the points previously outlined. Retail price neither proves nor disproves the costs of flash as a distribution format.

Except for the $20 flash deals you'd have to assume amazon would take a loss on something that doesn't further their market segment. You can make a claim on something like the fire stick being $25 since that is coupled with their amazon video and music services. So its smart to get people on those platforms. But a flash stick doesn't do anything and its not even a door buster since its an online store

There's your $10, excluding whatever the costs of replication are.

Except that's after its packaged , shipped , sold , shipped again. The only thing it doesn't have is replication costs in it. But it has multiple layers of profit built in for all the companies involved. The actual cost to the company who made the flash stick would be way lower.

A company like MS or Sony would have buy tens of millions if not over a hundred million nand chips. That amount of buying power would be very attractive for a nand manufacturer and since its that quanity every year for a decade.

You need that with flash storage as I said
HDD still required. Card reader is a point of failure, although probably more reliable that ODD. I've had a couple of card readers die on me over the years though. Only had PS2 drive die eventually, DIY repaired by greasing rails.
HDD still needed.
Then they sell 250M games with a $30 margin instead of a $20 margin and make $6B profit instead of $3.5B. Or they sell the flash games at a higher price with same $30 margin but sell less of them.

Flash storage doesn't require a hardrive. Also some companies like MS have found a magical way to let a user bring their own usb hardrive to the equation.

ODD have a high point of failure. The PS1 , PS2 had horrible failure rates with their cd / dvd drives . The ps3 also had a less than stellar track record with its drive. Even the ps4 has its eject problem although I'm not sure if that's a software or hardware issue.

The great thing about flash is it comes in all sizes . There are games shipping now that require 16 gigs and the majority at 32gigs and some at 50 gigs. Flash covers that whole range. And in the future when UHD Bluray discs are maxed out Flash will offer even further space.

Oh and on flash you'd be able to able to add DLC to the same stick the game is on

 

[MrFox]

You are proposing to have no local storage... but why?

 

[eastmen]

You are proposing to have no local storage... but why?

It can be optional to keep costs down.

Using flash instead of optical lets you install dlc to the flash cart. You could also sell blank flash carts to put DD on or sell external drives for it.

we are talking a 2018 to 2020 console. So large amounts of flash will be cheap and faster than traditional drives.

 

[MrFox]

How cheap? You have to give an expectation of cost per GB, and when.

Did you change your mind about 2017? What's your new prediction?