Business Approach Comparison Sony PS4 and Microsoft Xbox

Rangers said:
Well I am not sure I buy that only 60% of X360 owners make an account of any kind (because isn't any account=silver?) is that even possible (EG, use an x360 without a silver account?). that havent even been turned on in a while is going to be MUCH higher than for X1/PS4.
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The 60% figure is derived from numbers directly reported by Microsoft. Lots of people never hooked up their 360s to the internet because they didn't have WiFi built in for so long.

blakjedi said:
MS does provide free games for XBLG. In fact they are truly free. Even if you cancel your XBLG subscription you keep the game. Im not sure if thats the case with PS+ on PS4. it wasn't like that on PS3. A free game was REALLY a free game on XBLG.
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Yeah, one free game at a time, two per month, most of which have been over 5 years old. PS Plus gives you access to 17 games on your first day as a member, many less than a year old, some brand new, and you get at least one more game each week for an entire year. It's not a shock people see the Instant Game Collection as a far greater value even if they're just long term rentals.
 
Brad Grenz said:
Yeah, one free game at a time, two per month, most of which have been over 5 years old.
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Actually of the 17 games they have given away(not including Toy Soldiers yet), only 4 games are over 5 years old(Gears of War, Rainbow Six Vegas, Crackdown & Halo 3). Average age is about 3 years 11 months or average release date of April 2010. I created a simple spreadsheet to keep track of all the games. You can view it here.

Tommy McClain
 
U can't directly compare PS4's PSN subscription rate with the 360 unless you believe that ps4's early adopters aren't skewed heavily towards hardcore gamers.

As next gen console sales grow the demographics may shift to a point where sub rates of the new gen may mirror last gen. Or may shift to the point where sub rates may be higher across the board. No one this gen is being subjected to buying a $90 wifi adapter or any solution thats less convenient than having wifi standard which was a reality during the first years of the 360's life.

PSN+ is a fairly new service in comparison to Live. It's sub rate would have likely been much stronger if it were introduced at the release of the PS3. People can get used to using their console in a certain way and it can be harder to convince them to adopt a paid service than if that service was offered when those users were more in an exploration mode when using their new console. PSN+ had far less opportunity to catch users in that mode.
 
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For two generations it was fairly profitable for Sony, but this biz is only really good if you're way out in front. Most contenders take a financial beating. Of course, if you back out, you leave it wide open for your rivals, which is why MS got involved in the first place (only they misjudged where the future battle would actually take place). eg. If MS and Sony threw in the towel, Amazon or Apple or whoever would get the billions a year profit that this industry is worth.
 
temesgen said:
Washingpost article on investors who want MS to abandon Bing, Xbox and Surface:

http://www.washingtonpost.com/blogs...osofts-new-ceo-to-kill-xbox-bing-and-surface/

I raised the question a couple days ago, are these platforms truly a money making opportunity for Sony or MS. IMO gaming is a risky bet and with all the additional crowding due to tablets, new competitors like Amazon I'm not sure if I was the CEO of either company I'd make gaming a priority.
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It is likely inconsequential for MS at the moment. I guess if the Xbox 1 is able to turn a profit in its first year then the investors might stop bitching. I hope it turns a profit. I would really hate to see MS abandon the gaming market especially after launching a new console. It has the potential to be seriously profitable for the company if managed right.

The situation is different for Sony. The PS4's success is a must and a lot (some may think the company itself) is at risk if the machine isn't profitable. Sony's done an excellent job with the PS4 so far and I hope profit comes early for them, just as a matter of survival. If P{S4 is able to regain some of the glory days of PS1/2 then that could mean a thriving Sony for years to come.
 
MS obviously need to continue pushing enterprise, but giving up on their most successful CE brand may be pretty stupid if they want to expand beyond software.
 
Sonic said:
It is likely inconsequential for MS at the moment. I guess if the Xbox 1 is able to turn a profit in its first year then the investors might stop bitching. I hope it turns a profit. I would really hate to see MS abandon the gaming market especially after launching a new console. It has the potential to be seriously profitable for the company if managed right.

The situation is different for Sony. The PS4's success is a must and a lot (some may think the company itself) is at risk if the machine isn't profitable. Sony's done an excellent job with the PS4 so far and I hope profit comes early for them, just as a matter of survival. If P{S4 is able to regain some of the glory days of PS1/2 then that could mean a thriving Sony for years to come.
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I agree that Sony needs to be successful now they have made the investment in the platform but lets be honest Japan isn't exactly your typical free market economy, even if Sony continues to lose money they will be around. We can argue about what the nature of their business looks like in 10 years but just like real estate prices in Japan they aren't going anywhere in the short run.

My point has more to do with the relative opportunity cost of pursuing gaming versus other investment opportunities as a business. We often hear on this forum how much money so and so is making but I think the fact remains that gaming as a business is a very fickle, constantly changing business. Investors have good reason to not be excited about doubling down.
 
temesgen said:
My point has more to do with the relative opportunity cost of pursuing gaming versus other investment opportunities as a business. We often hear on this forum how much money so and so is making but I think the fact remains that gaming as a business is a very fickle, constantly changing business. Investors have good reason to not be excited about doubling down.
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And this so often overlooked by people, that just because a division is profitable on some level, it is safe.

I don't know if the Xbox division (part of a larger division) is profitable but any new CEO should be looking at all the profit/resource ratio of the smaller divisions and questioning whether those resources, if applied to something else, would be more profitable in the long term. Of course there are larger strategies at play and Xbox, I'm sure, is part of Microsoft's plan to "own the living room". But sometimes it's smarter to avoid hardware with it's higher (and riskier) costs and be the competitive middle man providing software and services regardless of whose box the customer owns.

That's the new mans background. Azure supports pretty much all platforms, not just Windows. Smart move. As good as Azure is nobody is going to switch to their platform to Windows for this reason alone, particularly on the mobile side.
 
DSoup said:
And this so often overlooked by people, that just because a division is profitable on some level, it is safe.

I don't know if the Xbox division (part of a larger division) is profitable but any new CEO should be looking at all the profit/resource ratio of the smaller divisions and questioning whether those resources, if applied to something else, would be more profitable in the long term. Of course there are larger strategies at play and Xbox, I'm sure, is part of Microsoft's plan to "own the living room". But sometimes it's smarter to avoid hardware with it's higher (and riskier) costs and be the competitive middle man providing software and services regardless of whose box the customer owns.

That's the new mans background. Azure supports pretty much all platforms, not just Windows. Smart move. As good as Azure is nobody is going to switch to their platform to Windows for this reason alone, particularly on the mobile side.
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EDD is profitable, 360 turned profitable in 2008ish? Up and Down along the way naturally with some losses, R&D numbers over the last few years are pretty consistent (I remember seeing the EDD gets hit with this). http://www.microsoft.com/Investor/E...ntAndDevicesDivision/FY13/Q4/Performance.aspx

The source link here is dead - http://www.joystiq.com/2009/07/24/xbox-division-profits-for-second-straight-year-but/
 
Jwm said:
EDD is profitable, 360 turned profitable in 2008ish? Up and Down along the way naturally with some losses, R&D numbers over the last few years are pretty consistent (I remember seeing the EDD gets hit with this). http://www.microsoft.com/Investor/E...ntAndDevicesDivision/FY13/Q4/Performance.aspx
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ED&D is profitable, that's why I referenced Xbox division being part of a larger division. The difficulty analysts have had is because Microsoft don't break down Xbox and Xbox Live revenue and operating costs from the rest of ED&D, it's difficult to work out specific profit/losses for the Xbox is profitable or not - unless Microsoft specifically mention this in financial calls, which they generally don't.

But assuming it is, whether it's $10m/quarter or $250m/quarter, the question remains the same. Could those resources dedicated to Xbox be better for Microsoft if they did something else? I don't know the answer.
 
Shifty Geezer said:
For two generations it was fairly profitable for Sony, but this biz is only really good if you're way out in front. Most contenders take a financial beating. Of course, if you back out, you leave it wide open for your rivals, which is why MS got involved in the first place (only they misjudged where the future battle would actually take place). eg. If MS and Sony threw in the towel, Amazon or Apple or whoever would get the billions a year profit that this industry is worth.
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Yeah, the problem is Xbox was literally conceived as a defensive move, part of an explicit strategy to combat Sony's dominance of the living room. But while they were at war in the console space they completely missed the revolution in mobile that would render the whole question moot. The living room belongs to Apple and Google and fighting over the TV just feels like a sideshow now. So, without the strategic aspect to competing in the console market, and with revenue that is dwarfed by Microsoft's "real" businesses, it's fair to question why they stay. Those questions will only become more persistent if PlayStation 4 jumps out to a large lead in the first year and the golden goose that are Gold membership fees begin to erode.
 
Or it's a matter of making smart business decisions. The GameCube didn't come close to winning its generation, but was still profitable.
 
Wasn't it last year that it was "revealed" that the division that XBOX was part of was losing money? Despite being home to Mac Office? I remember my confusing after having heard about the profitable 360..
 
Bigus Dickus said:
I would say "told" vs "heard", and then the follow on question you must ask is who was doing the telling...
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It was that investment guy who followed the paper trails from MS earning statements and concluded that XB division was losing a large sum on money but that was offset on paper by the licensing fees earned from Android.
 
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