Business Approach Comparison Sony PS4 and Microsoft Xbox

[Brad Grenz]

A blockbuster game like GTA V or Black Ops II can take more revenue in their first 24 hours than many movies over their entire cinematic runs and follow-up DVD and Blu-ray sales. This isn't new, revenue from games overtook Hollywood in 2009 and the gap continues to widen.

Not all games sell gangbusters but if you have a great selling game, it's a licence to print money:

Minecraft - 49 million slaes (all platforms)
GTA V - 32 million sales (360, PS3)
COD4:MW2 - 28 million sales (360, PS3, PC)
GTA San Andreas - 27 million slaes (all platforms)
COD:MW3 - 25 million sales (360, PS3, PC)
Gran Turismo 5 - 10 million sales (PS3)

This is why Sony are dropping low-margin utiliarian markets like PCs but remain in the console business but are dropping low-margin markets like PCs. And it's why Microsoft won't just abandon it lightly. Even when your are only the platform holder, you're picking up licensing royalties.

License fees are nice, it's what made PlayStation such a success. Of course, if you're signing exclusivity deals, marketing deals, or just desperate to get big games on your system you might have offered a big publisher like Activision or Rock Star a significantly reduce rate. It also really only provides a big pay-off when you're #1 with a bullet, like the PS1, PS2 and Wii. MS added a sweet wrinkle with the Gold membership fees that provided a torrent of free money, but unfortunately they kept those profits hidden in the division where all their worst money-sinks go to die.

But you know how Nintendo really made it through the N64 and Gamecube days (aside from the GBA and DS)? They were the number one publisher on their own platform and their biggest games all sold huge numbers where they kept ALL the profits. Similarly, during the PS3 generation Sony was publishing 15-20 games a year where they, again, keep all the money. Microsoft doesn't have the first party stable to really sustain a distant 2nd finish profitably. Gold membership won't do it either if they end up losing 1/2 or 2/3rds of their paying members and continue to give compute time on Azure away for free. And while they do have a safety net, it has nothing to do with games so the question is again, why bother?

 

[function]

Core gamers are dicks because they don't care about something they were promised but haven't seen?

'Core gamers' are dicks because they aren't interested in technologies that will fundamentally change the console gaming landscape. There, I said it! Again!

Cloud computing enhancing games are vapor until they show something real. AND it has to be something else than multi-player servers

No way, dedicated multiplayer servers on a good pipe is a huge win for cloud hosting. Alone, that would justify both MS offering the tech to pubs for free *and* the Gold tax!

Joke is harsh word, but it's under delivering tech, so far at least.

Cloud is delivering just fine, it's just not delivering much to gamers at this point in time.

So far it's fact, not opinion unless you prefer low framerate and resolution. And as said before, multi-player servers is as old as Quake and nothing special. It's unlikely that EA or other publishers will suddenly be unable to host servers themselves.

You make it sound like EA or other pubs have at some point been interested in hosting servers ...

Publishers have been able to deliver multiplayer servers for the last twenty years, and yet for consoles they have almost never bothered, because of the economics. They don't want a constant bleed for using or reserving server time, especially once they've already got their money.

Cloud infrastructure delivered by the platform holder - especially 'for free' - is something new and it makes the economics of delivering dedicated servers competitive with sloppy user hosting for the first time.

Even if if the exact same 'server' is run on the cloud instead of a user machine it's still a big win.

 

[Deleted member 11852]

There are thousands of games made each generation. The percentage of big successes will be less than one percent. That's rare.

When did we move from profitable to big success? That wasn't my point at all. I have no doubt there are unprofitable games but the number of collapsed development horses and/or published directly linked to commercial success is low. If they weren't profitable, how are they operational?

 

[specwarGP2]

There are thousands of games made each generation. The percentage of big successes will be less than one percent. That's rare.

Movie industry works the same way though... isn't it something like 9 out of 10 productions never make a profit?

 

[-tkf-]

'Core gamers' are dicks because they aren't interested in technologies that will fundamentally change the console gaming landscape. There, I said it! Again!

Plenty of core gamers bought into the Kinect Hype on the first round, plenty of core games got dicked around on that one. It sucks for anything but Laissez-faire games.

No way, dedicated multiplayer servers on a good pipe is a huge win for cloud hosting. Alone, that would justify both MS offering the tech to pubs for free *and* the Gold tax!

I am used to dedicated servers, there is nothing new about Cloud dedicated servers, hell i would bet most of the big publishers already have something similar. And it's not free, somewhere there is a bill being paid by money the customer gave Microsoft. Right now it may be the guy that bought an office license but it's not free

Cloud is delivering just fine, it's just not delivering much to gamers at this point in time.

You make it sound like EA or other pubs have at some point been interested in hosting servers ...

Publishers have been able to deliver multiplayer servers for the last twenty years, and yet for consoles they have almost never bothered, because of the economics. They don't want a constant bleed for using or reserving server time, especially once they've already got their money.

Cloud infrastructure delivered by the platform holder - especially 'for free' - is something new and it makes the economics of delivering dedicated servers competitive with sloppy user hosting for the first time.

Even if if the exact same 'server' is run on the cloud instead of a user machine it's still a big win.

The big MP games i have wasted time on mostly ran on dedicated servers, i honestly don't play alot online on my consoles, but it's my impression that GTA5, Burnout and some of the others i played did run on Dedicated servers. GT5 i know for a fact was P2P driven.

But again, there is nothing stopping Sony from doing the same, and it's really not something i consider amazing groundbreaking console moving and megaton selling to provide Dedicated servers.

 

[BoardBonobo]

'Core gamers' are dicks because they aren't interested in technologies that will fundamentally change the console gaming landscape. There, I said it! Again!

Or, as is more likely, the Kinnect isn't such a technology. It's not going to fundamentally change anything other than peoples perception of the XB1 being bundled with an over priced and relatively useless camera accessory.

 

[wco81]

Or, as is more likely, the Kinnect isn't such a technology. It's not going to fundamentally change anything other than peoples perception of the XB1 being bundled with an over priced and relatively useless camera accessory.

Ouch!!!

 

[eastmen]

Or, as is more likely, the Kinnect isn't such a technology. It's not going to fundamentally change anything other than peoples perception of the XB1 being bundled with an over priced and relatively useless camera accessory.

Look at how sony has changed people's perspectives.

They are the ones who introduced "money hatting" with the playstation . They are the ones who spread fud about their system specs to kill the dreamcast . They are the ones who forced system parity with the ps3.

They are the ones who included worthless features and forced them upon us with the ps3 .

Yet people don't look at sony negatively for this .

MS may be bad for a lot of things , but they have the cleanest hands in the console market currently.

Kinect has already made an improvement over my 360. Now if I turn on my system it signs me in , if my gf puts it on , it signs her in. Kinect sports 2 is actually a lot of fun and my niece and nephew play it quite often.

The only thing Kinect needs is some more games . If ms drops Kinect everyone claiming that they would buy an xbox one one if it was $400 or $350 without Kinect will just switch to saying well its less powerful than the ps4 and has no exclusives so why would I want that.

MS just needs to keep releasing games people want , after a point people will buy the system because of those games.


Look at the ps3. Dispite being $200-300 more expensive at launch it was able to claw its way back to sales parity with the 360 while having weaker graphical hardware.


I think at e3 we will see a $400 xbox one with Kinect

 

[-tkf-]

Look at how sony has changed people's perspectives.

They are the ones who introduced "money hatting" with the playstation . They are the ones who spread fud about their system specs to kill the dreamcast . They are the ones who forced system parity with the ps3.

They are the ones who included worthless features and forced them upon us with the ps3 .

Yet people don't look at sony negatively for this .

MS may be bad for a lot of things , but they have the cleanest hands in the console market currently.

Kinect has already made an improvement over my 360. Now if I turn on my system it signs me in , if my gf puts it on , it signs her in. Kinect sports 2 is actually a lot of fun and my niece and nephew play it quite often.

The only thing Kinect needs is some more games . If ms drops Kinect everyone claiming that they would buy an xbox one one if it was $400 or $350 without Kinect will just switch to saying well its less powerful than the ps4 and has no exclusives so why would I want that.

MS just needs to keep releasing games people want , after a point people will buy the system because of those games.

Look at the ps3. Dispite being $200-300 more expensive at launch it was able to claw its way back to sales parity with the 360 while having weaker graphical hardware.

I think at e3 we will see a $400 xbox one with Kinect

Maybe just a tad subjective?
The ps3 launched later and expensive and with a piss poor marketing that reaked of arrogance.


It only regained sales and consumer confidence by doing awesome stuff. Free online, and a paid service that gave actual games, you know games on a gaming device for gamers.
Reducing price constantly will offering enough for the higher price. Having some of the best games and best looking games helped as well.
Fighting bad pr and vibes with actual objective value.

Microsoft knows what to do, just read the ps3 playbook.

 

[BoardBonobo]

Look at how sony has changed people's perspectives.

They are the ones who introduced "money hatting" with the playstation . They are the ones who spread fud about their system specs to kill the dreamcast . They are the ones who forced system parity with the ps3.

They are the ones who included worthless features and forced them upon us with the ps3 .

Yet people don't look at sony negatively for this .

MS may be bad for a lot of things , but they have the cleanest hands in the console market currently.

Kinect has already made an improvement over my 360. Now if I turn on my system it signs me in , if my gf puts it on , it signs her in. Kinect sports 2 is actually a lot of fun and my niece and nephew play it quite often.

The only thing Kinect needs is some more games . If ms drops Kinect everyone claiming that they would buy an xbox one one if it was $400 or $350 without Kinect will just switch to saying well its less powerful than the ps4 and has no exclusives so why would I want that.

MS just needs to keep releasing games people want , after a point people will buy the system because of those games.


Look at the ps3. Dispite being $200-300 more expensive at launch it was able to claw its way back to sales parity with the 360 while having weaker graphical hardware.


I think at e3 we will see a $400 xbox one with Kinect

Nice but Sony, and the fate of the PS3, have nothing to do with MS's decision to blow the price of the XB1 with a fancy camera and then completely leave it unsupported.

It's too late for compelling games on the Kinnect, for it to get consumers attention it needs to have come out with all guns blazing. Not jump around at the back of the bus squeaking 'me too, me too'.

 

[function]

Plenty of core gamers bought into the Kinect Hype on the first round, plenty of core games got dicked around on that one.

Or, as is more likely, the Kinnect isn't such a technology. It's not going to fundamentally change anything other than peoples perception of the XB1 being bundled with an over priced and relatively useless camera accessory.

This thread of conversation had been about 'the cloud'.

tkf unilaterally switched it to being about Kinect instead in his last reply, and then BoardBonobo quoted me (where I had been talking about 'the cloud') and dogpiled onto Kinect too.

This an example of just how keen people are to shit on Kinect.

It sucks for anything but Laissez-faire games.

Don't actually understand what you mean here ....

I am used to dedicated servers, there is nothing new about Cloud dedicated servers, hell i would bet most of the big publishers already have something similar. And it's not free, somewhere there is a bill being paid by money the customer gave Microsoft. Right now it may be the guy that bought an office license but it's not free

There is absolutely something new about a console vendor offering integrated cloud services as part of the core platform. It's new. As in, it hasn't been done before.

The fee for cloud hosting should come from Live Gold in an ideal world. It's the model that fits best with the usage requirements, scaling in a similar way to user hosting actually but without the BW issues. You as a user should pay for access to certain cloud services, and the games you buy should take advantage of this.

If the publisher has to foot the bill, then except nothing but awefulness because they won't want to pay.

The big MP games i have wasted time on mostly ran on dedicated servers, i honestly don't play alot online on my consoles, but it's my impression that GTA5, Burnout and some of the others i played did run on Dedicated servers. GT5 i know for a fact was P2P driven.

The latest Burnout was user hosted, as are all the Halo games, Killzone, Gears of War, Call of Duty, Forza, GT, Ace Combat, Rage, the Left for Deads, Team Fortress ... basically almost everything. And they're all designed around this.

But again, there is nothing stopping Sony from doing the same, and it's really not something i consider amazing groundbreaking console moving and megaton selling to provide Dedicated servers.

Cloud is going to the biggest thing this generation in terms of changing the type of games we play on consoles. It fundamentally changes the amount of traffic and synchronization that shared games/environments/simulations can use, and it will make persistent elements far more common in console games. Yet all anyone can go on about is GPU FLOPS. FFS.

There's nothing stopping Sony from doing what MS are doing, but economics means they won't unless they are forced to. The more that publishers are involved with setting standards and maintaining availability, the more everyone will suffer (lower resource reservation and allocation, terminating online games early etc).

 

[function]

Microsoft knows what to do, just read the ps3 playbook.

They have been reading it. So far they've only gotten through the chapters leading up to launch though ...

... MS's decision to blow the price of the XB1 with a fancy camera and then completely leave it unsupported.

Yep, it was an incredible decision alright ...

They thought TV control was the killer app and needed nothing else. That's just how deluded and TV focused they were ...

It's too late for compelling games on the Kinnect, for it to get consumers attention it needs to have come out with all guns blazing. Not jump around at the back of the bus squeaking 'me too, me too'.

Compelling games will come out if someone fronts up the cash to make those games. Right now, the only party motivated to do that will be MS. Assuming they actually are now, that is, because they sure as hell weren't before.

A strong start would have been better, but an ongoing supply of innovative, quality games can still make the device a net draw for the platform in the longer term.

 

[Sonic]

Can we please not refer to core gamers as dicks? It's not their fault Microsoft has failed to deliver compelling enough content for Kinect that warrants mass interest. I've said in the past I'm a believer in the potential of Kinect, but if MS isn't going to deliver the content then that potential won't be realized. It's not the core gamers are dicks, it is that MS hasn't given a compelling reason to go run off and buy an XB1 in regards to its Kinect.

The same applies with the Cloud. MS needs to prove its concept. If it takes off then great I'd love to see the groundbreaking ways it will change gaming, but it hasn't yet. And the further time goes on the more it seems MS used Kinect and the Cloud as buzzwords for hyping XB1 without funding serious R&D into them. I hope E3 proves me wrong.

And eastman is largely right. Sony had a fantastic image going into the PS3 after the juggernaut that was the PS2 and completely destroyed their consumer faith with the super high price and failing to deliver on their hype. There were many out there who derided Sony for a good portion of the early years of PS3 and they've managed to salvage whatever consumer faith was left and build upon that. Enter the PS4 with Sony having a much different attitude and embracing it to the fullest.

If Sony can do it then so can MS. It's still early enough in the cycle where MS can still flourish with their platform. Getting to price parity without ditching Kinect would go a long way in doing this while simultaneously releasing games that make people actually want to use Kinect. I'm with eastman in that even releasing a Kinectless XB1 at a lower price will still not be a compelling enough reason for most to get a XB1 over PS4.

 

[function]

Can we please not refer to core gamers as dicks? It's not their fault Microsoft has failed to deliver compelling enough content for Kinect that warrants mass interest.

Damn it. I wasn't talking about Kinect. I've even explained this. Damn you, tkf!

And I'm not talking about the 'core gamer' demographic that the industry uses, I'm talking about the ultra vocal, toxic, self identified 'core gamer' that busies themself aggressively attacking technologies they don't want to try and understand.

 

[-tkf-]

This thread of conversation had been about 'the cloud'.

tkd unilaterally switched it to being about Kinect instead in his last reply, and then BoardBonobo quoted me (where I had been talking about 'the cloud') and dogpiled onto Kinect too.

This an example of just how keen people are to shit on Kinect.

Don't actually understand what you mean here ....

There is absolutely something new about a console vendor offering integrated cloud services as part of the core platform. It's new. As in, it hasn't been done before.

The fee for cloud hosting should come from Live Gold in an ideal world. It's the model that fits best with the usage requirements, scaling in a similar way to user hosting actually but without the BW issues. You as a user should pay for access to certain cloud services, and the games you buy should take advantage of this.

If the publisher has to foot the bill, then except nothing but awefulness because they won't want to pay.

The latest Burnout was user hosted, as are all the Halo games, Killzone, Gears of War, Call of Duty, Forza, GT, Ace Combat, Rage, the Left for Deads, Team Fortress ... basically almost everything. And they're all designed around this.

Cloud is going to the biggest thing this generation in terms of changing the type of games we play on consoles. It fundamentally changes the amount of traffic and synchronization that shared games/environments/simulations can use, and it will make persistent elements far more common in console games. Yet all anyone can go on about is GPU FLOPS. FFS.

There's nothing stopping Sony from doing what MS are doing, but economics means they won't unless they are forced to. The more that publishers are involved with setting standards and maintaining availability, the more everyone will suffer (lower resource reservation and allocation, terminating online games early etc).

A simple response, hosting games is nothing earth shattering that will move consoles, the end.

Using cloud power to enhance games into unseen graphic qualities with never before seen game play will make a difference. But I find it more than fair to stay skeptical based on everything we know, right now. I am prepared to be surprised

As for the dicks, yes I thought you meant kinect since I didn't think you would Bitch at core gamers for not embracing something that isn't even available now. Unless dedicated servers should be something to buy a xb1 for..

 

[-tkf-]

Damn it. I wasn't talking about Kinect. I've even explained this. Damn you, tkf!

And I'm not talking about the 'core gamer' demographic that the industry uses, I'm talking about the ultra vocal, toxic, self identified 'core gamer' that busies themself aggressively attacking technologies they don't want to try and understand.

soooorryy :-\

 

[Sonic]

Fair enough. Sorry about the cunfusion there.

 

[Shifty Geezer]

Cloud infrastructure delivered by the platform holder - especially 'for free' - is something new and it makes the economics of delivering dedicated servers competitive with sloppy user hosting for the first time.

Dynamic servers that don't require per-title renting mean supporting dedicated servers becomes a lot more viable. Cross-platform games also can't afford to use cloud-servers for XB1 and not for other platforms. So games that use the cloud will use cloud servers as is, without Azure being anything special for XB1. It'll only be a USP if games use Azure on XB1 and don't on PS4, and PS4 is an inferior experience in some way as a result. Which'll be a few platform exclusives, if anything.

Cloud doesn't really benefit MS unless they were the front runner. Then they could command exclusives that aren't economically viable on PS4. But even then, Azure isn't a charity. MS aren't going to off it for free forever, even if they do offer it for free. AFAIK, and I may be well wrong, MS are basically offering free time on a cloud system that's got free time to spare. If it's sitting there idle, may as well make use of it and offer it to games.

When did we move from profitable to big success? That wasn't my point at all. I have no doubt there are unprofitable games but the number of collapsed development horses and/or published directly linked to commercial success is low. If they weren't profitable, how are they operational?

Maybe I'm missing the thread of the discussion, but you raised gangbuster sellers and My Bitch said these games are rare, and you said they aren't that rare. Regards games not being profitable, 70% fail to break even, so games that are even profitable are uncommon. Games that make significant profits are definitely rare*.

* Depending on one's definition. Going by your specification of such a game every two to three months, five games a year I'd count as rare. They may be regular, but they're also rare, like a bus in the Welsh hills that arrives 12:30pm every day and that's its only time - regular as clockwork yet a rare thing.

 

[tuna]

Look at the ps3. Dispite being $200-300 more expensive at launch it was able to claw its way back to sales parity with the 360 while having weaker graphical hardware.

PS3 exclusives looked (arguably) better than 360 exclusives. That will not be the case for PS4/XBOne.

 

[London Geezer]

PS3 also had a couple of 'game of the year' we don't need to mention, as exclusives, that made its profile a bit more interesting after a few years than it was at launch.