Business Approach Comparison Sony PS4 and Microsoft Xbox

[SlimJim]

Late in last gen a media/forum narrative emerged that PS3 was getting the better exclusives the last 2-3 years. Yet, there was really no sales trend to this. PS3 did not experience some late life sales renaissance, really. It's an important point to note. Maybe you cared about Sony's games, but consumers did not, or at least not enough to really move the needle from the established trend going into those last years.

I think the fact 360 had the surfeit power to do slightly better multiplats than PS3, trumped Sony studio's games easily, as a factor in the sales race.

You make it sound like it was only true in the media or on forums, but the reality was that it was true, in real life:

Xbox 360 had a 10 million headstart according to microsoft. The fact that PS3 overtook it in the end tells you enough. Another thing, the larger number of exclusive PS3 games, the better awards, and the sheer diversity could have also played a part in the mindset of people leaving the Xbox platform this generation. People know how MS reacted after thinking they hit the low-budget Kinect-goldmine. That is not forum narrative, that is reality.

Look at the start of Xbox 360:
It had great exclusives, and a good number of them. They didn't get the 10 million head start for nothing. MS worked really hard to win the hearts of gamers, and reviewers/websites as well. You can't create games out of thin air though. Some can be bought from others (Titanfall, Sunset Drive, Quantum break), but to create a large number of diverse, great games, you need to foster studios, take good care of them (instead of firing them the moment after releasing a great game, which didn't set sale-records).

As an anecdote:
When the "that Games company"(an independent developer) contract for producing a few exclusive games expired; Sony openly discussed with them how they could grow if they were to produce games for more platforms, how it would benefit the developer instead of Sony.
-in contrast-
When MS let Bungie go, they didn't have any discussions with the developer, which helped them to great marketshare; they only discussed internally how much it could hurt MS if the developer continued to produce great titles. In the end they let them go because the suits believed it was better to spend more money on advertising and timed exclusive COD-map packs. That is why I hope Destiny will be the best selling Bungie title ever.

The more you know about this industry, the more you root for, and care about the "good" companies.

If you look at the generations as flow of gaming history, instead of different , isolated chapters, then you will understand that gamers will always choose the games. Even if it takes a few years, the gamers will know.

 

[Shifty Geezer]

You make it sound like it was only true in the media or on forums, but the reality was that it was true, in real life:

Right, but it didn't mean PS3 sold far more than XB360, did it? Your evidence doesn't support your argument that better games/exclusives results in better hardware sales.

 

[temesgen]

Right, but it didn't mean PS3 sold far more than XB360, did it? Your evidence doesn't support your argument that better games/exclusives results in better hardware sales.

I think his point is that in spite of the head start and issues with PS3 due to price, poor ports eventually Sony made up the gap due to better decisions later in its life and a good proprietary library. For what its worth the PS3 has sold at a faster pace bc the ltd numbers are very close and it has been out for a year less. And the overall pace did accelerate at some point bc the first couple years the gap going from my recollection was not narrowing.

 

[-tkf-]

Right, but it didn't mean PS3 sold far more than XB360, did it? Your evidence doesn't support your argument that better games/exclusives results in better hardware sales.

I think it's safe to say that with weak hardware, expensive development and a high priced console Sony would have been in trouble without all their incredible exclusive games. There was other things that helped the ps3 from disaster, bluray free online etc.. But exclusives was clearly a part of the story.

 

[Nesh]

Right, but it didn't mean PS3 sold far more than XB360, did it? Your evidence doesn't support your argument that better games/exclusives results in better hardware sales.

Well...it would be nice if we could measure how exclusives helped sales.

The PS does have a powerful brand name. But we know that its easy for a brand to be destroyed in a single generation as we have seen with the case of Sega and Nintendo.

We know that the PS3 was having huge trouble with HW sales. We also had some indications that certain exclusives did help sales a bit such as in the case of Metal Gear Solid 4. We also know that there are many people faithful to the console because of Gran Turismo. Its safe to believe that there are a few more titles that helped

Similarly we know that Nintendo has a dedicated fanbase that buy their console because of the exclusive content. Without it, Nintendo consoles would have been dead in the water

I think we all agree that content drive sales. Considering that the PS3 was too expensive for quite some time, and that multiplatform ports were usually a bit inferior, I think we can at least suspect that exclusive quality content did help HW sales. I see no other way that Sony could compensate apart from BR, free online and hype that wore off.

For quite some time the PS3 didnt have enough exclusives to compete the likes of Halo, Gears etc as well as many other former/time-exclusives. Sales were very low during that time

Its the amount of exclusive games that helped both the PS1 and PS2 be the number one choice too.

 

[DuckThor Evil]

Playstation 3 launched in US on November 17th 2006 and the following March in Europe. The initial price was very high, but already in October/November 2007 they launched the 40GB model for $399€ in both territories. The sales gap to 360 fluctuated a bit during the years, but it was almost gone by late 2010. After that it has hold quite steady with little fluctuations to both ways.

 

[Shifty Geezer]

I think his point is that in spite of the head start and issues with PS3 due to price, poor ports eventually Sony made up the gap due to better decisions later in its life and a good proprietary library.

The current thread is that SlimJim would buy a poor PS4 even if it had game. He cites PS3 as proof. Rangers says even if PS3 got the better exclusives in later years, it didn't experience a sales renaissance, ergo the exclusives didn't produce an uptick in uptake. SlimJim provides a list of titles from 2012 to 2013 which hardly proves that exclusive games shift boxes. PS3's ongoing turnaround happened first and foremost with price reductions. Sales have been dwindling for both consoles the past few years despite whatever exclusives.

Well...it would be nice if we could measure how exclusives helped sales.

The argument is a weak console can still perform well (outcompete rival?) on software alone.

I think we all agree that content drive sales. Considering that the PS3 was too expensive for quite some time, and that multiplatform ports were usually a bit inferior, I think we can at least suspect that exclusive quality content did help HW sales.

Multiplatform comparisons was a new thing. There's no doubt that existing Sony fans prioritsed getting another PS without really thinking about how their general game experience would be inferior to buying the alternative. There are also plenty of other reasons for buying a PS3 like BRD. It's impossible to attribute PS3's claw-back to exclusives, and certainly impossible to take PS3 and apply it to XB1.

1) Core gamers are now well informed on the game performance disparity
2) The basic experience is the same. There's no significant USP like BRD driving adoption given Kinect seems to have lost traction
3) The vast majority of titles are now multiplatform and everyone knows it. Where Sony fans in the past could have expected the best (largest) games library to be on PS3 because it was on PS1 and PS2, and so bought PS3 in expectation, it turned out most games came to every system and that's a trend that's continuing.

Someone with the numbers could compare sales of exclusives to sales of multiplats and determine a proportion that could be helpful in weighting the value of exclusives, but IMO the obvious trend of game discussion focussing primarily on multiplats shows that's where most people are getting their games. The exclusives now have to be weighed against inferior versions of these games where before the exclusives were the differentiators between two pretty identical consoles. That is, one had the choice between

100% game quality, Halo, Gears, et al ...or...
95% game quality, LBP, Uncharted, et al

Now the choice is currently more

100% game quality, Infamous, The Order, et al
75%-80% game quality, Ryse, Quantum Break, et al

If XB1 game quality picks up and reduces the disparity as PS3 did, the difference will reduce, but at this point there's just as much chance that advances in compute-based engines will actually see PS4 pull ahead more rather than XB1 catch up with ESRAM being mastered.

Or to sum it up, if one's business approach is just to provide exclusives, one will pull a Nintendo - lots of exclusives, lots of highly valued, high selling exclusives, yet little hardware adoption because the console is only good for exclusives and not the core library that the core gamer is interested in.

 

[Phil]

3) The vast majority of titles are now multiplatform and everyone knows it. Where Sony fans in the past could have expected the best (largest) games library to be on PS3 because it was on PS1 and PS2, and so bought PS3 in expectation, it turned out most games came to every system and that's a trend that's continuing.

That may be true, but Sony has still worked hard to strengthen their library and content that is exclusive to their brandname. I see partly the creation of the Worldwide Studios in 2005 responsible for that. Combining the strength of your teams, leading to better content. Since it's establishment in 2005, Sony has year by year aquired talented developers to add to their pond of developers. Then they also have a strong tie to 2nd party developers too.

By itself, it isn't enough to sway the loyal PS1 and PS2 consumers - the multi platform games are just as important. But at the end of the day, the exclusives is what greatly distinguishes one console from another. Most other features are just nice extras, like Bluray/Mediaplayer capabilities.

I'm not sure how you can look at PS3 closing the gap to X360 that had a year headstart, at a significantly better price range and better versions of multiplatform games for the most part and NOT look at the exclusives being a factor. It was a factor, just like many others too.

You are right though - at the time when PS3 launched, the perception wasn't that multi platform games would be worse. Many assumed that the PS3 would eventually pull ahead thanks to the hype surrounding CELL. In terms of multiplatform titles, it was a disappointment that this rarely happened - but then again - the difference was perhaps for the most part too small to have a big impact. Perhaps 4 years down the road when looking back, one might conclude that the X360 might have been the better bet (for the better multi platform titles), but by then, Sony had already had very very good and strong exclusive titles that performed visually/technically on an arguable slightly higher level than what was to be found on X360 (Uncharted, Heavy Rain, KillZone and some others). This weakened the impact of worse multiplatform games.

 

[Silenti]

Regarding the power gap. I remember comments on here that developers ended up developing/optimizing on the PS3 and then porting to the 360. They did this not just for parity clause sake if I remember correctly, but because there was enough market to warrant developing for both and by programming with the PS3 in mind, it actually ran better on the 360 to boot. I doubt this was for all cases, but enough that it caused comment on here. Is there anything this time around to indicate the situation would be reversed but the same idea applies? If you wanted to release on both, no reason not to anyway, you set it up for the One and then it just runs better on the PS4 anyway? Or is the gap substantial enough that you are talking a real quality difference regardless? Is it going to be more a matter of architecture = too similar so no real benefit?

 

[Shifty Geezer]

I'm not sure how you can look at PS3 closing the gap to X360 that had a year headstart, at a significantly better price range and better versions of multiplatform games for the most part and NOT look at the exclusives being a factor. It was a factor...

They were a factor, but one of many. My argument isn't that exclusives don't increase sales/interest in your platform. My argument is that exclusives aren't enough by-and-large to compensate a significant shortfall in multiplat performance, especially this new gen where the platform exclusive is dead save for 1st/2nd party*. It's not like PS2 era when devs went PS2 only because it was so large, or now with PS3 where a few Japanese devs will create a platform exclusive because XB360 is pretty irrelevant in their home market.

From Wiki, PS3 games - There are currently 795 games (multi-platform: 635; exclusive: 150)
~100 of those are from Sony, so you're looking at 19% of games being exclusives, 13% Sony published when 3rd party devs go multiplat.

XB360
There are currently 1,122 games (multiplatform: 922; exclusive: 187; console exclusive: 72) on this list as of July 10, 2014.
~ 60 were MS published , so 17% exclusives, 5% when you remove 3rd party exclusives.

* Stats could be a bit wrong as I'm skimming info from sources

Of course, the fact that platform exclusives will likely only account for <10% of the library doesn't matter if they're the games people are playing. A check for most played games on Live shows...

Grand Theft Auto V
Call of Duty: Black Ops II
Minecraft: Xbox 360 Edition
FIFA 14
EA Sports FIFA Soccer 13
Call of Duty: Modern Warfare 3
Madden NFL 25
GTA IV
Battlefield 3
Call of Duty: Black Ops
Halo 4
Diablo III
Skyrim
Ascend: Hand of Kul
Modern Warfare 2
NBA 2K13
EA SPORTS FIFA 14 Downloadable Demo
Rainbow Six Vegas
Halo: Reach
Gears of War 3

The console exclusives shown in bold. It's pretty obvious that the major use of these consoles is playing multiplats. Does it really make sense to buy a console that plays COD, GTA, FIFA notably worse for the hundreds of hours you'll be playing those games than its rival for the few hours that you'll be playing exclusives on that console? For some, yes, but for the market at large, I think not. Rolling out a platform that plays the most-played games worse to a market that's informed about this performance difference and hoping to prop it up with exclusives that represent 5-10% of the console's use doesn't strike me as an effective strategy.

* Excluding indie which is affected by platform policies, although they are multiplat outside of consoles at any rate.

 

[Phil]

They were a factor, but one of many. My argument isn't that exclusives don't increase sales/interest in your platform. My argument is that exclusives aren't enough by-and-large to compensate a significant shortfall in multiplat performance, especially this new gen where the platform exclusive is dead save for 1st/2nd party*. It's not like PS2 era when devs went PS2 only because it was so large, or now with PS3 where a few Japanese devs will create a platform exclusive because XB360 is pretty irrelevant in their home market.

I think you will find that the importance of exclusives varies from platform to platform. It's not a fixed value that is of equal importance. My point is; On the PlayStation, exclusives and the historically good support of multi-platform titles carry a lot of weight and are one of the reasons so many PlayStation consumers are loyal to this platform despite various shortcomings, like i.e. worse multiplatform titles and significantly more expensive hardware during the PS3 generation. For PS consumers it was a simple trade-off: exclusives + support and games we used to play on the older PS consoles + free online play + Bluray stacked against a higher price and some inferior multiplatform titles.


This generation it's different: Sony now has the better hardware which is arguably easier to extract predictable performance out of and it still has the all the exclusives and support of multi-platform titles. The consens is that there is still little reason for a PS consumer to consider jumping ship to a weaker, more expensive platform. On the other hand, Microsoft didn't help their cause by seamingly going after the Wii-Crowd with focus on Kinect and less capable hardware as a result. Now they find themselves in a vulnerable situation: They have weaker multi platform titles and less stand-out exclusives. This may not matter to those loyal Xbox fans that have bought and come to love those exclusives, but there are also less loyal fans who might and will flock to the PS brandname (as the other poll seems to suggest).

So in conclusion; I think Xbox has always relied on better hardware (and a headstart) to make up for what they lack on the software exclusive side; PS strength has always been the large developer support. Now it looks like, they have both.

 

[Shifty Geezer]

My point is; On the PlayStation, exclusives and the historically good support of multi-platform titles carry a lot of weight and are one of the reasons so many PlayStation consumers are loyal to this platform despite various shortcomings, like i.e.

I agree! I recall arguing this too way back when talking about 'system sellers' and how a title doesn't need to ship lots of millions to shift units. That wasn't the debate though. Comparing PS4 and XB1's business, all the other factors have been largely equalised. The end result is a notable performance deficit in plenty of titles for XB1. The argument put forward is that a few platform exclusives will be enough keep the platform significant over the coming years and gain on PS4's sales. I don't see evidence supporting that. The argument in support of that view is mostly historical and doesn't reflect changes in the market that make it largely inapplicable to the current gen.

To recap, in a market of ~150 million core gamers, by far and away the most bought and played games are multiplatform. Probably 90% of gaming hours will be spent on multiplatforms. For these games, PS4 is clearly the platform of choice. For each exclusive MS can produce, they'll add a degree of incentive to buy XB1 for fans of that exclusive, but that'll represent a small niche within the core market (and Sony are also countering with their own exclusives). Similar to Nintendo. Nintendo's exclusive are good to attract maybe 10-20 million Nintendo franchise fans, but the shortcomings of the Wii U in the wider gaming landscape mean it can't reach a larger audience. Exclusives alone aren't enough and multiplatform performance is more important than ever. In fact its so important that we hear of console gamers switching to PC now because they still get the library and get better performance.

In short, will platform exclusives be enough to significantly elevate interest and XB1's sales? Should MS spend more on exclusive content, or price drops?

 

[Cjail]

. Rolling out a platform that plays the most-played games worse to a market that's informed about this performance difference and hoping to prop it up with exclusives that represent 5-10% of the console's use doesn't strike me as an effective strategy.

I would say that the many customers, if not most, are not informed about the performance difference at all.

Anyway if XOne/MS can't "win/beat" PS4/Sony in therms of performance then exclusives are pretty much the only thing that can keep it going...massive price cut aside.

 

[-tkf-]

In short, will platform exclusives be enough to significantly elevate interest and XB1's sales? Should MS spend more on exclusive content, or price drops?

As a minimum exclusive games and content will be needed to keep it from dropping through the floor. To get back in the game they need to out Sony Sony. Sony learned that arrogant attitudes coupled with under delivering hardware is bad. Siding with gamers when you sell a game console is a smart move. Don't be evil pays in this case. I am sure that if being evil paid better Sony would do that.

I guess we are lucky that the market doesn't work that way.

 

[Shifty Geezer]

I would say that the many customers, if not most, are not informed about the performance difference at all.

That's mostly true, except it varies across the life of the generation. Pioneers and early adopters are far more likely to be informed by gaming websites, affecting who's buying what console now. Over the coming years when Ordinary Joe's start buying these consoles, they'll be more influenced by their 'gaming friends' who give 'advice' regurgitating whatever info their favourite fansites spout. Some will get to hear stories of hidden power, but the majority of info is PS4 is playing games better and that'll be the general background noise for future purchases. You'll also have more PS4's in homes promoting PS4 adoption (game sharing, play with mates, usual word-of-mouth, etc.).

So by the time masses buy consoles and they don't follow the gaming scene themselves, there'll be plenty of influence in place born from the early performance disparity. It's worth noting that PS3 buyers who were aware of the performance disparity believed PS3 was Teh Awesom and it only needed the supercomputer power of the Cell to be mastered to unlock its full potential and eclipse the XB360. This time around there's no real 'XB1 has secret power to unlock' outside of MisterX and the early adopters are very much of the mind 'PS4 plays games better and always will'.

 

[Dave Baumann]

IMO - this is exactly where backwards-compatibility could have played a joker.

Not sure that its BC that really plays the joker. As pointed out, if you are still playing and buying games for the older platform then you still have the hardware to do it. I'd say that a bigger factor to those users would be the online services. The fact that Live Gold translates across platforms seamlessly is handy and for people that subscribe and are updating the platform to the other camp have to consider either paying two subscriptions or letting the old one lapse.

 

[McHuj]

In short, will platform exclusives be enough to significantly elevate interest and XB1's sales? Should MS spend more on exclusive content, or price drops?

At this point, it's price drops. Price drops will have an immediate impact that reaches all potential consumers.

Exclusive content applies only to the people interested in that specific game. And unless the exclusive content is a full game, I don't believe DLC really sways a significant amount of people.

 

[Cjail]

@Shifty
Possibly in time the majority of customers will come to know that PS4 is more powerful but to me that's another good reason for MS to invest/focus on exclusives where, in the end, performance parity with the competition matters less.

 

[Phil]

Not sure that its BC that really plays the joker. As pointed out, if you are still playing and buying games for the older platform then you still have the hardware to do it. I'd say that a bigger factor to those users would be the online services. The fact that Live Gold translates across platforms seamlessly is handy and for people that subscribe and are updating the platform to the other camp have to consider either paying to subscriptions or letting the old one lapse.

Good point. I should have clarified a bit further; IMO the problematic aspect about not including BC is precisely the fact that Live Gold does translate across platforms seamlessly. The membership does - the content does not.

From a consumer POV, it's easier to look at hard-physical game copies (possibly with the 360 logo on every box) and realize that it physically just won't play on the newer console. However when buying digital purchases on Live, using a membership that does translate seamingless but the content does not, it becomes a bit less of clear-cut case - especially when the content we are talking about are indy-games.

You have a point that the people who have invested large sums of money on the older platform will also have the [old] hardware to keep playing it. That's true. But a consumer still full in touch with his older games is also less likely to upgrade. For them; it's easier to "wait and see" than to run out and stand in line at launch or within the first couple of months. If you can offer an upgrade to next-gen with a console that remains fully backwards-compatible, you can often justify a slightly higher entry price because you know that all your investments remain playable. For them, the transition is seamingless. They can get the next gen console, keep playing their old games with their friends and slowly purchase new next gen software as they go along.

Keeping your investment means a higher likelyhood that your consumers remain loyal to your platform, because they will always stack what they have invested and what remains playable against a competitor where they would start at zero.

Looking back; I have many nostalig memories of games I enjoyed playing on older hardware. It's also the reason why I have purchased countless of "HD remastered classics"
for my later console. There's obviously a market that is keen to buy and play old content. They're not selling because they're HD - they're selling because it enables us to play old games on new hardware (and the HD part is a nice benefit). The very same market that buys these types of game, I'd argue are also very much interested in BC.

 

[Brad Grenz]

Even in the absence of broader backwards compatibility, there are way to make that transition easier, and that's an area where Sony has excelled and MS continues to fail. There are lots of cross-buy games for PS3/PS4 and things like Zen Pinball tables import to the PS4 version for free. Zen just announced the release of Pinball FX2 for Xbox One but you have to rebuy all the tables for the new version. Zen wants to offer a free upgrade path for 360 owners, but Microsoft "did not allow that option". Considering the potential MS has to leverage cross-entitlements between 360, Xbox One, Windows and Windows Phone, their unwillingness to do so is mind-boggling.