Business Approach Comparison Sony PS4 and Microsoft Xbox

[Shifty Geezer]

How did Nintendo release titles at 49.99 for Wii versus 59.99 on everything else? We've seen pricing vary on other platforms historically based on power.

They may have controlled publisher pricing. However, it's more likely that they just specified a recommended price point, led by themselves and their 1st party catalogue, and other games had to match due to competition. But Wii games were cheaper to make than PS360 games, so publishers could still make money at the lower price point.

Point being, the cost of a game in store is broken up to pay various people. You can't reduce that without reducing the money to some of those people. I doubt publishers would be willing to release on XB1 if they have their profits cut. I doubt retailers would care to stock XB1 games if their profits are cut. So MS would have to absorb the cut themselves, destroying the key earner from the console business.

 

[temesgen]

They may have controlled publisher pricing. However, it's more likely that they just specified a recommended price point, led by themselves and their 1st party catalogue, and other games had to match due to competition. But Wii games were cheaper to make than PS360 games, so publishers could still make money at the lower price point.

Point being, the cost of a game in store is broken up to pay various people. You can't reduce that without reducing the money to some of those people. I doubt publishers would be willing to release on XB1 if they have their profits cut. I doubt retailers would care to stock XB1 games if their profits are cut. So MS would have to absorb the cut themselves, destroying the key earner from the console business.

If MS sold new releases on Live for 49.99 it would become the defacto price at retail, they could negotiate with the publishers to get the license fee acceptable for their partners but it would be extremely difficult for retail to stay at 59.99 if consumers can go online and get it cheaper.

Edit:

if retail CD and DVD is any sort of indicator I'm not sure I care that much about losing space on the floor. And honestly stores like Best Buy aren't exactly struggling to find floor space these days, I don't spend a lot of time there but when I have been their stores in the past year they have a lot less than they use to.

 

[Shifty Geezer]

If MS sold new releases on Live for 49.99 it would become the defacto price at retail, they could negotiate with the publishers to get the license fee acceptable for their partners but it would be extremely difficult for retail to stay at 59.99 if consumers can go online and get it cheaper.

1) That's a whole huge debate whether they can afford to offend retail or not.

2) Sony can do that too, meaning no advantage. So what's the point? Stick with things where they are, getting more money in and everyone in the business being comfortable.

 

[mosen]

Mate its not just the PR, check gamasutra etc, over the years sony have been far more accommodating(*) to indie developers than MS. MS have been improving of late though but to claim its only a PR perception is laughable

(*) more freedom, less restrictions, helpful etc

I didn't say that, but I think good PR and PS4 HW will have more effect for those indie developers that had no experiment with both Sony and MS before, since they have more similarities than differences right now.

Offering technical assistance to developers and improving the development platform is one of the jobs of platform holders. Microsoft doesn't get extra credit for earning their licensing fee in the expected manner. In fact, they should be admonished for trying to portray this universal practice as evidence of a special development relationship in the face of a backlash to their cynical strategy for securing exclusives.

As I said their work is more than what their platform needs (UE4 is a multiplatform engine and Lionhead is a 1st party studio). Technical assistance is a different thing than having full access to everything MS do or exchanging engineers back and forth with developers and sharing technical expertise with them. Also they don't need to do marketing for technical assistance.

@Shifty

Thanks, I should do exactly what you said.

 

[Dave Baumann]

Offering technical assistance to developers and improving the development platform is one of the jobs of platform holders. Microsoft doesn't get extra credit for earning their licensing fee in the expected manner.

If what is being discussed is the defacto standard then developers wouldn't be singling it out. Clearly in this case they are discussing partnerships and assistance beyond what they receive from platform holders under the standard agreements.

 

[Brad Grenz]

If what is being discussed is the defacto standard then developers wouldn't be singling it out. Clearly in this case they are discussing partnerships and assistance beyond what they receive from platform holders under the standard agreements.

Developers aren't singling it out. Microsoft is, acting like they deserve a pat on the head for doing their job. It's a PR tactic to portray themselves as the good guy when they haven't behaved in any way that deserves such accolades.

 

[Dave Baumann]

Developers aren't singling it out.

Yes, developers are.

http://www.totalxbox.com/80362/divi...tal-relationship-with-xbox-one-and-microsoft/

Tom Clancy's The Division will perform and play beautifully on Xbox One, producer Fredrik Rundqvist has assured OXM, thanks in part to an "almost integral" partnership with Microsoft.

Please read what's being discussed.

 

[Brad Grenz]

And yet The Division isn't miraculously an Xbox One exclusive. I wonder how that works? It's almost like MS lends engineering support to all their third parties.

 

[dobwal]

How did Nintendo release titles at 49.99 for Wii versus 59.99 on everything else? We've seen pricing vary on other platforms historically based on power.

That could of been Nintendo simply waving their licensing fee to drive third party sales. Nintendo's wares dominates their consoles and their hardware isnt lossy giving them flexibility in that department.

The increase in retail prices doesn't seem to be driven by an expansion in licensing fees but a desire by dev to increase revenue and cover the ever increasing cost of development. MS is unlikely to cut their licensing fees to zero so whatever lower price cut pubs could manage would mostly affect the amount of profit per unit sale, something I doubt they would be willing to do. Well they might but probably at the cost of reducing budgets for porting, which probably lead to a bunch of less than stellar efforts.

 

[dobwal]

And yet The Division isn't miraculously an Xbox One exclusive. I wonder how that works? It's almost like MS lends engineering support to all their third parties.

Probably dependent on how open the pub is to doing a deal. It takes two to tango. I'm pretty sure if ubi were very open to an exclusivity deal, MS would of jumped all over TD especially given how much drool it has produced.

 

[orangpelupa]

http://www.eurogamer.net/articles/2...itas-no-show-and-the-mystery-of-10m-ps4-sales

it seems sony still confused why ps4 selling well and how they can make future strategi from this phenomenon.

btw, the way Yoshida-san answer question really the exact oposite of other big company boss. Yoshida-san give straigh answers while other big company boss (EA, Xbox, Ubi) usually use roundabout answer and marketing speaks.

 

[iroboto]

And yet The Division isn't miraculously an Xbox One exclusive. I wonder how that works? It's almost like MS lends engineering support to all their third parties.

For some reason when I read this, I get the feeling you think this is a bad thing?
Who is this hurting exactly?

 

[Scott_Arm]

http://www.eurogamer.net/articles/2...itas-no-show-and-the-mystery-of-10m-ps4-sales

it seems sony still confused why ps4 selling well and how they can make future strategi from this phenomenon.

btw, the way Yoshida-san answer question really the exact oposite of other big company boss. Yoshida-san give straigh answers while other big company boss (EA, Xbox, Ubi) usually use roundabout answer and marketing speaks.

They're all the same. They'll be brutally honest when it's in their interest and they'll be guarded when it's not. Take the EA Access answer for instance. "If every publisher follows suit, and as a consumer you have to choose by publisher which service to subscribe to, that's not something we believe is best for consumers." That answer is complete nonsense.

 

[Nesh]

They're all the same. They'll be brutally honest when it's in their interest and they'll be guarded when it's not. Take the EA Access answer for instance. "If every publisher follows suit, and as a consumer you have to choose by publisher which service to subscribe to, that's not something we believe is best for consumers." That answer is complete nonsense.

The difference between Yoshida is that most of the time he is outright honest and clear. He doesnt use PR spin at every opportunity, unlike MS which tries to give a PR spin to everything, with sometimes devastating results. Where he will try not to give a completely truthful explanation is when he has no choice. Apparently in the EA Access case it meddles with their Playstation Network business, They want to be in complete control, they want to be the value proposers and the beneficiaries of that value. EA Access takes part of that value and of that control. Obviously they cant tell you "hey there is a conflict of interest between what we want to do and what they want to do". So he settled with a half truth that there are two businesses (EA and SONY), that will try to sell content through their own online platforms and Sony doesnt want other publishers to bypass PSN and Sony's value proposition.

 

[temesgen]

That could of been Nintendo simply waving their licensing fee to drive third party sales. Nintendo's wares dominates their consoles and their hardware isnt lossy giving them flexibility in that department.

The increase in retail prices doesn't seem to be driven by an expansion in licensing fees but a desire by dev to increase revenue and cover the ever increasing cost of development. MS is unlikely to cut their licensing fees to zero so whatever lower price cut pubs could manage would mostly affect the amount of profit per unit sale, something I doubt they would be willing to do. Well they might but probably at the cost of reducing budgets for porting, which probably lead to a bunch of less than stellar efforts.

if Sony or MS is able to move consumers to LIVE/PSN for more software purchases they'd make more money. Shifty was pointing out that traditional distribution channels has additional parties that facilitate the sale which have to be compensated. My point is if either platform holder (MS in this case) did day one digital downloads at 49.99 they'd move more units.

Granted it would cannibalize retail sales and put pressure on retailers to lower their prices.

My response to that is who cares? Bestbuy has already suffered the impact of lost CD and DVD sales, digital downloads are where the market is going. If I'm MS I'd make a bold gamble and move the price and if need be artificially support the retailers I need like Gamestop by giving them a credit at the POS which I would fund from the additional sales I'd be making from my online store. That way consumers who have to have a physical copy can get it at Gamestop or online from me. On balance I think MS would make more and potentially gain market share.

The obvious downside to this is angering the Targets of the world but lets be honest Target isn't going to carry too many XB1 consoles or accessories anyways if the install base can't reach escape velocity.

 

[Scott_Arm]

The difference between Yoshida is that most of the time he is outright honest and clear. He doesnt use PR spin at every opportunity, unlike MS which tries to give a PR spin to everything, with sometimes devastating results. Where he will try not to give a completely truthful explanation is when he has no choice. Apparently in the EA Access case it meddles with their Playstation Network business, They want to be in complete control, they want to be the value proposers and the beneficiaries of that value. EA Access takes part of that value and of that control. Obviously they cant tell you "hey there is a conflict of interest between what we want to do and what they want to do". So he settled with a half truth that there are two businesses (EA and SONY), that will try to sell content through their own online platforms and Sony doesnt want other publishers to bypass PSN and Sony's value proposition.

So your argument is that Yoshida is most of the time (but not all times) honest and clear, where the Microsoft guy is honest and clear none of the time (which is obviously not true). And then you go on to apologize for Yoshida's odd explanation of EA Access, because for some reason that's more excusable than in the other situation with the Microsoft guy. That's amazing. Double standards are fun. Here's a hint, they'll both be "honest and clear" when it's easy, and evasive, resorting to PR spin, when it's not.

 

[MrFox]

Once again this is a false equivalence fallacy, hey you found one statement from Yoshida which you disagree with, therefore they're all the same. And you claim other posters display double standards (where did Nesh say MS is wrong every single time?). Neither argument hold up to scrutiny.

By the way, Yoshida's explanations make sense to me, it's exactly what I was saying the day it was announced. Do you wish to discuss it or should we agree to disagree?

 

[Nesh]

That's amazing. Double standards are fun. Here's a hint, they'll both be "honest and clear" when it's easy, and evasive, resorting to PR spin, when it's not.

There is no double standard. This is my personal view on Yoshida which I find better than any of the previous Sony's spokespersons. Simple as that. If you dont share the same view I respect that. No reason to be offensive and imply words and meanings because you have a different view

 

[Shifty Geezer]

I think we have a thread on PR as it all comes back to the same and goes round in circles. It's a lot easier to be up front when it's something you know your audience wants to hear, while when you know they don't want to hear it, you try not to say it. That's pretty natural. At the moment, Sony is saying what fans like to hear and has a cuddly front-man doing it for them, which is good business. I'm sure if things get ugly, Sony will skirt around it a bit, although personally if I was to rate Yoshida out of 10 for honesty, he seems to be something like an 8, on a very uncalibrated, subjective scale. He also asks questions which is novel. I won't put it past being a fabulous act - it doesn't make any difference for this discussion. Point being, he comes across as trustworthy and you can tell when he's beating about the bush. Other execs tend to score more around 5 on the Arbitrary Niceness Scale, sometimes a lot lower among politician territory. Having someone communicating high up that scale is important.

 

[-tkf-]

Ok, checked up on my one pre-order.. Supposedly it's not possible to pre-order any consoles with kinect, it's only those that did so a long time ago that gets the kinect. Strictly kinect less.

Can any other confirm this? Would be pretty spectacular if there wasn't an official sku with kinect in the new launch countries..