Console Failures and Successes *spawn*

[bunge]

Using that same logic then Kinect is a success because Kinect is basically in every new Apple iPhone going forward, which is basically every phone from here on out.

Is it being used in games like motion controls are in phones? Maybe the fad has died down but the percentage of phone games with motion controls was high for a while. I’m not sure we see the same kind of penetration with Kinect technology.

EDIT: I think motion controls are important in VR games, too.

 

[Silent_Buddha]

Once again, MS and Sony sell basically the same thing. So, market share is determinant. Your comment doesn't apply to the console market.

Games cost about the same price, same thing for their online services. In such a situation, how could you make more money otherwise than with a larger market share ? You can't...



So, if i say Germany is a wealthier country than Spain, do i search a winner ? Facts are facts. There is no ideology behind facts...

Here is the truth : Sony makes more money with the PS4 than MS with the XB1.

So basically what you are saying is that if Microsoft was selling more consoles, it would be a success, even if they were losing money to do it?

Sorry, that isn't how the corporate world works. While something like that can give corporations bragging rights, which can be used in advertising (Press Releases), it's of minor importance to the corporation. Profits are what matters.

If MS didn't consider XBO's current performance as a success, it would be getting the axe right now as there aren't very many people on the BOD that were a fan of Xbox. X360 was not considered a success by them as it wasn't making enough profit, hence they were waiting for XBO to perform similar to X360 from a profit point of view in hopes of gaining more support for cutting the division.

This is especially true after the power struggle in the BOD around the time of the XBO launch, with the contingent favoring axing the Xbox division "winning." Just the fact that the Xbox division still exists with no rumblings out of Microsoft's investors and Board of Directors about axing the division means that XBO is doing significantly better than X360 (constant rumors of Investors and members of the Board of Directors questioning whether the Xbox division should keep getting funded).

In short.

• X360 generation. Corporate board of directors and influential investors want Xbox to be cut from the company because it wasn't profitable enough.
• XBO generation.
  • After launch, much crowing from influential investors that Xbox will get cut because it isn't profitable.
  • 1-2 years after launch, not a single peep from them about getting rid of Xbox. Instead, we hear about how Xbox is a key part of Microsoft's plans for the future.

Market share is only a footnote for the people making the decisions at MS. Profit generation and profit potential are the only things that matter.

Xbox, despite relatively large losses and miniscule market share was viewed as a necessary step to enter the market.

X360, despite massive market share gains almost got axed by the board of directors. A lot of pressure was put on the board by big money investors to get rid of the division.

XBO, investors were just waiting for XBO to perform poorly to get rid of the Xbox division. For the first 1-2 years, it almost happened. Nadella was able to hold them off long enough for Phil to turn things around and generate consistent profits that were large enough that the board and key investors were satisfied.

That is key. Those people were satisfied with the performance of the Xbox division in a way that they were never satisfied with the X360. IE - XBO is far more successful than X360 for the people that are making the decisions at Microsoft and more importantly since they are a publicly traded company, the people investing money in the company.

Sure to the average consumer and forum warrior, it's not selling as much as PS4, so it must be a failure. That's cool. It has indeed failed to match PS4's success.

But as I've been saying, from a business perspective, it is now more successful than the X360. The same couldn't be said of it in the first 1-2 years despite it selling more hardware units than the X360 did in the first 1-2 years.

Regards,
SB

 

[djskribbles]

The way I see it is, XB1 in itself is a failure. It failed to build or even meet the level of success of the X360 in terms of unit sales. It was a sinking ship under Don Mattrick's leadership.

However, Phil significantly turned things around for the Xbox division. XB1 will probably go on to sell ~33% less than X360, but it could've been a lot worse if it weren't for Phil. He probably did save the Xbox division from being axed.
He kept a consistent level of success while remaining profitable.

I still somehow doubt that the Xbox division is more profitable now than they were before though. Are these just assumptions, or has that been proven to be true? Even if the X360 wasn't profitable by itself, I would think that higher subscription, software and accessory sales would more than make up for it.

If X360 wasn't as profitable, I feel that it was another necessary step, as it created large inroads in the console market. They had a chance to build on that and take advantage of Sony's shortcomings and instead went backwards IMO.

Going forward, Microsoft has a big uphill battle to climb. IMO they're basically at square one again, after making significant inroads with the X360. They could have seriously challenged Sony and Nintendo as becoming the top selling console, but now they just seem to be focused on keeping their own level of success.

Sony was in a similar situation with the PS3; it was a complete failure at launch, but Kaz Hirai turned things around -- not just for PlayStation, but Sony in general. Unlike Microsoft, though, Sony already has established themselves in the console market, so it didn't require much for them to recover. Microsoft doesn't have that luxury; they're going to have to work hard to re-establish themselves.

So tl;dr, I think XB1 in itself is a failure, but the Xbox division remains in a somewhat healthy state. Phil took a sinking ship back afloat. The Xbox division probably went from being axed, to maintaining a decent level of success and remain profitable.

 

[Recop]

So basically what you are saying is that if Microsoft was selling more consoles, it would be a success, even if they were losing money to do it?

I didn't say that... don't you understand that a larger market share would be a good thing for the XB1 ?

A larger market share is always positive, unless it implies massive losses that you will never compensate.

Even if you're extremely profitable with a tiny market share, you would be even more profitable with a larger market share for the same product.

Apple is very profitable ? Fine but they would gain even more money with a larger market share.

X360, despite massive market share gains almost got axed by the board of directors. A lot of pressure was put on the board by big money investors to get rid of the division.

Compared to the Xbox situation, it was a huge step in the right direction. You can't deny that...

But as I've been saying, from a business perspective, it is now more successful than the X360.

You have to consider the whole context... the XB1 didn't success as it should be.

Even if the PS3 would have been profitable for Sony, it would be a failure because they lost their total domination from the PS2 era.

If you want, instead of a failure, we can say that the XB1 is a middling success.

I still somehow doubt that the Xbox division is more profitable now than they were before though. Are these just assumptions, or has that been proven to be true?

Indeed, where are the sources ?

 

[dobwal]

From the good ole days....

Entertainment and Devices Division

(In millions, except percentages) 2010 2009 2008 Percentage
Change 2010
Versus 2009 Percentage
Change 2009
Versus 2008
Revenue $ 8,058 $ 8,035 $ 8,495 0% (5)%
Operating income $ 679 $ 108 $ 445 529% (76)%
Entertainment and Devices Division (“EDD”) offerings include the Xbox 360 platform (which includes the Xbox 360 gaming and entertainment console, Xbox 360 video games, Xbox LIVE, and Xbox 360 accessories), the Zune digital music and entertainment platform (“Zune”), PC software games, online games and services, Mediaroom (our Internet protocol television software), Windows Phone and Windows Embedded device platforms, application software for Apple’s Macintosh computers, Microsoft PC hardware products, and other devices. EDD is also responsible for all retail sales and marketing for Microsoft Office and Windows operating systems.

Fiscal year 2010 compared with fiscal year 2009
EDD revenue was nearly flat reflecting increased revenue from the non-gaming portion of the business, partially offset by decreased revenue from Xbox 360 platform and PC games. Non-gaming revenue increased $35 million or 1% primarily reflecting increased sales of Windows Embedded device platforms.

EDD was worth about $8-8.5 billion in revenue a year with a bunch of business like Zune, phones, Mac software and retail Windows thrown in. Notice how they mention non gaming revenue increasing by $35 million or 1%. That would put non gaming revenue at ~$3.5 billion so gaming revenue was around $4.5-5 billion around this time.

Now fast forward to FY 2016

• Gaming revenue increased $75 million or 1%, primarily due to higher revenue from Xbox Live and video games, offset in part by lower Xbox hardware revenue. Xbox Live revenue increased 17%, driven by higher revenue per transaction and volume of transactions. Video games revenue grew 28%, driven by the launch of Halo 5 and sales of Minecraft. We acquired Mojang AB, the Swedish video game developer of the Minecraft gaming franchise, in November 2014. Xbox hardware revenue decreased 16%, mainly due to lower prices of Xbox One consoles sold and a decline in Xbox 360 console volume, offset in part by higher Xbox One console volume. Gaming revenue included an unfavorable foreign currency impact of approximately 4%.

$75 million representing a 1% increase means that gaming alone is worth about $7.5 billion in revenue. About 50% more than in FY 2010 and almost as much annual revenue as the EDD division as a whole back in 2010.

So how does one in the console business sell consoles at a lesser rate while generating about 50% more revenue on an annual basis while making no profits?

 

[chris1515]

From the good ole days....



EDD was worth about $8-8.5 billion in revenue a year with a bunch of business like Zune, phones, Mac software and retail Windows thrown in. Notice how they mention non gaming revenue increasing by $35 million or 1%. That would put non gaming revenue at ~$3.5 billion so gaming revenue was around $4.5-5 billion around this time.

Now fast forward to FY 2016



$75 million representing a 1% increase means that gaming alone is worth about $7.5 billion in revenue. About 50% more than in FY 2010 and almost as much annual revenue as the EDD division as a whole back in 2010.

So how does one in the console business sell consoles at a lesser rate while generating about 50% more revenue on an annual basis while making no profits?

On the current market having more market share means more revenue and profit using Sony Playstation and Microsoft Xbox business model.

And Microsoft lost market share coming from last generation and the loss was Sony gain.

The business model is better than last generation for Sony and Microsoft with PS plus being a paid services and losing much less money on each console.

And the rise of digital sales help earning more profit too.

 

[Nesh]

PS3 failed as a commercial venture - it never made money. It failed to maintain the brand popularity. It failed to introduce a whole new CPU paradigm into the world to be used everywhere, which was its intention. Motion controls in the controller basically failed too because they didn't become adopted everywhere. Failed to outperform its cheaper rival because they had the better GPU. There are few goals set out for PS3 that it managed, though of course it had its successes too, like mainstreaming BRD, providing a great media platform (most popular device for TV Netflix before TV sticks were a thing), and it was a success as a games machine in entertaining its users.

The PS3 is a mixed case. It had a disastrous start, to the point that the console probably faced the danger of extinction and almost took Sony down along with it, since the PS brand was one of the very few successful brands that kept Sony alive back then. But that's why it also hides some impressive success. Despite the late launch, high price and all the other disastrous choices that made the console lose a ton of third party exclusives and slowed sales almost to a halt, they managed to not only save the brand, but also reach and maybe slightly surpass the 360 in sales with an 80million userbase. All the mistakes Sega did with the Saturn, Sony repeated it and added some more. But they eventually avoided the "Saturn"ification of the Playstation. The brand was strong enough at the end of its generation that people forgot what a disaster the PS3 was at the beginning and they had high expectations for the PS4 that were eventually met.

Kutaragi was insane.

I don't think there was ever a console that managed to recover so gracefully out of such a mess in videogame history.

The XBOX One had less issues and it sits on 36 million sales and expected to end at 50 million.

 

[bunge]

If you want, instead of a failure, we can say that the XB1 is a middling success.

This ignores the fact that it failed to meet certain goals. I think that’s how this conversation started and I think it was @Shifty Geezer who stated that success or fail is tied to specific goals. Certainly MS failed at a number of goals but that doesn’t mean the brand is a failure.

Emotionally that's possibly difficult for some people to separate.

 

[bunge]

I don't think there was ever a console that managed to recover so gracefully out of such a mess in videogame history.

I think Sony were probably helped by the worldwide economic crisis in an obtuse way. Slowed sales weren’t necessarily a sign of a failed launch (even though years later objectively we can say that it was) and people had more important issues to worry about than a video game war. This probably deflected some criticism or “taint” that could have brought the entire thing down.

 

[Shifty Geezer]

Nah. PS3 wasn't a dud at launch - it didn't have the negativity of TVTVTV, say, nor was it overshadowed by a more hyped console. It was just too expensive! That conceded sales to the rival (who also launched earlier which helped). It's only retrospectively we can see quite the catalogue of failures. The hardware wasn't awesome, with too many compromises in significant places, much like XB1 was too expensive and compromised because of the original intent and Kinect pack-in.

One of PS4's biggest successes was actually the RAM. It came from nowhere and PS4 would be struggling in places with the expected 4GBs. PS4 is a win in many ways hardware wise - easy to develop for, performant yet cost effective, generally well balanced. Shame the OS is a fail.

 

[bunge]

Shame the OS is a fail.

So much of the Vita’s OS works. It’s weird that it’s from the same company! The PS Store seems to suck everywhere though.

EDIT: corrected two fat fingers.

 

[mrcorbo]

Nah. PS3 wasn't a dud at launch - it didn't have the negativity of TVTVTV, say, nor was it overshadowed by a more hyped console. It was just too expensive!

I disagree. I think the PS3 was a dud at launch.

It was:

• Designed according to a vision that never materialized.
• Expensive.
• Hyped to all hell, with massive shade thrown at the competition.
• Hard to develop for (which lead to delayed releases and extremely sub-par ports early on).
• Alienating to 3rd parties that developed many franchises that had been synonymous with PlayStation due to Sony's early focus on it's 1st and 2nd party (though they probably benefited from this in the long run). In the US, at least, there were franchises that had been strongly linked to the PlayStation brand that either became less so, or became most associated with Xbox.
• Lacking in online features that were standard on the competition that launched a year earlier.
• Preceded by some very unfortunate PR (2nd job, can launch with no games, next gen starts when we say, etc.)

It did recover from all this stunningly well (throw the PSN hack in there, too) due to Sony's post-launch decisions, though. And all of those lessons clearly informed the development of the PS4.

 

[iroboto]

interesting that there is so much debate on the failure of ps3. I'm actively looking at the turn around as my focal point. Learning from failures is infinitely more important than having never failed. Some companies fail and never recover, much less than return to form and becoming the world leader.

 

[Shifty Geezer]

I disagree. I think the PS3 was a dud at launch.

I mean it wasn't perceived as a dud at launch. Bunge suggested the worldwide crisis helped obscure poor sales as though the poor sales were because people didn't want PS3. The market didn't snub it because it was no good; sales were only down because it was expensive, but it was still desirable. Most of what you list only started affecting the platform after launch when people realised it all.

 

[mrcorbo]

I mean it wasn't perceived as a dud at launch. Bunge suggested the worldwide crisis helped obscure poor sales as though the poor sales were because people didn't want PS3. The market didn't snub it because it was no good; sales were only down because it was expensive, but it was still desirable. Most of what you list only started affecting the platform after launch when people realised it all.

I guess it would depend on whether you consider the launch as just the launch date or the launch period. Since it was a staggered launch people in those later-launched territories would have been well aware of its issues.

 

[RobertR1]

At the launch of PS3 and through most of the generation, PSN was a mess compared to Xbox Live.

Sony underestimated the rise of online gaming during the generation. This is highlighted by their ultimate admission that Party Chat was never going to happen due to early design choice.

 

[Shifty Geezer]

The design gaffs didn't affect PS3 sales, probably ever. For years we had the secret, unstoppable power of Teh Cell which only the best and least lazy devs could harness, from those who followed such things. For the mainstream, it was just a games console that put graphics on their TV and they didn't know whether they were better or worse than the other choice. The PR nonsense probably didn't impact either. It was quite simply the very high price that kept earlier adopters away versus previous PS. Had PS3 been £400, and everything else the same (only know 'you need a second job, they'll buy it even without games' remarks), it'd have sold gangbusters.

It cost too much at launch to be a runaway success, giving the rival a chance to establish itself as a valid alternative. That meant no runaway 3rd party exclusives library like last time, and ultimately no massive difference between the machines, meaning a fairly even share of the sales.

This gen, one machine was far cheaper and a bit better, meaning it had a great launch, meaning it attracts some console exclusivity (especially Japanese games), and so its no surprise it's outselling the rival 2:1.

 

[Tkumpathenurple]

The design gaffs didn't affect PS3 sales, probably ever. For years we had the secret, unstoppable power of Teh Cell which only the best and least lazy devs could harness, from those who followed such things. For the mainstream, it was just a games console that put graphics on their TV and they didn't know whether they were better or worse than the other choice. The PR nonsense probably didn't impact either. It was quite simply the very high price that kept earlier adopters away versus previous PS. Had PS3 been £400, and everything else the same (only know 'you need a second job, they'll buy it even without games' remarks), it'd have sold gangbusters.

It cost too much at launch to be a runaway success, giving the rival a chance to establish itself as a valid alternative. That meant no runaway 3rd party exclusives library like last time, and ultimately no massive difference between the machines, meaning a fairly even share of the sales.

This gen, one machine was far cheaper and a bit better, meaning it had a great launch, meaning it attracts some console exclusivity (especially Japanese games), and so its no surprise it's outselling the rival 2:1.

I agree that the high price played a big part in the stymied launch of the PS3, but I don't think it was that in isolation. It was more expensive, whilst also being, in many ways, much worse.

No party chat, no background music, clunkier UI, constant stopping and starting with game updates. Worst of all, if you saw the same game running on both consoles, Sony's promise of "most powerful console" didn't hold true (I still wonder how different things would have been with an extra 256MB of VRAM.)

The PS3 was absolutely a failure, and I loved it. The XBoxOne is as much of a failure, and for the people that own one, probably just as loveable as the previous generation's fatty.

IMO arguing otherwise is sophistry.

 

[mrcorbo]

The design gaffs didn't affect PS3 sales, probably ever. For years we had the secret, unstoppable power of Teh Cell which only the best and least lazy devs could harness, from those who followed such things. For the mainstream, it was just a games console that put graphics on their TV and they didn't know whether they were better or worse than the other choice. The PR nonsense probably didn't impact either. It was quite simply the very high price that kept earlier adopters away versus previous PS. Had PS3 been £400, and everything else the same (only know 'you need a second job, they'll buy it even without games' remarks), it'd have sold gangbusters.

It cost too much at launch to be a runaway success, giving the rival a chance to establish itself as a valid alternative. That meant no runaway 3rd party exclusives library like last time, and ultimately no massive difference between the machines, meaning a fairly even share of the sales.

This gen, one machine was far cheaper and a bit better, meaning it had a great launch, meaning it attracts some console exclusivity (especially Japanese games), and so its no surprise it's outselling the rival 2:1.

Even accepting all that, why does the fact that price was the primary reason why it didn't sell mean it wasn't a dud? The price was a direct result of the design decisions made in architecting the system. The PS3 would have had to have been a completely different device for them to sell it at £400. One could just as easily say that if the XBOne had launched at $299 it would have sold gangbusters at launch.

 

[Shifty Geezer]

I use the word 'dud' to mean something people didn't want. PS3 was a product people wanted but couldn't afford. Contrast that with Wii U, say, which was a product people didn't want. Wii U was a dud, PS3 wasn't. From a business POV, yes, it can be said PS3 was a product dud because it was too expensive.