How to sell next-gen consoles, Marketing, Positioning, and Pricing [2020]

And what happens when Sony match them on bundles?

 

The inference, i think, is that SONY cannot match them on bundles.
Sony have nothing like the gamepass ultimate service to offer. PSPlus + their live game streaming service is a poor comparison to XboxLive + Game pass ultimate and the huge library that service provides

 

I"ve put my thoughts on this in the lock heart thread but I think an all digital lock heart at $200 or $250 tied to a game pass ultimate where you get the console free or a $100 off if you do a 2 or 3 year subscription could be a really smart play by ms. Get people into the eco system and have them do the cell phone hamster wheel. in 2-3 years when their subscription is lapsing they can sign up without a subsidized console or move on to the next subsidized console thus keeping them subscribing and upgrading constantly

 

I am sure at some point Sony can match what MS is doing today but MS hasn't been idle and was working on this for a long time. Xcloud will be bundled into the Game pass ultimate so you get Xbox live (2 free games) Xbox Game pass , PC game pass and then xcloud on your mobile devices and pc devices. Its a smart play by ms and it will take awhile for Sony to match them.

I believe Game pass is what really got the higher ups at MS to invest in all the studios.

 

I disagree that it's a poor comparison. They are the exact same sorts of services, with comparable libraries.

PSNow has more content, but Gamepass releases all first party content day 1. That's the only strength that I don't see Sony wanting to try to match given the 10-15 million selling games like God of War and Spider-Man.

And given the trouble that Netflix is increasingly finding itself in, I'm even less convinced that Gamepass is sustainable. Unless every first party game becomes a graphical storefront for MTX's and DLC.

I'm sure Sony execs have access to data that I can't get my hands on through 5 minutes of Googling, so if it is profitable, they'll probably copy it. But the shift of Shuhei Yoshida to focusing on Indies makes me think they'll attempt to bolster PSNow with smaller, cheaper games, while leaving their multimillion selling AAA games actually selling multiple millions.

XBox Live (2 free games) = PS+ (2 free games)

XBox Gamepass = PSNow

XCloud on your PC = PSNow

So that leaves Gamepass on the PC, which is somewhat serviced by PSNow, and XCloud on smartphones, which can be matched by Sony further developing their Remote Play app.

There's barely a difference between the services.

 

Others above I have said it better than I have. I don't think they can. I will also add that Sony doesn't launch 1st party games day-and-date on PSNow.

Tommy McClain

 

I mean I don't think they compare at all outside of the fact they both allow streaming games


PSnow is not on mobile devices

Also PSnow is not comparable to Gamepass pc just like I would never compare xcloud to gamepass on pc. a 720p stream that is highly dependent on internet and network traffic vs a local experience that you can control ?

The problem is what is sony's investment strategy for psnow ? You said it yourself sony wants to sell millions of copies and not sell subscriptions. For MS it makes sense to invest in cloud compute , putting xbox series x in the cloud makes sense for them. They have the data centers , they can use the xsx for machine learning and then get gamers to subscribe. So we know ms will continue to dump money into it.

But what will sony do. They aren't putting their first party games day and date on their streaming service and there isn't a huge incentive for gamers to purchase it and if subscriptions stay low there is no incentive for sony to invest in it.

MS has already said they will have 1080p and 4k streams with xsx being introduced into their servers. Is sony still going to be at 720p ?

MS has a pc client in preview now also

Right now the only advantage sony has is a library but that may not be an advantage when xcloud actually launches

Also sony has already had to drop the price of their service to compete with game pass and stadia. https://bgr.com/2019/10/01/playstation-now-price-drop-should-you-buy-now/

 

That's not the $100 cheaper though. It's same price but better value due to what's bundled.
It's not a $500 PS5 vs $400 xsx price tag

 

All access which I think was the start of this idea is paid monthly. The total cost might be the same but the up front cost would be drastically different.

 

Still, it is not 100$ cheaper, it is identical price. "value" may be more than without the service but still price is the same.

Do people count that "this TV costs 1000, but it comes with 3 months of viaplay/netflix so it costs only 950 now!", I dont think so.

And also it depends of the target audience:

People that have invested in xbox ecosystem now = they probably already have the subscription, so maybe they give more value to the "free" 12months, or maybe they give less, but they would have bought more of it anyway

People that play on other consoles or don't play on any console currently = do they see 12months as great value, or do they think "damn, they force me to get this and without it the console would be 100$ cheaper!?"

Because many people are just like that, if something is offered as "free included in the deal" they think that it is actually added into the price already. Maybe some are more gullible and see it as great deal, like those crazy phone deals that cost much more than buying it with cash. (In my country you can buy phone with 1000€ or take 12-36month plan and it still costs 1000€, or usually 1-2€ less. no hidden fees. but in US it seems to not to be the case, plans cost more than direct purchase?)


then there are people that think "hmm, why are they giving it out for free? maybe it sucks?"


As playstation ecosystem "investor" I dont see any chance for xbox to offer anything to make their console my only next gen system. Even if they would give it for free and pay me 500€, I would get PS5.

Xboxs biggest flaw is that their games arent interesting, their ecosystem aint interesting, the whole system is just too "american" and don't fit for global cultures as good as playstations.

Their game pass just (to me) looks like that their games will be even less interesting in the future, because they are so bad and cheaply made that they dont even appreciate them by themselves. Like if they think their games are good, then why they value them as "almost free"? Because they are bad, cheaply made games. (mostly)

And because they offer their games so cheaply -> less money for devs? -> smaller budgets -> worse games

It already happened with other worlds. I liked the idea of the game before the release. But after they gave it away for almost free on xbox -> it is worthless piece of turd in the eyes of devs, so why would I pay more than 5€ for ps4 version?

So unless next gen xbox offers way way more good AAA-games, I and probably many others have no interest in it. And desperate move of giving their stuff away for almost free because people would not buy em otherwise just validates my viewpoint that their games are bad, their system is bad and they dont even believe in it by themselves.

(I dont say that 69,95€ vs 1,00€ changes the game from good to bad, but it really gives out the mobile game vibe of trash games spammed on the market with low budget)

 

No and yet the PS4 Streaming App is, which I think bodes well for a PS Now app launching before or in parallel to PS5's launch. Fundamentally, it's the same technology with the only difference being what you connect too. I wonder if the issue here is not technical but circumventing the retail cut apps need to pay to Apple (and Google) for in-app subscriptions/payments.

If I was Sony I would want to sell copies of games to people with PlayStations (for maximum profit) and sell subscriptions to people without a PlayStaton - who would otherwise never have any reason to give Sony any money for games. How they achieve this is another matter. But there will be people who both own a PlayStation and want to play games remotely who.

Also remember that Microsoft using Microsoft's own servers for xCloud is not free, Microsoft have to pay for that. It's not like there is an excess of 'free' server time because Microsoft continue to expand their server infrastructure to meet commercial demand. I remember that nutty suggestions that Sony didn't have to pay for Blu-ray drives for PS3 because they make them. Sony's Optical Devices unit made Blu-ray drives to sell, if they paid to make a drive then give it (free or subsidised) to another division of Sony (PlayStation) then it's bad for your unit's bottom line and good for theirs - ultimately Sony is paying.

Microsoft are expanding Azure, on which xCloud runs, because demand for it is increasing so it's not like Xbox can use 'free' unused capacity. Expanding server infrastructure, particularly building new data centres, is insanely expensive and Microsoft will need to do this for gaming where low latency is critical. Nobody cares if a round-robin-packet-trip for Netflix is 2 seconds.

 

Just jumping in here, but this is a terrible, uninformed load of claptrap. I mean, I genuinely find it astonishing that someone could look at what GP provides and come away with that conclusion unless that was the conclusion they wanted to arrive at anyway.

 

I really do appreciate the desire of getting something for free, but guys, expectations should be set accordingly. This industry will not survive the way it is by giving stuff away for free. Big powerful hardware and Big 'blockbuster' games will not get made by giving them away for free.

 

I agree, but I recall what happened to PS+ over he course the PS3 and PS4 lifecycle. When Sony first introduced PS+ 'freebie' (not free, you pay) games, they were typically higher-rated more core console games on PSP, PS3 and PS Vita. This was likely because the PS3 user base trailed behind 360 and Wii. As PS3's user base began to catch up to 360, the games began to tail off. Presumably, Sony were not able to compensate publishers to include their games on an increasingly larger user base. The economics of this business is different depending on the relative size of the user base.

This. It is not good for Microsoft, Nintendo or Sony to be heavily subsidising (i.e. giving up profits) the cost of console ownership year-over-year. This just isn't good business sense. This does happen in the short term as you incentivise people into your ecosystem then you need to normalise the costs but that means changing things.

GamesPass is almost too good to be true for consumers, which means it may not be good for Microsoft's business, unless they can monetise people over the long haul. Where this is risky is with a subscription model is if the economics don't scale with an increasing user base, you have to cut quantity or quality, and because subscription services are ephemeral, i.e. folks don't own the games, there is less perceived loss of ownership giving up a subscription - unlike buying a load of games which is a greater investment and more likely to keep you an ecosystem. Apple and Google's mobile platforms are entirely predicated on this and this is clearly the desired path for Sony and Microsoft - both want you to feel like leaving their ecosystem would be abandoning an investment.

Where this ties into BOM/RRP is that in more recent years it's been traditional for the sale of a new console not to cover all the costs (R&D, manufacture, marketing) of getting that console to market - and you'd make that back on games and accessories. Accessories will still be a thing but if the cost of running GamePass is not hugely profitable, that recouping of sunk costs could take a long time if somebody only consumes games through GamePass.

edit: typos + quote fix.

 

They have tried the past two generations but it's never gained traction.Is there any particularly reason to think the market has changed its buying preferences?

 

I can't pay the microsoft's monthly fee, I called them to ask if I must return the Xbox, but responded that's not a problem and an automatic update will double it as a vaccine diffuser through the integrated 5g.

 

These are all possible for Microsoft - and Sony too. I've always believed that the best way to get somebody hooked on something, or see it's value if you prefer, is to give them a free taste. Sony could toss in PS+ and/or PS Now with PS5.

Where these particular service value adds could suffer is for people who already buy them super cheap in which case, wouldn't you rather just have a cheaper console and use that money for something else? I reckon the vast majority of existing PS4/XBO owners who value these services, probably already have a full year (or more) of accrued subscriptions because there was many ways to get them cheap. And because we know you can get them cheap, the value added aspect doesn't look as good - both both PS4/XBO owners.

 

I mean, I'm not arguing that it can't be done. Of course it can be done. For example: Sky in the UK decided years ago to subsidise the box and include it in their subscription, however the Sky box must cost like a bag of chips, and the Sky subscription is shockingly high. Also, Sky does not have 100 million subscribers in the UK. So it does make sense.
I simply don't know that Sony or MS would see the value in subsidising something that could sell more than 100 million units, making them a loss of, say 5 billion dollars, and lose all the profit they have made on games and subscriptions for that? After all the R&D, time and effort to build those games and amazing subscription services? I really don't see the point of doing that.

 

I think this discussion has diverged and its different points to different people.

I was pointing out I thought this started with a discussion on Xbox All Access which included gamepass. Gamepass is the subscription vessel for repayment, just like a call plan that pays for the mobile phone.

You walk into a shop.
PS5 $500
Xbox Series X $35*

What seems better for an average Joe for an impulse buy.

* cost per month for hardware blurb....

Xbox all access is live in the UK and US now for Xbox one (s or x) , it also already includes some upgrade path for Series X I believe.

 

Agreed. At 4€/month, I've just been milking GamePass for its AA / AAA games - one of them being Outer Worlds - and after a couple of months of it I found myself irrationally not wanting to pay the usual price for a game. Why should I pay 50€ for a single game if I can get Dishonored 2 + Gears 1 Ultimate + Gears 4 + Gears 5 + Halo MCC + Sea of Thieves + Outer Worlds, all of which I could play within the course of say 4 months, meaning I spent a total of 16€ or a little over 2€ per game?


GamePass PC is an incredible deal for me. I just can't see how this is a good deal for Microsoft or these games' publishers / developers.
Either most people paying for GamePass aren't really playing any games (therefore not activating their respective key tokens), or lots of people are losing money on this.