Hypothetical: Direct Download only Future for Console Gaming?

[aaronspink]

Do you claim to know better than Credit Suisse analysts?

http://www.multichannel.com/article/339947-YouTube_s_Bandwidth_Bill_Estimated_At_300M_For_2009.php

You might want to match up data with relevant like data. You also might want to question CSFB's ability to have a clue as well.

 

[corduroygt]

You might want to match up data with relevant like data. You also might want to question CSFB's ability to have a clue as well.

I'd rather question your agenda than Credit Suisse's research. Why should anyone take your word over analysts' from respectable companies?

 

[dobwal]

Ah I see where I messed up . Of course they wouldn't need 5000PB the first year. So costs would scale up each year.

of course it wouldn't be in one large go and steam has no problem handling thier amounts of games and even let you download the titles as many times as you need.

Steam doesn't handle that amount of data needed to serve console consumers and even with their limited userbase, they still took the time and based their investment schedule around consumer demand of their users.

As i've pointed out the only retailer to be upset with this would be gamestop and thier used market. In fact for bestbuy having the console have built in profit and going with game cards would reduce the space needed to support gaming and allow them to stock more acessorys. All major stores carry ipods + itun cards. They make a profit on the itune card + the ipod + then acessorys. It will be the same here

No, every retailer would be upset because you are replacing a proven model with known revenue stream figures for an unproven model where retailers recieve a smaller cut of sales. Game space saving will be trivial to the amount of sales lost from departure from optical disc based media. For the big retailers, game space take up >1%-2% of store space. And none of the big three can prove that consumers will transition seamlessly from optical based media to DD and that DD cards sales will actually notably make up the loss from not selling optical media anymore.

All major stores carry ipods + itun cards. They make a profit on the itune card + the ipod + then acessorys. It will be the same here.

Ipod and Itunes cards are a poor example because Apple doesn't ask for ultra slim margins for Ipods with the sales of Itunes to make it worth while for retailers. Plus, CD sales still contribute to retailers' bottom line. Ipods and Itunes is a consumer generated phenemenom, transitioning to a DD only console where its pred was mostly optical media based will be a manufacturer based phenemenom. Retailers know this and will punish the manufacturers. You only have to look at the initial retailers' response to the PSP Go to predict the retailers mood for a DD only console where there exist a proven DD only profit model for retailers.

Retailers would take a much tougher stance against the introduction of DD in such an abrupt fashion. They will demand a profit margin that either force manufacturers to notably increase retail prices or force a higher level of subidization.

All companys already made investments into DD this gen. They would simply need to scale existing capacity. At the start of a generation your going to sell the least amount of software. So investment in in the first year or two will be low and ramp up should be steady peaking in the fall.

You're talking a massive scaling of capacity with data center investment in every region where your console is sold. You don't need to start that investment at year one, you can start it now and grow the investment based on demand and not a console release. DD penetration is not going to be the same in all regions. You can grow DD naturally and at a pace that match market demand. While a DD only model too soon would force you to abandon certain market or try to shoehorn a DD only console that really is not suited for the market you trying to target.

Whats more these companys can easily use a bit torrent like service so that under huge load a user is also uploading a portion. Even setting it at 5kb/s would make for huge bandwidth savings. Its something that youtube can't do.

You think the big three would leave the quality of their service to their userbase? You think ISP are going to take kindly to dealing with 5000 PB of P2P data running around the internet because the big 3 want to save on bandwidth costs?

Optical media is still the number one way the market consumers video entertainment because of that the DVD drive in the 360 and BluRay drive in the PS3 functions more than just media storage for games. DD only on consoles are an unknown. MS, Sony nor Nintendo know how going DD only will affect retailers as well as consumers. The last place you want to deal with this is the launch of a new console. Its simply more feasible to wait to DD grows on your existing optical based consoles as well as the overall market in general before transitioning to DD only. A slower transition provides knowledge about the market acceptance of the delivery method before you actually commit yourself 100% to the delivery method.

 

[NeoTechni]

In this day and age, the people that don't have broadband can't afford it in the vast majority of cases.

Prove it instead of making up lies.

Why? Roughly the same customer base buying roughly the same number of games.

No, significantly less will be

No, there are not.

Yes, there are. At least do a google search on undercutting laws before claiming there arent any. I've even posted one before. You've never heard of unfair competition laws?

I could care less either way quite honestly, I just am having fun driving trucks through the vast oceans of BS in your argument.

Making up lie after lie doesnt constitute as driving trucks through anything

PS3 games aren't really using 50GB now. And they likely never will unless they are doing nothing but FMV using bad compression which is like so 1990s.

There are 3 that come on dual layered discs, none are reliant on FMV

The vast majority of collector editions are switching to digital bonuses. If you want an art book, just buy the damn art book.

So you're saying your opinion is more valid than anyone who wants a collectors edition
The vast majority of collectors editions even with DLC still come with physical objects, ie: special packaging.

So you are calling basically the heads of every major media company stupid?

No, because none of them are getting rid of physical mediums. Movies and music still come on discs, they havent gone away


http://www.pcworld.com/article/192128/the_real_truth_about_broadband_speeds.html

 

[eastmen]

Steam doesn't handle that amount of data needed to serve console consumers and even with their limited userbase, they still took the time and based their investment schedule around consumer demand of their users.

And both MS and Sony have taken the time to increase thier capacity. They have been doing it all generation.

No, every retailer would be upset because you are replacing a proven model with known revenue stream figures for an unproven model where retailers recieve a smaller cut of sales. Game space saving will be trivial to the amount of sales lost from departure from optical disc based media. For the big retailers, game space take up >1%-2% of store space. And none of the big three can prove that consumers will transition seamlessly from optical based media to DD and that DD cards sales will actually notably make up the loss from not selling optical media anymore.

You assume that margins on the console would remain slim. There is no reason for that to be the same. Next gen consoles can come with bigger margins built in. Also retail stores can carry game cards while reducing the gaming sections foot print and allowing them to devote the space to higher margin items or higher margin acessorys.

Also the hit on loosing a non activated game card will be many times less than the actual physical game.

Retailers know this and will punish the manufacturers. You only have to look at the initial retailers' response to the PSP Go to predict the retailers mood for a DD only console where there exist a proven DD only profit model for retailers.
/QUOTE]

PSP go is a poor example. A better example would be kindle or nook. Both are DD only devices and both are being pushed by thier retailers. Barnes and nobles knows there is more money to be made through nook than through retail books.

Retailers would take a much tougher stance against the introduction of DD in such an abrupt fashion. They will demand a profit margin that either force manufacturers to notably increase retail prices or force a higher level of subidization.

The profit margin for a retailer on a game is $5 usd here in the states. There is no reason why DD can't provide the same for the retailer with less risk.

You think the big three would leave the quality of their service to their userbase? You think ISP are going to take kindly to dealing with 5000 PB of P2P data running around the internet because the big 3 want to save on bandwidth costs?

Please don't leave out important information.

I never said to dump it all on P2P but a portion can be moved to P2P while the rest is handled by dedicated servers.

Optical media is still the number one way the market consumers video entertainment because of that the DVD drive in the 360 and BluRay drive in the PS3 functions more than just media storage for games.

DVD is dieing and bluray is doing a poor job of replacing it. The vast majority of bluray players are nw including DDoptions. Both the 360 and ps3 not only have netflix streaming but also have thier own video stores. Apple has its own store now als.

. DD only on consoles are an unknown. MS, Sony nor Nintendo know how going DD only will affect retailers as well as consumers. The last place you want to deal with this is the launch of a new console. Its simply more feasible to wait to DD grows on your existing optical based consoles as well as the overall market in general before transitioning to DD only. A slower transition provides knowledge about the market acceptance of the delivery method before you actually commit yourself 100% to the delivery method.

Microsoft already knows how DD wll do. They have been testing it since the start of the generation and slowly but surely sales are going up for it and gamesizes are going up. From 50MB in 2005 to 8 gigs in 2009 .

Buy including optical formats in the console you are destroying the benfits of DD

 

[NeoTechni]

Steam doesn't handle that amount of data needed to serve console consumers and even with their limited userbase, they still took the time and based their investment schedule around consumer demand of their users.

That's a really good point. Show me the 50 GB Steam games

No, every retailer would be upset because you are replacing a proven model with known revenue stream figures for an unproven model where retailers recieve a smaller cut of sales. Game space saving will be trivial to the amount of sales lost from departure from optical disc based media. For the big retailers, game space take up >1%-2% of store space. And none of the big three can prove that consumers will transition seamlessly from optical based media to DD and that DD cards sales will actually notably make up the loss from not selling optical media anymore.

Agreed, and as PSP Go proved, retailers are more than happy to boycott a system that costs them sales

Retailers know this and will punish the manufacturers. You only have to look at the initial retailers' response to the PSP Go to predict the retailers mood for a DD only console where there exist a proven DD only profit model for retailers.

I'm seeing a similar train of thought here

You're talking a massive scaling of capacity with data center investment in every region where your console is sold.

Which isnt even possible.
Poland for example still doesnt have XBOX Live, yet MS sells 360s there

You think the big three would leave the quality of their service to their userbase? You think ISP are going to take kindly to dealing with 5000 PB of P2P data running around the internet because the big 3 want to save on bandwidth costs?

No, they wont. ISPs are already punishing heavy downloaders, and throttling bandwidth
This article especially emphasizes your point http://www.pcworld.com/article/192128/the_real_truth_about_broadband_speeds.html


Going DD only is suicide

 

[corduroygt]

Buy including optical formats in the console you are destroying the benfits of DD

How exactly? Console size isn't as important as a handheld's size, and 360's DVD drive costs about $10-15 since retail DVD BURNERS with full 5.25" chassis, box, etc can be sold at a profit for $20, Blu-ray will cost about the same when next-gen starts.

The benefits of DD can coexist with optical media, as it's been doing this gen.

 

[aaronspink]

I'd rather question your agenda than Credit Suisse's research. Why should anyone take your word over analysts' from respectable companies?

Um, apparently someone didn't pay any attention the last 2 years to the credibility of analysts.

 

[aaronspink]

Prove it instead of making up lies.

Actually the contention is yours. Proof is therefore also yours.

Yes, there are. At least do a google search on undercutting laws before claiming there arent any. I've even posted one before. You've never heard of unfair competition laws?

You do realize that applies to the WHOLESALE price not the RETAIL/MSRP. The difference between the wholesale and retail/MSRP for video games can be upwards of 100%. Ever wonder how retailers can give $10 day one discounts? Come back when you have a freakin clue about the market you are trying to preach about.

There are 3 that come on dual layered discs, none are reliant on FMV

DL != 50GB.

So you're saying your opinion is more valid than anyone who wants a collectors edition
The vast majority of collectors editions even with DLC still come with physical objects, ie: special packaging.

And I'm saying that the people generally don't care about the packaging unless they aren't ever going to open it.

No, because none of them are getting rid of physical mediums. Movies and music still come on discs, they havent gone away

But they ARE going away. They are all planning on them going away. They all believe they will go away. We are on a trajectory where things such as physical media will be in the same categories as Vinyl.

http://www.pcworld.com/article/192128/the_real_truth_about_broadband_speeds.html

Linking to an idiot being an idiot because he doesn't understand the underlying technology isn't helping your case.

 

[aaronspink]

No, every retailer would be upset because you are replacing a proven model with known revenue stream figures for an unproven model where retailers recieve a smaller cut of sales. Game space saving will be trivial to the amount of sales lost from departure from optical disc based media. For the big retailers, game space take up >1%-2% of store space. And none of the big three can prove that consumers will transition seamlessly from optical based media to DD and that DD cards sales will actually notably make up the loss from not selling optical media anymore.

So the retailer is upset. They'll die anyways. If you are a retailers that is dependent on mainstream physical media for profits, then your time is already counting down. FAST!

Retailers would take a much tougher stance against the introduction of DD in such an abrupt fashion. They will demand a profit margin that either force manufacturers to notably increase retail prices or force a higher level of subidization.

Retailers don't have a voice. They can take it or leave it. They can get something or nothing. They don't have the power you seem to think they have.

You're talking a massive scaling of capacity with data center investment in every region where your console is sold. You don't need to start that investment at year one, you can start it now and grow the investment based on demand and not a console release. DD penetration is not going to be the same in all regions. You can grow DD naturally and at a pace that match market demand. While a DD only model too soon would force you to abandon certain market or try to shoehorn a DD only console that really is not suited for the market you trying to target.

Why replicate what is already there.

 

[dobwal]

And both MS and Sony have taken the time to increase thier capacity. They have been doing it all generation.

Not a scale that can support DD only. Current growth is rather organic based around consumer demand for DD.

You assume that margins on the console would remain slim. There is no reason for that to be the same. Next gen consoles can come with bigger margins built in. Also retail stores can carry game cards while reducing the gaming sections foot print and allowing them to devote the space to higher margin items or higher margin acessorys.

Yes, DD console would more likely provide greater flexibility in terms of subidization. The problem becomes when you launch a new console where you aren't gauranteed sales and you present yourself with greater risk because you are incurring huge losses without the knowledge that DD will ever recoup that upfront investment. You can end up a datacenters that can globally handle 1000s of petabyte of downloads for a console that died on delivery.

Also the hit on loosing a non activated game card will be many times less than the actual physical game.

How many people buy games and don't play them. How many buy card and don't use them? It rather huge as I've read only 80% to 90% of gift cards actually get used. Meaning that manufacturers will actually get to eat up market dollars that will never get to pubs and developers.

Retailers know this and will punish the manufacturers. You only have to look at the initial retailers' response to the PSP Go to predict the retailers mood for a DD only console where there exist a proven DD only profit model for retailers.
/QUOTE]

PSP go is a poor example. A better example would be kindle or nook. Both are DD only devices and both are being pushed by thier retailers. Barnes and nobles knows there is more money to be made through nook than through retail books.

Now thats a poor example. Both the kindle and nook are pushed and sold by the retailers that sells the content. How's is that a better example than the PSP Go, a dd only gaming device sold by Sony? Kindle and nook are the equivalent to the Walmart PS3 or BestBuy 360.

The profit margin for a retailer on a game is $5 usd here in the states. There is no reason why DD can't provide the same for the retailer with less risk.

Well, from the conversations around B3D, the US margins seem more like 10-15 dollars a game not $5.

Please don't leave out important information.

I never said to dump it all on P2P but a portion can be moved to P2P while the rest is handled by dedicated servers

How do propose you do that? What system can deliver content where a portion is P2P distributed and other through dedicated servers. Do you want big releases on P2P where its take time to build on maximum download rates as seeds get added, while smaller titles with dedicated servers won't get swamp but provide a speedier download.

You talking paying customers here and most aren't going to feel obligated or readily take kind to being called leeches because they don't want contributed to the efficiency of Bit downloading.

DVD is dieing and bluray is doing a poor job of replacing it. The vast majority of bluray players are nw including DDoptions. Both the 360 and ps3 not only have netflix streaming but also have thier own video stores. Apple has its own store now als.

DVD is dying but its still by far the number #1 choice for at home consumption. BluRay isn't going to totally replace it, true, but how many DD only device whos only function is to play downloaded movies do you see on the market with major penetration. DD strength is its ability to piggyback on current tech because it doesn't cost much to implement. But when DD is ready for prime time and the dominant method of delivery, it will be able to stand as the primary feature of a device.

Do you think the 360, PS3 or Wii would be at their levels now if they were DD only? The same conditions that existed in 2005 and 2006 that would of made those console unviable as DD only platform still exist. Even though DD is bigger it is still not at the tipping stage of major market adoption. If that were true, DD would be rivaling DVDs and its not.

Microsoft already knows how DD wll do. They have been testing it since the start of the generation and slowly but surely sales are going up for it and gamesizes are going up. From 50MB in 2005 to 8 gigs in 2009 .

Buy including optical formats in the console you are destroying the benfits of DD

No you are not, you creating the opportunity to smoothly transition to predominantly DD without requiring consumers or retailers to experience an abrupt change in the market. This has been DD strength, basically

 

[dobwal]

So the retailer is upset. They'll die anyways. If you are a retailers that is dependent on mainstream physical media for profits, then your time is already counting down. FAST!

If Walmart, BestBuy and others were dead it would be true, an all out effort for DD would make sense. But when they are still the #1 sellers of your consoles, you can't ignore them and B&M are far from dying because they serve a needs you can't get over the internet. The internet doesn't provide physical access to a prospective product nor does it serve the desire to acquire a product in less than a hour.

Retailers don't have a voice. They can take it or leave it. They can get something or nothing. They don't have the power you seem to think they have.

Retailers do have a voice. I don't think that the PSP high retail price is strictly the result of higher manufacturing cost while I do believe that its high retail has drastically killed demand and pratically gaurantees it will remain a niche product. A handful of retailers provide the vast majority of console and game sales and it only takes a few to discontinue a console to have a drastic impact. Ask distributors and vendors how much leverage Walmart has over sales prices.

Why replicate what is already there.

Live isn't everywhere, but a DD only console would require a data center in every region sold. Unless, you can maximize sales with a low quality download service, which I doubt.

 

[corduroygt]

Um, apparently someone didn't pay any attention the last 2 years to the credibility of analysts.

Surely the economic crisis has a lot to do with knowing how much Youtube pays for bandwidth. How about YOU show me a credible link that says bandwidth is ridiculously cheap? You try and fail to defend against links, but can't expect anyone to take you at your word against the professionals. I surely don't expect that, so I back up my statements with sources, like others. You fail at this.

 

[specwarGP2]

I'm certain a DD only console will be rejected by consumers if games stay at $60.

 

[aaronspink]

If Walmart, BestBuy and others were dead it would be true, an all out effort for DD would make sense. But when they are still the #1 sellers of your consoles, you can't ignore them and B&M are far from dying because they serve a needs you can't get over the internet. The internet doesn't provide physical access to a prospective product nor does it serve the desire to acquire a product in less than a hour.

If they don't want to sell them, I'm sure there are other retailers perfectly willing to make $ for hold stock on shelf.

Retailers do have a voice. I don't think that the PSP high retail price is strictly the result of higher manufacturing cost while I do believe that its high retail has drastically killed demand and pratically gaurantees it will remain a niche product. A handful of retailers provide the vast majority of console and game sales and it only takes a few to discontinue a console to have a drastic impact. Ask distributors and vendors how much leverage Walmart has over sales prices.

The PSP has a high retail price because it has a higher manufacturing cost and is at best an also ran in the market place.

Walmart only has leverage if you give them leverage. And quite honestly, I'm sure they wouldn't mind putting the physical media shelf to other uses. Its a minor minor part of their income.

Live isn't everywhere, but a DD only console would require a data center in every region sold. Unless, you can maximize sales with a low quality download service, which I doubt.

No it wouldn't require a data center in every region sold. In fact, that is about the most stupid way to do things I've ever heard. There are companies that specialize in high bandwidth delivery that have already partnered with pretty much every ISP on earth because it is in the ISPs best interest. Anyone with a clue doing DD ends up partnering with them due to their cost factors. 4U to a rack of DCD boxes can basically saturate most ISPs with up to 80 Gbit of delivered bandwidth (significantly more upend bandwith that most ISPs even have). The cost is exceeding low in reality since the ISPs basically give free local bandwidth because of their cost savings.

 

[aaronspink]

Surely the economic crisis has a lot to do with knowing how much Youtube pays for bandwidth. How about YOU show me a credible link that says bandwidth is ridiculously cheap? You try and fail to defend against links, but can't expect anyone to take you at your word against the professionals. I surely don't expect that, so I back up my statements with sources, like others. You fail at this.

quoting a financial analyst isn't backing up your statements. It is if anything punching holes through your own statements. Financial analysts know very little about most of the industries they actually cover, esp technical industries. The comments on the article only prove my point.

 

[aaronspink]

I'm certain a DD only console will be rejected by consumers if games stay at $60.

Any DCD only system would have to carefully mirror the pricing systems used by steam. Part of the reason to go to a DCD is to have the increased pricing flexibility and feedback that only a DCD can provide. Also the fundamental economics for the developers and publishers significantly change with a DCD system instead of a pre-manufactured retail system where the publishers/developers have to pay royalties upfront for each disc vs per actual copy sold.

 

[corduroygt]

quoting a financial analyst isn't backing up your statements. It is if anything punching holes through your own statements. Financial analysts know very little about most of the industries they actually cover, esp technical industries. The comments on the article only prove my point.

As I posted before, they're a billion times more accurate than a random forum poster. Unless you're going to give out legit links, your words don't hold any weight whatsoever.

 

[holsty101]

The PSP has a high retail price because it has a higher manufacturing cost and is at best an also ran in the market place.

Not forgetting that retail asked for (and got) a higher margin.

Anywho, this thread has (IMO) degenerated into something very depressing

 

[eastmen]

Not forgetting that retail asked for (and got) a higher margin.

Anywho, this thread has (IMO) degenerated into something very depressing

Well what have we learned ?


Physical discs

Pros

Cheap
Lots of space
proven retail channel
used market ?


Cons

Slow performance
fragile
used market
huge bulky optical drive
prone to selling out of stock
stock rotates quickly as new games come out
lots of hands in the pie

DD

pros

No retail hands dipping into margins
no lost or broken discs
very fast compared to optical
low noise
allways avalible titles
higher profit margins for developers

cons
No used market ?
downloads can take time
not everyone has extremely fast downloads.
data centers and bandwidth costs ?
devs will use more compression and non losseless sound and less fmv ?