Importance of being the most powerful console *spawn

[Nesh]

Maybe, maybe not. The economics of consoles are in licensing fees paid by publishers for their games to be available on your system. This is a literal licence to print money for the manufacturer so it's really about ecosystem lock-in with hardware being the mechanism to date. But hardware is a double-edged sword, while you profit wildly on peripherals there are many costs sunk into console development and while the goal is sell all hardware at a profit there's no always possible initially so you're carrying R&D, manufacturer, shipping and marketing costs before a single game has been sold. Equally, customers having to buy a fairly expensive piece of equipment is a significant barrier to entry.

Now imagine replacing the hardware cost barrier with a BYOD approach, like Netflix. Or PlayStation Now, and whatever it is Microsoft keep hinting at. You need a controller, but that's it - and the controller is a high-profit item.

Sounds like a winner to me.

There other costs though. Some of these costs could set back conpetition since MS own a large amount of servers that others will have to rent.
Maintaining servers for such a service is a cost. Maintaining hardware per customer that render the games and stream them is additional cost. Although I suspect that could benefit from economies of scale of some sorts. On the other hand a hardware sold is a one off cost. If you are Sony and Nintendo you have all these costs plus the cost of renting. I dont think these companies can sustain competition in a market that replaces consoles with streaming services. MS has a huge competitive advantage that very few will have thecresources to match.
I am alsi unsure if this will ultimately benefit the consumer or not

 

[Deleted member 11852]

There other costs though. Some of these costs could set back conpetition since MS own a large amount of servers that others will have to rent.

Microsoft also have to design, build and maintain those servers. Any advantage they have depends on them leveraging an already-profitable Azure business.

Is Azure making money? I'm not sure because when you dig into that sector of Microsoft's business you'll find figures for "revenue" and "growth" which are the words managers use when it would be untruthful to say "profit" and you want to avoid saying "loss".

It can be cheaper to hire somebody else to do something specialised than do it yourself. NASA are perfectly capable of launching payloads into orbit but its cheaper to pay the Russians and Indians to do it. More reliable too.

 

[Nesh]

Microsoft also have to design, build and maintain those servers. Any advantage they have depends on them leveraging an already-profitable Azure business.

Is Azure making money? I'm not sure because when you dig into that sector of Microsoft's business you'll find figures for "revenue" and "growth" which are the words managers use when it would be untruthful to say "profit" and you want to avoid saying "loss".

It can be cheaper to hire somebody else to do something specialised than do it yourself. NASA are perfectly capable of launching payloads into orbit but its cheaper to pay the Russians and Indians to do it. More reliable too.

Well NASA found the cheap labor/costs to outsiurce some of their operations I presume. I also suspect that these operations are heavilly subsidized by the Indian and Russian government. Can MS find a "third party" that has the scale and cheaper services to outsource?

 

[Deleted member 11852]

Well NASA found the cheap labor/costs to outsiurce some of their operations I presume.

O/T but nope. NASA pay over commercial rates to Russia, who over-charge simply because they can.

I also suspect that these operations are heavilly subsidized by the Indian and Russian government. Can MS find a "third party" that has the scale and cheaper services to outsource?

Also O/T but nope. Sometimes it's just cheaper to get somebody with the relevant infrastructure, resources and experience to do that thing you want done. This is why most people pay other people to clean, deliver their mail, maintain their building etc - it's about economies of scale. It's why Netflix use AWS. This could all work well for Microsoft but it could also be good news for Amazon, Google and IBM.

Console economics are predicated on a closed ecosystem, not the hardware. That's all I'm saying. And the change, whenever it happens, will be an opportunity for others to get in on gaming without needing to design consumer hardware.

 

[Recop]

I recognize that Sony and MS create their own ecosystem now as Apple. So consumers will be more reluctant to change from a brand unless there is a real interest to do it.

 

[Deleted member 11852]

I recognize that Sony and MS create their own ecosystem now as Apple. So consumers will be more reluctant to change from a brand unless there is a real interest to do it.

Maybe, maybe not. I don't think the vast majority of consumers are wedded to particular brands but I think many people do understand when moving from one eco-system to another means no longer having access to what they've previously invested in. I.e, if you've owned an Xbox since 2007 and bought a lot digitally then it seems way unlikely that you'll suddenly switch to Sony for PS5 because there is no way to transfer that library across. Even if, objectively, you don't play those games much, they represent an investment that requires a sacrifice to give up.

 

[iroboto]

Maybe, maybe not. I don't think the vast majority of consumers are wedded to particular brands but I think many people do understand when moving from one eco-system to another means no longer having access to what they've previously invested in. I.e, if you've owned an Xbox since 2007 and bought a lot digitally then it seems way unlikely that you'll suddenly switch to Sony for PS5 because there is no way to transfer that library across. Even if, objectively, you don't play those games much, they represent an investment that requires a sacrifice to give up.

As if you'd have to find a way to ensure that their purchases can shift from one library to the next or have some service for cheap that would enable them to build an instant library of over 100+ titles within seconds for 12 dollars a month.
It's definitely getting clearer the methods in which MS wants to get back into this fight. If the content doesn't lock you to an ecosytem, then, I suppose power/features becomes a bigger part of the value pie for a purchaser.

 

[Deleted member 11852]

As if you'd have to find a way to ensure that their purchases can shift from one library to the next or have some service for cheap that would enable them to build an instant library of over 100+ titles within seconds for 12 dollars a month.

Agreed, the downside of a subscription service like GamePass (or Netflix) is keeping an eye on what you might want to consume and when it cycles out of the catalogue. GamePass hasn't been around long enough to get a feel for this but it's obviously not in publishers interests to sign lengthy deals as they are giving up revenue from the flash sales that Steam is famous for generating high revenue from.

 

[bgroovy]

Now imagine replacing the hardware cost barrier with a BYOD approach, like Netflix, or PlayStation Now, and whatever it is Microsoft keep hinting at. You need a controller, but that's it - and the controller is a high-profit item.

Sounds like a winner to me.

This is just a recipe for Publishers to sidestep "platform holders" altogether, as EA and Ubisoft have already announced their intentions to do. Sony was smart not to allow EA Access on PlayStation. After this gen EA's first order of business will be to convert their entire subscriber base to Streaming customers who won't need and Xbox or PlayStation at all. And this is an aspect of the crossplay debate people have totally ignored as well. These streaming players will not be siloed off from the Xbox and PC user bases. That's the kind of "dark future" Sony is resisting. The economics of being a platform holder are threatened by these developments. That might sound just fine for gamers, but consumers have traditionally enjoyed a lot of benefits created by the current business model, not the least of which is access to powerful hardware at or below manufacturing costs.

 

[Silent_Buddha]

This is just a recipe for Publishers to sidestep "platform holders" altogether, as EA and Ubisoft have already announced their intentions to do. Sony was smart not to allow EA Access on PlayStation. After this gen EA's first order of business will be to convert their entire subscriber base to Streaming customers who won't need and Xbox or PlayStation at all. And this is an aspect of the crossplay debate people have totally ignored as well. These streaming players will not be siloed off from the Xbox and PC user bases. That's the kind of "dark future" Sony is resisting. The economics of being a platform holder are threatened by these developments. That might sound just fine for gamers, but consumers have traditionally enjoyed a lot of benefits created by the current business model, not the least of which is access to powerful hardware at or below manufacturing costs.

People still need "something" to play the game on. PC and the major consoles will remain that "something. Consoles have an advantage in ease of use at the expense of vendor lock in and the lower performing hardware. This isn't going anywhere even if EA move everything they have into EA access. Albeit unless Sony changes their mind, they'll lose access to EA games on their platform if this were to happen (it probably isn't going to happen).

EA could in theory roll out their own inexpensive platform. But if all it plays are EA games it won't sell in any numbers worth mentioning. If it only plays EA games and a small selection of other games it'll still won't be relevant to the market. And do EA really want to get into the hardware business?

If it at some point transitions into a streaming service than that opens up mobile devices. But you'll still end up with inferior experience to a console or a PC.

And as long as they are on console, they'll still have to pay console holder royalties. While the contract details aren't available to the public, you can be sure that MS gets a piece of the EA access revenue pie on XBO.

TL: DR - consoles and PCs aren't going anywhere. Many gamers will still be on console no matter what just due to the economics and ease of maintenance. Publisher's aren't going to be cutting out consoles as long as consoles bring in large numbers of players that spend large amounts of currency. Result is that the 3 existing hardware console makers are still going to have a revenue stream from games published by those publishers.

Regards,
SB

 

[Nesh]

O/T but nope. NASA pay over commercial rates to Russia, who over-charge simply because they can.

Now I am confused. Who over charges? Russia? If so how is it cheaper?

Also O/T but nope. Sometimes it's just cheaper to get somebody with the relevant infrastructure, resources and experience to do that thing you want done. This is why most people pay other people to clean, deliver their mail, maintain their building etc - it's about economies of scale. It's why Netflix use AWS. This could all work well for Microsoft but it could also be good news for Amazon, Google and IBM.

Are you sayig it will be good for Amazon, Google, IBM because MS will use their infrastructure instead of their own? Is MS not experienced enough? Is or will the size of operation not be large enough to enjoy economies of scale by using their own infrastructure?

 

[BRiT]

Agreed, the downside of a subscription service like GamePass (or Netflix) is keeping an eye on what you might want to consume and when it cycles out of the catalogue. GamePass hasn't been around long enough to get a feel for this but it's obviously not in publishers interests to sign lengthy deals as they are giving up revenue from the flash sales that Steam is famous for generating high revenue from.

So far all titles have been on the service for 12 months before they cycled out. The only exception to this was one MGS (Metal Gear Solid) title.

 

[bgroovy]

People still need "something" to play the game on.

Yeah, but that "something to play on" can be any $30 HDMI stick from Amazon, Roku, Apple or Alibaba. What does the market look like when the choice is between paying $400 for a traditional console, $200 for Microsoft's hybrid streaming console or just an AndroidTV device and a Bluetooth controller which will run all the same Ubisoft and EA games and services streamed for less than $80 up front? You'll still be able to play with all the same Xbox or PC players, and EA marketing will be working overtime to make sure EA Access subscribers know they no longer need to waste money on Xbox hardware.

I think that's what Sony is thinking about. They want to make sure the market can still be "captured" on their platform, whether that's streaming or not. Microsoft can afford to risk the future of the business model by letting go of that kind of control because Xbox failing is not an existential threat to the company the way it is for Sony.

 

[Silent_Buddha]

Yeah, but that "something to play on" can be any $30 HDMI stick from Amazon, Roku, Apple or Alibaba. What does the market look like when the choice is between paying $400 for a traditional console, $200 for Microsoft's hybrid streaming console or just an AndroidTV device and a Bluetooth controller which will run all the same Ubisoft and EA games and services streamed for less than $80 up front? You'll still be able to play with all the same Xbox or PC players, and EA marketing will be working overtime to make sure EA Access subscribers know they no longer need to waste money on Xbox hardware.

I think that's what Sony is thinking about. They want to make sure the market can still be "captured" on their platform, whether that's streaming or not. Microsoft can afford to risk the future of the business model by letting go of that kind of control because Xbox failing is not an existential threat to the company the way it is for Sony.

Don't forget the controller. Don't forget the downgraded visuals. Don't forget the "laggier" controls and less responsive gameplay. Don't forget having access to a relatively small library. Don't forget the need for not only a robust relatively high bandwidth network connection but one that offers consistent and stable pings as well. Don't forget all the caveats that come with streaming a game.

There's rumors that Microsoft have a hybrid streaming technology that they hope to deploy, but until I see it in action and get to try it, I'm not going to believe it's going to be that much better than existing streaming game services which are all crap, IMO.

While they are serviceable for some, they aren't for many. Hence, dedicated hardware to play games isn't going anywhere soon. And AAA game developers and publishers aren't abandoning them anytime soon (soon being the next 2-3 console hardware generations).

Considering that EA hasn't even started to experiment with streaming games in a public capacity, yeah...they aren't abandoning dedicated gaming hardware platforms anytime soon.

Regards,
SB

 

[Deleted member 11852]

This is just a recipe for Publishers to sidestep "platform holders" altogether, as EA and Ubisoft have already announced their intentions to do. Sony was smart not to allow EA Access on PlayStation. After this gen EA's first order of business will be to convert their entire subscriber base to Streaming customers who won't need and Xbox or PlayStation at all. And this is an aspect of the crossplay debate people have totally ignored as well. These streaming players will not be siloed off from the Xbox and PC user bases. That's the kind of "dark future" Sony is resisting.

We'll see. I'm sceptical of consumers wanting to have a direct subscription arrangement with major publishers because there are a lot of them and each will be bringing their own UI, T&C and benefits which will very quickly become confusing and unfriendly. There is still a market for a uniform experience provided by a overarching content providing.

Now I am confused. Who over charges? Russia? If so how is it cheaper?

Supply and demand.

Are you sayig it will be good for Amazon, Google, IBM because MS will use their infrastructure instead of their own? Is MS not experienced enough? Is or will the size of operation not be large enough to enjoy economies of scale by using their own infrastructure?

No, I'm saying when more content is hosted remotely, it's good for all server service providers.

Don't forget the controller. Don't forget the downgraded visuals. Don't forget the "laggier" controls and less responsive gameplay. Don't forget having access to a relatively small library. Don't forget the need for not only a robust relatively high bandwidth network connection but one that offers consistent and stable pings as well. Don't forget all the caveats that come with streaming a game.

These are all problems technology will solve over time. My first experience accessing content online in the 1980s was with a 1200/75 baud modem. If it had an optimum connection (which modems then never did) it could transfer 150 bytes down and 9 bytes upstream each second. In reality it was about half that. And you paid to be connected by the minute. And yet look where technology has brought us. Today's problems are today's problems.

While they are serviceable for some, they aren't for many. Hence, dedicated hardware to play games isn't going anywhere soon. And AAA game developers and publishers aren't abandoning them anytime soon (soon being the next 2-3 console hardware generations).

Not soon. But there is a reason Sony, Microsoft and Nvidia are all investing in server-side technology and it's not because they like bit facilities full of blinking LEDs.

 

[Nesh]

Supply and demand.

Can you elaborate a bit further? Is it Russia and India that overcharge due to supply and demand?

No, I'm saying when more content is hosted remotely, it's good for all server service providers.

How does this change the fact that MS could use their own infrastructure for economies of scale and to avoid paying premiums (or even subsidize) their streaming services?

 

[Deleted member 11852]

Can you elaborate a bit further? Is it Russia and India that overcharge due to supply and demand?

http://uk.businessinsider.com/space-travel-per-seat-cost-soyuz-2016-9

How does this change the fact that MS could use their own infrastructure for economies of scale and to avoid paying premiums (or even subsidize) their streaming services?

It doesn't but it goes back to my first question, is Azure profitable for Microsoft? If it's not profitable, why would more Azure be profitable, or at what scale would Azure become profitable? Is it a scale thing at all?

 

[Rangers]

My thread!

 

[liolio]

Being the more "powerful" is a relevant metric among othersn like for cars, motorcyles, phones, phone screens, etc.
It is definitely not the only criteria, management has to balance things out. If it is about being sitten on a massive pile of money put everything on 11' (amp analogy) and rocking... every body can do it and it is not how you create a business plan for a system addressing masses.

You have to be competitve at the whole package level an if you had features you have to do while still reaching your primary target which is another game altogether.

Lookind at that gen, my bet is that there was more of a market for a lower power version of both the XB1 and the PS4 (yet compatible) in a portable format. Not really doable BUT I'm confident that the addressable market for such devices is bigger than the one for the Pro and 1X.


SHortly being the most powerful is one pretty solid argument for a manufacturer, among the most critical, yet so far from tellig the whole story. This gen the XB1 was hardly competitive (in graphics) against the PS4. Had they been sold as GPU the XB1 would have addressed a different segment as cards based on Bonaire and Pitcairn did.

I would say it is more like 200 IM in swimming, you can't suck at breaststroke but if you don't you are still far from done.

Spoiler

trying to set a new standard for easy pre made answer without going into car. For non swimming people the difference between a good and bad breaststroke competitive swimmer is greater than in other strokes. You can loose lots of time against a "natural" breaststroker.

 

[BRiT]

I'm sorry, but your analogy lost me because of where my mind normally functions on the weekend. All I could think of was how that would << Cue folks clamoring for a DOA swimming game... @AlBran >>