NPD February 2007

[patsu]

Seriously the most straightforward reason is that Sony would rather *just* lose $2 billion with the PS3 launch rather than $3 billion...

Sony has money for whatever they want money for, and SCE has massive budgetary control - if it's game funding they're looking for, they don't need higher console prices to secure it.

Why would they worry about "losing 2B rather than 3B" if they have money for whatever they want money for ? As in why not 2.5B ? Why not all 3B ?

My simple explanation has holes, but I was hoping to capture the essence of Sony needs to validate/show whether and how the money turns on the new software platform initially. Unfortunately, you may be right, it's not simple to explain.

People just really need to accept that PS3 is expensive as hell to build, has its price because it needs to for financial reasons (not to to any backroom brilliant planning over at Sony HQ)

Hmm... the hardest part is actually to figure out where the money comes from. So even for simple "financial reasons", it is brilliant planning. However, there are business reality and norms when pricing PS3. They have some existing constraints to work with. Perhaps this forum is not the right place to discuss.

, and yes even though it's causing slow sales right now, the story on a console is not written after one year, let alone three months. I think PS3 will be fine in the end; look at XBox at the beginning of its life vs the end to see how drastically perceptions of a console can change over its life.

I think what some people are saying is that the market might not wait for Sony (There is a window). Within this window, Sony not only has to drop the cost, and/or has to figure out new ways to make (more) money given the higher cost.

I'll drop this subject now since it's going to muddle the picture even more. This is a technical forum anyway.

 

[kia]

NBA Live 07 sold 130 copies? Sure it did...

Those numbers smell like they are just an additive culmination of the monthly or weekly sales charts found on the internet. The problem with doing that is that the errors start to magnify.

See post #331:

http://forum.beyond3d.com/showpost.php?p=949254&postcount=331

 

[Carl B]

And said that these numbers (which are obviously taken from VGCharts.org) are not correct, then you quoted me and said those are in line with NPD and Famitsu and after that I said how.
Now you provide a link to another site with different numbers to show me how?

Kia, first of all you are way to wired and aggressive about this whole thing, so... calm down.

I bolded the word obvious for a reason, and I'll tell you why - IMO, it wasn't obvious. You simply wrote vgcharts, you didn't write vgcharts.org. When I see vgcharts, I think vgcharts.com. So, I showed you how vgcharts was NPD-related, based on my understanding of what you were referencing. Am I supposed to think that vgcharts means .org? Or are you supposed to think it's .com? Well - IMO it's a misunderstanding and 'oh well,' that happens. But you seem driven to prove yourself "right" in some sort of capacity here, and my question would be, why do you care so much in the first place?

 

[kia]

Kia, first of all you are way to wired and aggressive about this whole thing, so... calm down.

I bolded the word obvious for a reason, and I'll tell you why - IMO, it wasn't obvious. You simply wrote vgcharts, you didn't write vgcharts.org. When I see vgcharts, I think vgcharts.com. So, I showed you how vgcharts was NPD-related, based on my understanding of what you were referencing. Am I supposed to think that vgcharts means .org? Or are you supposed to think it's .com? Well - IMO it's a misunderstanding and 'oh well,' that happens. But you seem driven to prove yourself "right" in some sort of capacity here, and my question would be, why do you care so much in the first place?

Oh well, but I assumed you see the argument between us (me and Natoma) and then want to prove it's in line with NPD.
Anyway, I'm care about it because I'm a sales whore.
And then again I don't like misinformation on any level, do you?

P.S. English is not my first language, so excuse me if I can't express myself correctly.

 

[Carl B]

Oh well, but I assumed you see the argument between us (me and Natoma) and then want to prove it's in line with NPD.
Anyway, I'm care about it because I'm a sales whore.
And then again I don't like misinformation on any level, do you?

P.S. English is not my first language, so excuse me if I can't express myself correctly.

Well, it's my fault for havng involved myself in a discussion where the site I was thinking about was not the site being discussed. I didn't even realize the large difference between .com and .org before now, and it really is a mess. I wonder how many arguments on forums everywhere start up because people are referencing different sites when they say 'vgcharts' and they don't even realize it?

Anyway... no prob. Misinformation I agree is "the enemy."

 

[quest55720]

I'm shrugging my shoulders at this, personally confident that Blu-ray will *win*, not as confident that it will ever reach DVD levels. But so what? The dice are cast. Five years from now putting those BD drives into PSThree won't cost hardly any more than putting a DVD drive in - of all the components *this* is the component that will drop in price the fastest and work towards a general price floor shared by all optical drives.

Well in 5 years if sony is in 3rd place or lost a ton of market share the cost of the blue ray drive won't matter then as it will of already over. The blue ray drive will drop in price but it might not be fast enough to save the PS3. It is very hard to regain momentum when it is lost in this business. Once your brand loses that. The masses easily and harshly can turn on a company just ask nintendo or sega. If they can not get the price down by fall you don't think they won't be blown out of the water by MS with the halo3/madden/GTA and a price cut?

I totally disagree with you there. Now matters, but tomorrow matters more.

Even for cross-platform titles, things that are easy to implement will be implemented. As time goes on, the class of objects that fall under that umbrella will expand. PS3 has an advantage in being 360's 'secondary' that XBox didn't have with PS2. The PS2 and XBox architectures were fundamentally different; with PS3 and 360 it's a PPC/DX9 world all around. Since the porting is more straightforward, there's also more time for tweaking when the tweaking is simple enough. I expect both Cell and Xenos to enjoy such tweaks on their respective multiplatform titles later on in the gen.

Sure there might be a tweak or 2 but they are not going to waste a ton of time to shovel out that PS3 port. Especially if the PS3 user base is much smaller and they are not buying a ton of games. Why anyone would go out of thier way to improve a game for platform that is under performing? Ports are a way to maximize return the less effort spent the more return.

Frankly I think the Sony published offerings are some of the strongest in the business. I don't sell them short compared to Nintendo at all, it's simply that due to Nintendo's platforms (and the ease of development), they're able to crank out the hits/sequels on a monthly basis. But Sony's IPs are nothing to laugh at; think of which PS3 games you (or anyone) would be looking forward to, and think to yourself how many of those are Sony published. FFXIII, MGS4, DMC4... I mean those are the only ones I can think of right now that aren't!

Sony has some nice first party games I like GT series a lot. The first party sony games are not what sold the PS2. It was the exclusives from 3rd parties that drove PS2 sales games like GTA moved units in NA and SE games in japan.

Well, I don't think they're 'screwed' if they lose 3rd party exclusives, so I think you and I are just going to have to disagree on a fundamental level. I'm one that would choose funneling cash into internal development every time over securing external exclusives through monetary means alone.

I agree for lesser games your are right much better to invest in yourself the return is much greater. For huge games like GTA sony should of paid what ever they had to get it exclusive.

 

[Carl B]

Why would they worry about "losing 2B rather than 3B" if they have money for whatever they want money for ? As in why not 2.5B ? Why not all 3B ?

What I was trying to say with this was that until January basically, SCEI seemed to have the benefit of a "spend now, ask later" sort of latitude when approaching projects, not the sort of fixed budget constraints some 'lesser' division in Sony might have to work with. Now that's obviously not something they would ever abuse out of hand, as they are a business afterall, and I think KK despite everything did always keep an eye on profits. Hell besides being the most profitable unit at Sony for some time, the man was being groomed to be CEO of the whole thing. But the unilateral move of the $100 pricecut basically shocked Stringer into putting stricter controls in place.

Hmm... the hardest part is actually to figure out where the money comes from. So even for simple "financial reasons", it is brilliant planning. However, there are business reality and norms when pricing PS3. They have some existing constraints to work with. Perhaps this forum is not the right place to discuss.

Well this forum sort of moonlights as a financial forum for these industries, so I wouldn't worry about it being off-topic.

Anyway it's like this - they could price the PS3 at $100 and sell... well, a lot more than now, or they could price it at $1000, make a profit on it, and sell a lot fewer. Somewhere, they had to find a middle ground between profit/loss, consumer will to pay and pricing constraint. I don't think there were any hard constraints when they set the price save what the components themselves cost and their earnings forcasts dictated - and out of that, they determined ~$599 was the price to go with ($499 as well but that variant is rare), the 'soundest' financial move in light of the various known - and many unknown - factors at play.

 

[RobertR1]

Outside of Sony financials, an important aspect of lower than expected sales is the turbulence in 2nd and 3rd party support with any exclusive titles on the horizon. The lower than expeced unit sales with low attach rates could have the exclusive title developers start worrying. Now the obvious answer is "hold onto the title." This is easy to say but quite shallow at a macro level. With such big budgets allocated, the timing of the release is generally intune with their financials for the year and based of a formula of units sold and existing software attach rate. From here you can extrapolate your low-mid-high range of market penetration. Pushing a game back a few quarters, to allow the these numbers to favor them, could likely mean laying off/losing top talent to other studios, which can be devastating.

A 2nd or 3rd party exclusive in light of the data could likely have these studios hurrying ports to recoup the costs, especially if the other console manufacturers are willing to float the studios to get the exclusive done on their platform. This way they not only keep the payroll current but now expand their potential customer pool greatly in an effort to turn a profit.

 

[patsu]

What I was trying to say with this was that until January basically, SCEI seemed to have the benefit of a "spend now, ask later" sort of latitude when approaching projects, not the sort of fixed budget constraints some 'lesser' division in Sony might have to work with. Now that's obviously not something they would ever abuse out of hand, as they are a business afterall, and I think KK despite everything did always keep an eye on profits. Hell besides being the most profitable unit at Sony for some time, the man was being groomed to be CEO of the whole thing. But the unilateral move of the $100 pricecut basically shocked Stringer into putting stricter controls in place.

PS3 certainly has that "spend now, ask later" vibe. But when it comes to the list price, it has to fit into the planned business model (because consumers are the ones paying). I don't think even Kutaragi went without a business plan/model for Playstation 3 because there are too many contracts and BOM/inventory involved.

The "original" plan requires a USD599 list price for 60Gb PS3 before Kutaragi dropped the "It'll be expensive" hint (perhaps with Stringer's blessing). The Japan discount he asked for did not fit into this original plan, and should be out of scope.

Anyway it's like this - they could price the PS3 at $100 and sell... well, a lot more than now, or they could price it at $1000, make a profit on it, and sell a lot fewer. Somewhere, they had to find a middle ground between profit/loss, consumer will to pay and pricing constraint. I don't think ther were any hard constraints when they set the price save what the components themselves and their earnings forcasts dictated - and out of that, they determined ~$599 was the price to go with, the 'soundest' financial move in light of the various known - and many unknown - factors at play.

Yes... I'm saying the 'most sound' analysis will have to cover:
* How money is recouped to fund the new software stack (All the stuff not in PS2)
and
* Existing business constraints (e.g., component costs, prevent cannibalization of standalone consumer devices and PS2, supply-demand, ...)

Some of these constraints are business reality (hard). Setting the price for a new product is not simple. Companies pay millions for it. It is not just based on component costs.

Anyway... will drop the subject now since we can't prove/disprove anything

 

[DuckThor Evil]

(DrEvil you better believe Sony loses money on that $600 console!) So... I'm certainly not seeing a pricedrop on the horizon in that climate.

People just really need to accept that PS3 is expensive as hell to build.

I'm willing to consider it atleast :smile:, but I would like to see more convincing arguments than "people just need to believe it". I mean Cell just went 65nm, that's a rather large price cut right there, loss of EE, and I'm sure Blu-ray doesn't cost as much to make today than what it was around launch time. Also I'm expecting minor drops across the board making the total amount of savings significant

Also it does feel kind of strange to me that they would be willing to take such a huge loss at Japan. I mean if they are making loss in the US too, the amount of red they'd be looking at in Japan would be gigantic.

The price cut rants I make are more a selfish outbursts, I'm not expecting a price cut right now, but I'm hoping we'll see one this year as it probably would make me a PS3 owner too.

 

[quest55720]

I'm willing to consider it atleast :smile:, but I would like to see more convincing arguments than "people just need to believe it". I mean Cell just went 65nm, that's a rather large price cut right there, loss of EE, and I'm sure Blu-ray doesn't cost as much to make today than what it was around launch time. Also I'm expecting minor drops across the board making the total amount of savings significant

Also it does feel kind of strange to me that they would be willing to take such a huge loss at Japan. I mean if they are making loss in the US too, the amount of red they'd be looking at in Japan would be gigantic.

The price cut rants I make are more a selfish outbursts, I'm not expecting a price cut right now, but I'm hoping we'll see one this year as it probably would make me a PS3 owner too.

I could be wrong but I think the price cut in japan was out of fear of the Wii just running away with the market. If you look at it traditional console gaming in japan has been on life support for a while. Sony needed something to kick start the market and a price cut was a way to try. I could be wrong but to me it seems eastern developers get behind the front runner pretty fast and don't look back especially SE. Sony has already lost the next DQ game to the DS. I don't think sony feared MS or the Wii in the west that is why there was no price cut. I would love to be a fly on the wall during the next week in the sony head quarters.

 

[DuckThor Evil]

I could be wrong but I think the price cut in japan was out of fear of the Wii just running away with the market.

Well it was clearly a strategic move and the possible reasons for it are of course quite limited. Yep Wii is definately big part of the reason, but I also believe they didn't want to price themselves that much out of reach compared to X360 as well.

About the manufacturing cost, I would also like to point out that I remember hearing Sony officials stating before the launch that this time, they are trying to change the business model so that hardware would turn profit too, maybe/probably not initially but sooner than expected. I always tought that was part of the reason for the high price. I don't know whether that was just talk, or whether they are in fact implementing that strategy.

 

[Moonblade]

I could be wrong but to me it seems eastern developers get behind the front runner pretty fast and don't look back especially SE. Sony has already lost the next DQ game to the DS.

The PS3 will probably get a DQ game too after a few years but I don't think SE was considering a DQ game for the PS3 this early because of the small install base and next-gen development costs. I don't think it's a shift, rather an expansion of a succesful franchise just like Final fantasy crystal chronicles.

 

[quest55720]

The PS3 will probably get a DQ game too after a few years but I don't think SE was considering a DQ game for the PS3 this early because of the small install base and next-gen development costs. I don't think it's a shift, rather an expansion of a succesful franchise just like Final fantasy crystal chronicles.

From what I understand the DQ game on the DS is a true sequel not a side story like FFcc.

 

[kia]

From what I understand the DQ game on the DS is a true sequel not a side story like FFcc.

Yes, DQ game for the DS is a numbered one and true sequel to DQ VIII not a spin-off.

 

[Capeta]

Wow just wow...only 127K PS3s sold in Feb?

 

[infinity4]

Wow just wow...only 127K PS3s sold in Feb?

they need some AAA titles IMO. this won't last for 5 years

 

[Arwin]

Wow just wow...only 127K PS3s sold in Feb?

Doesn't really mean much, I think. What were the 360's numbers for February again? Much more interesting are going to be the March and April numbers, because the European launch almost seems to becoming like a global relaunch - the PS3 is launching with a huge number of games (for what we are used to in Europe , I think we officially had 6-7 launch games for the PS2, a year after the Japanese launch) and some of them are likely to be popular here.

Then again, right now there are a lot of pre-orders on the shelves here in Europe. But then, there are enormous amounts of pre-orders. Remember how some shops in the U.S. got 6-8 consoles? Here in the Netherlands, it looks like most shops, even small ones, are getting at least 20. And they only started selling those pre-orders late, with very few actual PS3s yet visibly out there (only one large chain seems to have them, Media Markt). However, the Media Markt I went to, had 90% of their pre-orders sold last Thursday, and they could have quite a few - they're huge electronics retailers, very popular right now.

I'm keeping a close watch at the shop at the train station where I pre-ordered mine, which isn't really the place where I expect people to pre-order a lot, and today, I think they still had 12/20.

They're advertising now with 2 BluRay discs as a bonus, though I'm not sure if that includes Casino Royale (I'm getting Black Hawk Down for free, as well as Casino Royale no doubt).

There's a fair number of reviews in magazines right now though, and they seem to be quite favorable. It will be interesting to see what happens. People do seem to get excited once they see the machine in person, but as yet I doubt BluRay is very effective because right now people know Playstation 3 when they see one, but have barely heard about BluRay - this from observing a PS3 demo unit in a store for 15-20 minutes.

 

[Laa-Yosh]

What were the 360's numbers for February again?

You mean when they were supply limited?

 

[Sis]

Doesn't really mean much, I think. What were the 360's numbers for February again? Much more interesting are going to be the March and April numbers, because the European launch almost seems to becoming like a global relaunch - the PS3 is launching with a huge number of games (for what we are used to in Europe , I think we officially had 6-7 launch games for the PS2, a year after the Japanese launch) and some of them are likely to be popular here.

It definitely means much. A brand new console on the market selling something like 25k units a week? The 360 continues to sell 40-50k units a week, a year after launch and no price cuts.

I agree that one month is largely unimportant, but only if Sony can turn it around. If this is but the tipping point to complete consumer disinterest (or perhaps that was January), then it is important. Or, perhaps it will be as you say, and the EUR launch somehow re-invigorates the global market.

A price cut might help Sony, but they can't do that. So they may just have to weather the storm until they can, and drop some large moneyhats around in order to maintain some exclusives. But that gets harder and more expensive every time another 3rd party title sees success on the 360 platform. Not to mention that Sony hasn't seemed willing to do that yet. Perhaps they are counting on their 1st and 2nd party developers?