NPD September 2009

[patsu]

There are many ways to do this. Even with a real-world currency system like PSN, you can still introduce points for loyalty management.

A full-blown points currency system however is usually used to maintain a float to make extra $$$ for the vendor. Without getting into the mechanics, what people are saying is: Microsoft has a separate marketing budget to discount point values to market their XBL platform. This is separate from promoting games.

On PSN, Sony's main focus is to sell and promote the games and movies. There is little barrier to PSN since it's free to begin with (No need to promote it separately). Hence, the marketing dollars would be spent on discounting the content or even give them away for free.

The actual end user benefit will depend on the size of the marketing budget. e.g., How deep a discount is. When the time is right, they may (both) introduce a loyalty system.

 

[specwarGP2]

I can see the motivation for MS's point system. When manufacturing cards denominated in actual currency and then selling them at a discount, you are actually devaluing the currency on your network. If you are constantly selling $20 cards for $16 dollars then for all intent and purpose a $1 on your network is really only worth 80 cents in the real world.

The same hold true for points but with points I think its easier from an accounting point of view and makes for easy acceptance by the vendors who hawk wares on your network.

My beef with (microsoft's) point system is that you really don't know exactly how much a point is worth. If you buy a discounted point card, are you really getting a good deal? Or are regular priced points a ripoff because their value is inflated to begin with? My feeling is the former, considering how easy it is to find discounted point cards everywhere.

 

[zed]

Top 10 Accessories

1. WII NUNCHUK CONTROLLER NINTENDO OF AMERICA
2. 360 LIVE 1600 POINT GAME CARD MICROSOFT
3. WII REMOTE CONTROLLER W/ JACKET NINTENDO OF AMERICA
4. PS3 DUALSHOCK 3 WIRELESS CONTROLLER SONY
5. 360 LIVE 1 MONTH GOLD CARD MICROSOFT
6. WII REMOTE CONTROLLER NINTENDO OF AMERICA
7. 360 HEADSET MICROSOFT
8. 360 LIVE 12 MONTH GOLD CARD MICROSOFT
9. 360 LIVE 3 MONTH GOLD CARD MICROSOFT
10. WII WHEEL GRIP NINTENDO OF AMERICA

OK remove the things that arent really accessories but services etc + we have

1. WII NUNCHUK CONTROLLER NINTENDO OF AMERICA
3. WII REMOTE CONTROLLER W/ JACKET NINTENDO OF AMERICA
4. PS3 DUALSHOCK 3 WIRELESS CONTROLLER SONY
6. WII REMOTE CONTROLLER NINTENDO OF AMERICA
7. 360 HEADSET MICROSOFT
10. WII WHEEL GRIP NINTENDO OF AMERICA

Though this confirms what I mentioned on these forum's a couple of years ago, which others here disagreed with, when MS were talking about X$ spent on the platform, they were including live subscriptions as well.

Whats next?
streaming of movies
buying of stuff to customize your house in home
customizing of your avatar
how about the money they charge repairing the console!!!

its all getting a bit ridiculous

http://en.wikipedia.org/wiki/Video_game_accessory

'A video game accessory is a distinct piece of hardware that is required to use a video game console, or one that enriches the video game's play experience.'

 

[patsu]

Well... I think Sony's PSN pre-paid card may be counted under accessory/peripheral/misc too. You just have to be aware that the money cards are in. ^_^

 

[DuckThor Evil]

Though this confirms what I mentioned on these forum's a couple of years ago, which others here disagreed with, when MS were talking about X$ spent on the platform, they were including live subscriptions as well.

Why wouldn't they include it? I agree that it's not an accessory, but it's definitely money spent on the platform every way you look at it.

 

[Acert93]

Not to mention as they walk into a store they are picking up a card instead of another controller (of which you can only buy so many). Oddly, from a developer/pub angle, I would be more excited about people picking up cars over physical accessories as that means $ going toward software versus inflated HW to the console maker.

 

[Silent_Buddha]

Based on Video Business' analysis, the % of PS3 users watching Blu-ray on PS3 did not change too. So they may be attracting a different kind of users. The effect of PS3 Slim price drop won't be apparent until a few more months later.

Then again if real life is mirroring these forums somewhat, then a lot of people might be replacing their PS3 fat with a PS3 slim.

In that case, the effect won't be quite as pronounced. And by a lot I'm not saying a majority as I'm sure the majority of sales are new owners attracted by the 299 USD price point.

But 10-20% might not be out of line. Considering it feels like 35-50% of the PS3 owners on these forums have gotten a slim to replace their fat.

Unfortunately, there's no way to track something like that so we can only speculate as to how many may be doing it.

Regards,
SB

 

[Arwin]

Unfortunately, there's no way to track something like that so we can only speculate as to how many may be doing it.

And of course in the context of the console wars, it's even less relevant, at least in terms of competition with the 360, for very obvious reasons. I think that if I'd used my 360 more (might still happen, Forza 3 coming up though I've got a bad cold now so it may have to wait) I'd have replaced it by now, as there are quite a few very cheap offers out there. Also, my 360 is out of warranty, even from red rings, so if it dies, it's dead and I'd have to buy a new one.

 

[Shifty Geezer]

There's also some chance that new buyers will be borrowing games from existing PS3 owning friends. I'd expect the attach rate of new consoles to be lower as the years roll by for this reason.

 

[obonicus]

Then again if real life is mirroring these forums somewhat, then a lot of people might be replacing their PS3 fat with a PS3 slim.

I won't say if this is true or false, but I really doubt that real life mirrors these forums at all.

If it did, there'd probably be a lot more Scandinavians in the world.

 

[dobwal]

Not to mention as they walk into a store they are picking up a card instead of another controller (of which you can only buy so many). Oddly, from a developer/pub angle, I would be more excited about people picking up cars over physical accessories as that means $ going toward software versus inflated HW to the console maker.

Actually you wouldn't be, once you realize that the reason everyone on the retail side is so crazy about gift cards/point cards is that a percentage of those dollars are never used. Meaning points or cash never redeemed only benefit Sony, MS and Nintendo.

Plus, most people choose software unless there is an explicit desire for an hardware accessory.

 

[Silent_Buddha]

There are many ways to do this. Even with a real-world currency system like PSN, you can still introduce points for loyalty management.

A full-blown points currency system however is usually used to maintain a float to make extra $$$ for the vendor. Without getting into the mechanics, what people are saying is: Microsoft has a separate marketing budget to discount point values to market their XBL platform. This is separate from promoting games.

On PSN, Sony's main focus is to sell and promote the games and movies. There is little barrier to PSN since it's free to begin with (No need to promote it separately). Hence, the marketing dollars would be spent on discounting the content or even give them away for free.

The actual end user benefit will depend on the size of the marketing budget. e.g., How deep a discount is. When the time is right, they may (both) introduce a loyalty system.

Points are specifically used in Microsofts case for a variety of reasons.

1. Keep the "price" (in points) of purchaseables online the same, while only have to update prices of the points periodically in each currency region. So, in theory, no matter where you go in the world Trials HD will be the same number of points.

2. Probably the most important reason. I should have put this first. Maintain a good relationship with Brick and Mortar retailers. Microsoft in most likelyhood is making ZERO profit on the point cards (they make their profit off products purchased with points). Point cards however still allow retailers to make a profit, thus encouraging them to carry and sell the X360 console.

3. Reduce overhead of credit card fees, credit card fraud, disputed credit card charges, etc... In there with the credit card fees would be eliminating addional fees for credit card processing (which is on top of the percent that Visa/MC/Amex take off the top of all purchases).

Point 2 is particularly important if you are considering a move to digital only distribution. You NEED someway to keep brick and mortar stores interested in carrying your console that sells for low margins. If you move to digital only distribution brick and mortar stores would no longer have an incentive to carry your console. Introducting point cards they can sell at nice margins keeps them interested. In other words, seeding the market with the idea of point cards in case next generation or generation after moves to digital only distribution.

So when there's a sale, then it's coming out the retailer's margins not Microsofts since MS is selling them pretty much at cost.

A lot of the codes you see sold on Ebay for ridiculously low prices are generally ones that were shoplifted/stolen.

Regards,
SB

 

[Silent_Buddha]

I won't say if this is true or false, but I really doubt that real life mirrors these forums at all.

If it did, there'd probably be a lot more Scandinavians in the world.

Hehe, I wouldn't mind if there were more Scandinavian women in my part of the world.

Regards,
SB

 

[corduroygt]

There's also some chance that new buyers will be borrowing games from existing PS3 owning friends. I'd expect the attach rate of new consoles to be lower as the years roll by for this reason.

Many who replace their existing ps3 s with a slim will sell or give their Fat ps3s to someone else instead of keeping 2 ps3s to themselves. I sold my ps3 fat very cheaply to a relative and now he's buying games for it.

 

[patsu]

Then again if real life is mirroring these forums somewhat, then a lot of people might be replacing their PS3 fat with a PS3 slim.

In that case, the effect won't be quite as pronounced. And by a lot I'm not saying a majority as I'm sure the majority of sales are new owners attracted by the 299 USD price point.

But 10-20% might not be out of line. Considering it feels like 35-50% of the PS3 owners on these forums have gotten a slim to replace their fat.

Unfortunately, there's no way to track something like that so we can only speculate as to how many may be doing it.

Yes, I mentioned that a portion of the 500K users are repeated PS3 customers.

Rolf mentioned that KZ2 and another title remade the UK Top 40 list. Those are likely first time PS3 owners.

Points are specifically used in Microsofts case for a variety of reasons.

1. Keep the "price" (in points) of purchaseables online the same, while only have to update prices of the points periodically in each currency region. So, in theory, no matter where you go in the world Trials HD will be the same number of points.

2. Probably the most important reason. I should have put this first. Maintain a good relationship with Brick and Mortar retailers. Microsoft in most likelyhood is making ZERO profit on the point cards (they make their profit off products purchased with points). Point cards however still allow retailers to make a profit, thus encouraging them to carry and sell the X360 console.

3. Reduce overhead of credit card fees, credit card fraud, disputed credit card charges, etc... In there with the credit card fees would be eliminating addional fees for credit card processing (which is on top of the percent that Visa/MC/Amex take off the top of all purchases).

Point 2 is particularly important if you are considering a move to digital only distribution. You NEED someway to keep brick and mortar stores interested in carrying your console that sells for low margins. If you move to digital only distribution brick and mortar stores would no longer have an incentive to carry your console. Introducting point cards they can sell at nice margins keeps them interested. In other words, seeding the market with the idea of point cards in case next generation or generation after moves to digital only distribution.

So when there's a sale, then it's coming out the retailer's margins not Microsofts since MS is selling them pretty much at cost.

A lot of the codes you see sold on Ebay for ridiculously low prices are generally ones that were shoplifted/stolen.

These are possible reasons but again, there are many ways to achieve similar effects. The only effect those alternatives can't do is float. XBL's "complete" point based system (or fully pre-paid model) requires you to convert your cash into their currency first before transaction. You can do it last minute, but the promotions encourage you to deposit your money ahead of time.

 

[Shifty Geezer]

Many who replace their existing ps3 s with a slim will sell or give their Fat ps3s to someone else instead of keeping 2 ps3s to themselves. I sold my ps3 fat very cheaply to a relative and now he's buying games for it.

Yes. I'm not saying the market isn't expanding. A percentage (unknown) will be existing PS3 owners who buy a second console and no more games than for their existing one. Another %age will be PS3 'upgraders' passing the old system on to someone else, who will buy games. Another %age will be PS3 'upgraders' passing on the old system to someone else who will instead borrow games. A further %age will be new owners who buy games. A further %age will be new owners who borrow games, or are buying second hand etc.

This is in contrast to early adopters, who all buy games because there isn't a ready library of friends games and 2nd hand discs to buy. And as the generation progresses, the existing library of disc spread throughout all users increases, so the chances of new owners being able to access someone else game increases, decreasing the need for immediate game purchases to have something to play on their new hardware. They'll start buying some games (we hope!) as there are new releases they want to play, but the necessity for games isn't there.

 

[Zassk]

The point is Sony has additional revenue from Blu-ray (Royalty, services, software, hardware).

Microsoft also has those types of revenue... MS is in the royalty pool for Blu-ray, they sell encoders for Blu-ray and provide encoding services. Only on the hardware side is Sony distinguished from MS, but in this case the hardware is the PS3 which is being sold at $100 loss in 2009. I have no idea whether MS or Sony makes more revenue on Blu-ray overall; do you have any basis for thinking Sony makes more?

 

[Cheezdoodles]

Points are specifically used in Microsofts case for a variety of reasons.

1. Keep the "price" (in points) of purchaseables online the same, while only have to update prices of the points periodically in each currency region. So, in theory, no matter where you go in the world Trials HD will be the same number of points.

You would need to update constantly, currencies have big volatility. MS has been screwing Norwegians for a long time trading at 10nok per dollar, when in reality its 5.

Sony is better but still screwing us.

 

[zed]

Actually you wouldn't be, once you realize that the reason everyone on the retail side is so crazy about gift cards/point cards is that a percentage of those dollars are never used. Meaning points or cash never redeemed only benefit Sony, MS and Nintendo.

Yes I remember reading studies on these sort of thing that the figure is >20% of dollars are never redeemed

Theres also the slight benefit of
you give $20 today + I give you back $20 in a months time
not being an equal exchange, due to inflation/investment/interest etc

 

[patsu]

Microsoft also has those types of revenue... MS is in the royalty pool for Blu-ray, they sell encoders for Blu-ray and provide encoding services. Only on the hardware side is Sony distinguished from MS, but in this case the hardware is the PS3 which is being sold at $100 loss in 2009. I have no idea whether MS or Sony makes more revenue on Blu-ray overall; do you have any basis for thinking Sony makes more?

A lot of people are in the patent pool, especially the combined one since it includes DVD.

For Blu-ray, I remember reading that Panasonic is the biggest (About 50%), Sony is around third but can't find the link. Panasonic, Phillips and Sony are the 3 entities that rallied for the combined patent pool though.

MS probably sells VC-1 encoder ? As far as I know, Sony is much more deeper into Blu-ray: royalties, diodes, head/lens assembly, the largest Blu-ray production facility, authoring and encoding software, BD-Live applications, BD player, recorders, video cams, jukeboxes, etc. ... and of course BD movies and HDTV. Blu-ray is (was ?) supposed to be one of their 3 pillars for growth in their business plan. Sony Group's HDTV business is not looking good, but if not for Blu-ray it could be worse (since DVD revenue is tanking and online pick up is much smaller than Blu-ray).