Doing something and doing nothing both have their risks. We should trust Sony, the long time market leader, to have the data to know which path will keep them in this leadership position.
Playstation 5 [PS5] [Release November 12 2020]
- Thread starter BRiT
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But you know perfectly well that all companies make strategic errors regardless of their position. So this isn't really an argument
That's always going to be something done in hindsight. We can judge them only long after, it's very difficult to judge while they are in the process of just starting it
Silent_Buddha
Legend
Sony didn't really have a choice. If they didn't diversify to PC, then PlayStation was likely done for. It might have taken another generation, but the writing was already on the wall with ballooning production costs but no significant increase in the console market. And it's not like they can drastically increase game prices to match game development costs because gamers by and large would likely drop out of video games if the prices increased significantly. Not all of them but the majority of it.
PC (and other platforms) gives them a chance to keep PlayStation relevant as a brand in the coming years (hopefully decades) ... it just won't be a console only brand going forward. Much like Xbox. Microsoft were pushed to transition and diversify sooner than Sony because they were doing worse in the console landscape than Sony.
I mentioned other platforms. Don't be surprised if we start seeing Sony mimic Microsoft's moves in putting multiplayer games on rival consoles. Everyone in video gaming is in survival mode at the moment. Cost cutting (layoffs, for example) is a sign of that. Entire swathes of the gaming industry attempting to find a buyer for their development house or publishing house is another sign.
Sony can put some of this stuff off longer than Microsoft just because they are doing relatively better in a market that isn't growing significantly (console gaming). IE - not growing fast enough to match the increase in development costs. And low hanging fruit like digital downloads, DLC, microtransactions, etc. are already being used to try to offset those increases in dev. costs.
Basically, what other options do they have going forward to increase revenue such that they can match rising development costs.
Regards,
SB
This feels very hyperbolic.
Also, companies looking for a buyer is not necessarily a sign of desperation at all. It's not like these companies have been getting bought up for pennies by any means. Quite the opposite. It's a seller's market, and that means it's being driven by demand from buyers. Which is exactly what these companies were taking advantage of.
Large numbers of layoffs is largely happening because 1) the pandemic boom was actually fantastic for gaming, and many companies simply got carried away with overhiring as a result and 2) typical greed and an inability to accept that the financial benefits of the pandemic boom could not be sustained.
It's this whole thing where we went through something of an unexpected boom, and then when things normalize, nobody knows how to handle it and it's treated like some giant disaster rather than just normalization.
As for costs, they've gotten so out of hand so quickly, I cant help but think there's simply egregious amounts of irresponsible spending going on. In no world should Sony allow a game to cost $300,000,000 to get out of the door. That's absurd and they clearly did something wrong in allowing that, no matter that the game will still end up making money. It's simply setting bad practices and precedent, when we need to be going the opposite way.
And then of course Sony is spending mountains of cash not on making games, but simply buying exclusivity of games. Essentially spending huge amounts that could be put into actually making games instead to just making sure Xbox(and even PC) users cant play them for a time.
So no, I dont accept that they're in 'survival mode' at all, anymore than me going out and buying a bunch of stuff I dont really need and then having $50 left in my bank account means I'm struggling.
Why do you think Playstation became successful and people bought it?
In what way games being made on PC make Playstation as a brand relevant? And based on what do you believe the Playstation would have been done for?
Your arguments regarding Sony's response are very clearly covering the "issue" in the short run, but hints to nothing positive for the long run.
At best your points show that their focus should be on cost management. We know that they wasted resources on projects with questionable prospects that were later cancelled.
In addition, even if we take their own games fully out of the picture that low margin shows that the profit of the large number of third party games is overshadowed by other operational costs, and your points show, that, the more Sony focuses on reducing the specific value proposition of the PS, by releasing 1st party games on PC, that profit coming from third parties, is going to shrink more.
Why do you think PS sales are expected to slow down by Sony? Sony is expecting slower rate of sales and less margins. The trend of PS losing steam as a brand is already there, combined with higher costs. So there are 2 things that require focus. Cost management and empower the brand which the PC gaming did not assist. Rather it gave only some short term profits and people considering buying a PS, are staying on PC since pretty much everybody owns one and have access to all MP games plus PS games, plus a huge load of older and retro games on PC on Steam. Casuals who wanted a PS can do even with lower settings. Sony is benefitting Steam more than it does PS as a platform and a brand.
Playstation were perfectly healthy just before their PC initiative. Are they actually healthier now after 4 years following their new strategy?
Tkumpathenurple
Veteran
You don't grow a market by shrinking the reasons to buy into it. Word of mouth was "buy a PlayStation to play PlayStation exclusives" which has now received the suffix of "or buy a PC and wait 18 months."
This is the nature of bean counters at the helm: they can't look upwards or forwards. But they're great at padding their own pockets.
All data, no qualia.
This is the nature of bean counters at the helm: they can't look upwards or forwards. But they're great at padding their own pockets.
All data, no qualia.
I agree. But times change as well. They came in with a technology that allowed them to dominate the market. A lot of ecosystems were based around technology as it was advancing so quickly.
everything about the industry has changed, its not unreasonable that they change strategy to match the times. Very often I find that many companies and teams and people unrelated to each other reach the same conclusions. How they play that out is up to them, but reacting to market conditions and challenges can’t be considered a bad thing.
But can you answer the question more specifically? Like what is Playstation, what does generate money for Sony and why people buy Playstation?
SM 2.2 M on Steam, 13M on PS, quick Google. GOW 3.3M Steam, 23M PS. HZD 2.4M Steam, 24M PS. Days Gone, >1M Steam, 8M PS.
So 10% minimum seems pretty typical. Assuming ports are fairly cheap (and getting relatively cheaper with cross-plat envisioned all through development), that's an okay return, I bet.
I'm pretty confident it's not a bad read on things.
Sucker Punch stopped making Infamous and started making Ghosts of Tsushima
Guerrilla stopped making Killzone and started making Horizon
Naughty Dog moved on from Uncharted to The Last of Us
Sony Santa Monica continued God of War by re-imagining the style of game
Housemarque never makes sequels
Plus they bring in new IPs like Nioh from Team Ninja, Death Stranding from Kojima
Insomniac is one company that's kind of a sequely company, because they're still making Ratchet and Clank and Spiderman is turning into a franchise, but they do have Wolverine coming.
In terms of the remasters, I don't like how those are being substitutes for a slower release schedule, but they're usually farmed out to other studios to allow the others to continue making new games.
Other companies will basically never let their early to mid 2000s franchises die the deaths they deserve.
I think the idea that pc is somehow cannibalizing the success of PS5 doesn't make a lot of sense. There was a zero percent chance of me buying a new console, but I bought Spiderman on PC. A lot of PC gamers are just PC gamers. Some people double dip and buy twice. There are probably some people waiting for the PC version over PS5, but they likely were never strongly attached to playstation anyway.
The real issues are the limit on what people are willing to pay to buy a game, and the cost of producing them. This gens game price increase was a shock to a lot of people, on top of the consoles being fairly expensive and having limited availability for a long time. You put the cost of making a game on top of that, with a break-even point being in millions of sales, and you have a recipe for low margins. Throw some studio purchases into the mix, and long development times and you now have a lot of costs that need to be floated by fewer games per year. I think if PC has an impact, it's one of the smallest ones.
Cynicalking
Regular
I think people are delusional if they think that someone that's buying 2 year old ports at discounted prices are somehow cannibalizing PS5 sales.
There is an error in our tendency to imagine that we, represent a stable audience and use ourselves as examples. We talk about audiences as if it is fixed and it is just about switching.
The audience is not fixed. Older generations exit the market and newer generations enter it.
For example, the millions playing on Switch aren't all the same people who grew up with NES.
The current and potential gamers who own or will own PS5 are not all of them the same people who grew up with PS1.
The older generations act as a foundation, a backbone that maintain the ecosystem that will be joined by new gamers.
Growth and sustainability are retained by new people joining while older are exiting. Without getting new blood into the brand, it is going to shrink.
So the discussion shouldnt be simply about switching. Switching IS part of it but it is NOT the only part of it.
Younger gamers are less likely to join PS if they can get the experience on PC or laptop which pretty much almost every youngster owns in the developed world. All games and features are moving to PC. And casuals can just as well play wherever and won't care about game legacy or trophies.
The XBOX console is a prime example where people abandoned it and newer generations don't join, hence why from the 85 million plus 360 users it is struggling to even reach half of that, and it did try day 1 releases on PC. How XBOX is today, shows how PS could potentially end up with the same tactics that have been tried by MS. When we talk about the PS audience as if it's going to stay the same and can't drop, we are deliberately and consciously fooling ourselves.
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PlayStation is a platform in which they sell a console to its users who purchase it, and developers and studios create software for that console in which they pay royalties to PlayStation to do so.
To encourage more potential consumers to purchase PlayStation they also create their own software that is only available on their platform so that it entices people to buy their platform and not invest in another.
Everything else, would be a branch of this. That’s what I think playstation is, as how I view many platforms.
The majority of revenue for PlayStation comes from royalties of 3rd party software sales as well as profits from first party software and any subscriptions they happen to sell to their user base as well as any accessories.
People buy PlayStation because of a large heritage of having games that other ecosystems did not have; driven largely by their entrance to the marketplace with CD over cartridge, letting developers access vastly larger space at a fraction of the cost over a cartridge.
But back to my original point, it should be clear that the majority of PlayStation purchasers are driven by older gamers, largely because they grew up with PlayStation. But are children buying PlayStation in droves?
Nintendo doesn’t have that issue, children and families are still buying Nintendo. Tablets and IPhones have a big stake in kids growing up playing games.
So where does that leave PC, Sony and MS? Well PC has a ton of games that kids play, so many of them are playing Fortnite, Minecraft, Roblox, now palworld. So many of them engaged on twitch and social media. PC is stronger than ever in the younger markets.
Why would children want to play the types of games that MS and Sony are releasing today? They don’t have the connection we do with these brands. So they have a problem, the demographic that is buying these titles is shrinking, in 8 years I’ll be 50 and then you’re going to see a cliff of users fall off the platform and secondly the cost of releasing newer and stronger hardware keeps going up.
So what exactly should Sony and MS do if you want to think long term ? I mean let’s realistically look at the output from Sony the last two years and tell me how they are getting new young gamers on the platform to monetize for the next 30 years?
Because when we talk about long term, that’s what I think about, I think about demographics, the vast majority of millennials and Gen X have children now. Where are the games for them, where do they spend their time and on what devices, and how are they getting engaged. What games are made for them?
When you talk about long term, you’re thinking exclusives are the most important thing to driving people to keep buying PS. But I before exclusives I worry much more about demographics.
Tkumpathenurple
Veteran
Sure, but I've spoken to a bunch of people who have bought a PS3/4/5 for exclusives, and read plenty such accounts across the internet. An individual title may not move the needle for a person, but a body of games can tip them into buying the hardware necessary. It's exactly that reason that I'll probably buy the Switch 2 (y'know, unless it's another WiiU.)
It's why I say keeping the releases to the generation behind would've made more sense. If PS4 console sales dip now it doesn't matter, but PS5 sales staying healthy are vital.
I agree. And to be clear, I'm talking exclusively in reference to PS5 hardware sales, not the issues with development costs and profitability.
I think people are delusional if they think making PlayStation games available on other platforms doesn't impact sales of PlayStation consoles.
You just explained how Nintendo manages to stay relevant whereas Sony going the PC route makes the Playstation brand irrelevant for younger generations. The PS was relevant for all demographics in all generations.
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