PS3 costs drive Sony's Q2 profit downwards

PARANOiA said:
If you disagree I'd be interested to see why.

Well, I do disagree in a way. IMO as long as the business makes sense to continue running as a business, then it's a 'success.' Sure, relative to prior or future performance one could say a certain year, model, or generation 'failed,' but in the larger scheme of things profitability is the ultimate determiner.

That being said though I so see where you're coming from with your listed criteria there, for Sony Nintendo, and Microsoft.

Viewed in that context (the relative context) I agree with your conclusions, except to say that I think you reversed it with Microsoft: this gen profitability is their number one, and mindshare is secondary. It just stands though that the road to the former will likely be paved with the later. But if Microsoft doesn't turn profitable this gen, mindshare aside, I think that will qualify as a *relative* failure for them.
 
I think PARANOIA's right in general. Sony have invested an awful lot of money in support of PS3 and related technologies. If PS3 doesn't do as well as people are expecting (emulating it's older siblings' successes) Sony are going to be out of pocket, which'll reflect badly on their books and damage investor relations I'm sure.

As for an easy/hard round for Sony, I've no idea. I don't think anyone can actually with confidence predict a likely outcome. So far UMD's have done well despite everyone of sense saying the public would neven go for it. At the end of the day, though marketting firms would like the companies they service to think otherwise, the mainstream buying public can be amazingly unpredictable. There's no way of knowing which thing will become the latest fad. I remember a few years back a program of Christmas presents and what would be the big seller. Experts were tooting Pogo sticks (following on from Scooters and other mobile entertainments) and I've never seen one out since. Similarly authors and musicians approach countless publishers and agents who turn them away thinking they won't amount to anything, only suddenly for their book/music to get taken up by an unknown are fly to the top of the Fads and Crazes list. All these agents etc. have a job only to predict what will sell, and they get it wrong as more often as not. You can't create a craze deliberately (except boybands :p). You just shovel your wares out there and maybe one will take off. Next gen Sony are in a strong position, but for all we know suddenly Nintendo get the cred and whizz to the fore? Or Maybe Sony can still ride the wave of the PlayStation brand in the same way Apple continue with iPod's sales success despite there being other better rivals.

I'll be surprised if PS3 doesn't reign supreme, but at the same time I'm not making any predictions!
 
I think all of us can agree if sony is forced to take larger losses while selling less units than it did with the ps2 they will be introuble .

If there is no growth that is a bad sign esp if ms or nintendo starts to make more inroads . If ms can get 30-40% of the global market this round (or more ) it will be a huge blow to sony .
 
Why is it dependant on Sony shifting hardware? What if MS and Nintendo make inroads (pretty likely IMO) but Sony triples software and content income through downloadable msuic, movies and whatnot? As long as they make the money, that's what's important to them. I'm sure given a choice between making $500 million profit a year with 90 million PS3s, and $2 billion profit with 20 PS3s, Sony would willingly choose the latter.

The concern is not 'will Sony lose market share?' but 'will Sony's earning power be reduced?'
 
PARANOiA said:
Shifty,

There are plenty of IFs. However, I think the point trying to be made is that Sony are in a much riskier position than ever before with the Playstation. Your sarcasm is noted, however I think you'd have to agree here that it's not going to be an easy win for PS3 this round.

It wasn't a easy win the last two darn rounds. Sorry for sounding pissed but I am. Sony had to bust their butts to be where they are now. Before the PS2 came out plenty of people talked about the launch games and stated what the Sega DC could do and how they had great games. Now the DC is a in no mans land. The GC was cheap, small, and cute and people talked about how that was Nintendo return to the top. The Xbox was super powerful, had a HDD, and had the obvious best online in console history.

But what happened? Sony creamed all of them. Even with Mario 64 and GoldenEye the N64 got crushed by the PS1. My point is Sony has always stepped up to the competition. And each and everytime they had very good competition. Everytime.
 
As I have already stated numerous times, mind-share will play a big factor. In addition, Microsoft though undoubtedly in a better position at glance still lacks key-games to make a big impact into Sony's marketshare. Millions of Sony owners enjoy the software they're used to for the last 2 generations. As long as those key-selling franchises are still on the Sony platform, it is left to be seen if they feel tempted enough by what Microsoft is offering.

From how I see it now - and ultimately, I am a PlayStation owner and the ones Microsoft wants to see buying their console - there's little that sparks my interest. PGR3 all sounds nice and dandy, but in all honesty, it's not exciting me any more than the previous two games did. Why would I get all excited about them now? Same goes for Halo. Undoubtedly great game, yet part 1 and 2 weren't reason enough for me to get an Xbox so why would part 3 change any of that? Answer: it doesn't, and I'm betting tousands if not millions think the same.

As for graphics - well, undoubtedly Xbox360 will have the advantage of having the best graphics around for over a half year - but why get all excited about it when I know that PS3 visuals will be just as good?

As I said, I'm sure Xbox360 will enjoy an excellent launch and will be bought by many of its own followers (today Xbox owners), but really, to think that millions of proud PlayStation owners will just drop everything and go and buy an Xbox360 knowing PS3 with all their favorite franchises is around the corner is really pushing it.
 
Phil said:
From how I see it now - and ultimately, I am a PlayStation owner and the ones Microsoft wants to see buying their console - there's little that sparks my interest. PGR3 all sounds nice and dandy, but in all honesty, it's not exciting me any more than the previous two games did. Why would I get all excited about them now? Same goes for Halo. Undoubtedly great game, yet part 1 and 2 weren't reason enough for me to get an Xbox so why would part 3 change any of that? Answer: it doesn't, and I'm betting tousands if not millions think the same.
For me, the way I see it what is XB360 going to have genre-wise that PS3 won't? It's got PGR and racers, but PS3 will have GT and racer. It's got FPSes, and so will PS3. It's got platformers like Kameo, and PS3 will have platformers like Jak/Ratchet.

The only thing I can see coming to XB360 that isn't yet listed for PS3 is Oblivion, and I don't know what western style DnD class RPG's PS3 will be seeing. I do expect a lot of original concepts (not just IPs) on PS3, like Okami, ICO/SotC, Katamari etc. It's the old 'it's all about the exclusives' argument, but for me it's not the brands that are as important as the ideas. They'll all have their fair share of genre exclusives with slight variations on a theme. It's the new and exclusive gameplays that'll sell the console to me.
 
It comes down to ONE GAME to proclaim who wins this console war:


GRAND THEFT AUTO :D

(j/k....But if Sony once again secures the GTA series with a timed exclusive and the gameplay and graphics are mind-blowing....it may be PS2 all over again. BUT, I have to see what PDZ and Halo 3 is looking before I get a 360. Also, I'm skeptic since I only mentioned 2 games for 360 that I truly want (either than the next NG game), I hope MS can come with alot more exciting games than 2 FPS of my tastes.)

Franchise games....will I ever move on to more innovative and unique games?

-Josh378
 
Shifty Geezer said:
For me, the way I see it what is XB360 going to have genre-wise that PS3 won't? It's got PGR and racers, but PS3 will have GT and racer. It's got FPSes, and so will PS3. It's got platformers like Kameo, and PS3 will have platformers like Jak/Ratchet.

Oh I wasn't trying to imply that Xbox360 lacks genres and games that are on PS2 and will be on the PS3 eventually - what I was specifically saying is that Xbox360 currently isn't offering something that will make PlayStation owners magically drop their console of choice and run out to stores.

But let me start differently now that I have a bit more time on my hands for a longer reply:

Consider the following:

At the beginning of a consoles launch - beginning as in launch + initial year of the consoles debut - its consumers are made up of

1.) hardcore gamers,
2.) loyal platform supporters (fans) and
3.) casuals out to buy a new toy that's considered to be cutting-edge new and will last them a couple of years.

I'm obviously guessing here, but I think it's fair to assume that the largest part of initial buyers are the ones made up of hardcore gamers & loyal platform supporters. The rest ( 3 ) will probably make up for below 30% of those initial buyers.

As the months pass, I'd say it's reasonable to assume that the casuals gain more and more importance over the hardcore gamers & loyal platform supporters. This is attributed especially to the increase in software but also price drops and the fact that they too would want to use their consoles for around a 5 years cycle.

Now, considering the above, I will safely assume that the Xbox360 when it will launch at the end of this year, will be predominantly bought by hardcore gamers and its own set of loyal Xbox supporters. Casuals will, as with any console, be of a very small percentage - if even less than expected because many of them will have just have bought a PStwo not too long ago and won't be rushing out to shops to buy an expensive new console.

The time when the group of casuals will slowly pick-up is when, as mentioned above, there are price-drops, more software and their old console start to become outdated. I'm not sure anyone can make accurate as to when this happens, but I wouldn't think within the first year of the Xbox 360s launch. Now, if we assume that this shift occurs around 1 to 1.5 years after the console's debut, the PlayStation 3 will have already been launched - and it too, will have sold heaps in that time, thanks to hardcore gamers and especially loyal platform supporters. If we look up to when PS2 launched, we will see that Sony managed to sell roughly 10 million units within the first year. This is unparalleld so far in console history and I see especially one reason: mind-share. At the time PS2 launched, PSone enjoyed sales of over 70 million units world-wide - a big percentage of course being casuals, but also many casuals that over time of being happy PlayStation owners transformed into loyal supporters. Loyal supporters that then went out and bought a PS2 within that first year, despite an impressive Dreamcast at the time.

Now if we fast forward to December, we'll see that with the launch of Xbox360, there will be roughly 95 million PS2owners outthere, many of which I expect to be happy owners as well - many of which will have turned into loyal supporters as well.

If we go by current sales numbers, we have roughly 20 million Xbox owners and roughly 20 million GameCube owners outthere (actually, I'm not quite sure about the current number, but for the sake of the point, it should be accurate enough).

If we subtract that from the PS2 userbase, we're left with around ~50 million of PS2 owners that appear to be exclusive to the PlayStation brand at the moment (and this is best-case scenario as I'm sure not every Xbox & GameCube owner owns a PS2).

Now, obviously, we don't know how many of the above mentioned 50 million PS2 owners are casuals, hardcore and loyal supporters, but also here, I'd expect a fair part of them to have become at least somewhat supporters as well, if not for the fact that they enjoy the games they're playing and will be looking out for franchises they know next generation.

Thing is, once Xbox360 will start to gain popularity among casual gamers, PS3 will almost certainly be on the market for a while as well, enjoying rising sales of its own. The question I think is the important one is if those casuals, those 50 million PS2 owners today, are they going to go out and buy a Xbox360 or a PS3? To answer that question, I think software will play a significant factor - software that yet isn't around.

I suppose it's my opinion, but I think if Microsoft seriously wants to get a big fat chunk of those 50 million to convert over to their console, they need more of the same kind. The games Microsoft over will have to be better than the PS3 ones, more innovative and simply different to make people want to change. If they fail to deliver on this, I don't see why many of the today's exclusive PS2 owners would shift. In fact, what they need IMO are key-exclusives that are appeared on PlayStation this generation. Final Fantasies, GTA's.. you name it. Or they need to build new IPs that grow to similar successes and will make an impact.
 
Shifty Geezer said:
Why is it dependant on Sony shifting hardware? What if MS and Nintendo make inroads (pretty likely IMO) but Sony triples software and content income through downloadable msuic, movies and whatnot? As long as they make the money, that's what's important to them. I'm sure given a choice between making $500 million profit a year with 90 million PS3s, and $2 billion profit with 20 PS3s, Sony would willingly choose the latter.

The concern is not 'will Sony lose market share?' but 'will Sony's earning power be reduced?'

Sonys software tie in ratio is just not that good . To continue growing thier busniess they need to continue expanding thier user base . Esp for a company thats game base is largely third party .
 
Or improve their software tie ratio. And software can be more than just games. That can include media content. eg. PSP's software tie ratio is augmented by UMD sales.
 
Phil . Your missing a key point . Casual gamers that make up a huge portion of sonys 90m users will buy what has the hype and what they can afford.

There is a reason why most consoles are sold at the 200$ and under price point and it has more to do than just the amount the system itself costs .

I believe through ms's core unit they will hit 200$ mark way before sony does and with it will have a host of 20$ games .

Most gamers don't care if they are playing gt5 or froza 2 . Just as long as it has the features they want .
 
Shifty Geezer said:
Or improve their software tie ratio. And software can be more than just games. That can include media content. eg. PSP's software tie ratio is augmented by UMD sales.

It could be . But where are they going to increase thier software tie ratio ? Xbox live market place doesn't exist in sony land . They don't even have a working online model for it as of now .

Umd is working well because there are simply no good games hitting the psp . Will umd sales stay high if the owners have a choice between quality games or movies ?

Lets nto forget that whatever sony does with the ps3 its going to require huge investments . A multimedia content delivery system doesn't just sprout out of thin air
 
Phil said:
I suppose it's my opinion, but I think if Microsoft seriously wants to get a big fat chunk of those 50 million to convert over to their console, they need more of the same kind. The games Microsoft over will have to be better than the PS3 ones, more innovative and simply different to make people want to change. If they fail to deliver on this, I don't see why many of the today's exclusive PS2 owners would shift. In fact, what they need IMO are key-exclusives that are appeared on PlayStation this generation. Final Fantasies, GTA's.. you name it. Or they need to build new IPs that grow to similar successes and will make an impact.

I'm sorry I just don't see 50 million+ people switching over to buy a Xbox360 or Nintendo Rev exclusively. And with the PS3 having its BC with its hundreds of millions of games, it's just wow.
 
xbdestroya said:
I think you want to revise your scale there Mckmas. ;)

:LOL: No I was referring to games sold, not total amount of titles. It's is funny if I did mean the other way though lol.

jvd said:
Umd is working well because there are simply no good games hitting the psp . Will umd sales stay high if the owners have a choice between quality games or movies

jvd you are just WAAAY off with this remark. UMD movies are not working because of this "lack" of good games. Game sales are doing good compared to the number of units that are out. And if the PSP doesn't have any good games then explain to me why by the end of August the PSP had more total games sales than the DS in the U.S.? The whole "PSP doesn't have good games" thing is old so just drop it will you? Thanks.
 
jvd said:
Lets nto forget that whatever sony does with the ps3 its going to require huge investments . A multimedia content delivery system doesn't just sprout out of thin air
True. I was just saying it's a possibility. Rather than having to invest in getting more hardware sales, it's an option to get more content sales. And we have been hearing here and there of content delivery being developed for Sony. They seem very slow on this front IMO. PSP's been out a year-ish without a proper content platform, and you'd have thought they'd have started work on that the moment they started PSP. Could be internal wranglings, arguing over various aspects between Sony music and films. And perhaps they're cahooting with other publishers which'll slow everything down. Still, if within a couple of years there isn't an integrated content portal for PSP and PS3 I'll be quite surprised.
 
mckmas8808 said:
:LOL: No I was referring to games sold, not total amount of titles. It's is funny if I did mean the other way though lol.



jvd you are just WAAAY off with this remark. UMD movies are not working because of this "lack" of good games. Game sales are doing good compared to the number of units that are out. And if the PSP doesn't have any good games then explain to me why by the end of August the PSP had more total games sales than the DS in the U.S.? The whole "PSP doesn't have good games" thing is old so just drop it will you? Thanks.


Hmm could it be that there are more psps than ds's in the states ? Why not compare world wide and see the diffrence.

Number 1 complaint about the psp that gamestop hears "No games that apeal to me"

We will see psp game sales go up again with gta 3 .
 
Phil said:
If we subtract that from the PS2 userbase, we're left with around ~50 million of PS2 owners that appear to be exclusive to the PlayStation brand at the moment (and this is best-case scenario as I'm sure not every Xbox & GameCube owner owns a PS2).
I'm interested in what makes you think they're "exclusive". It's possible to own one machine without buying the next iteration. Otherwise the PS1 couldn't have beaten both Sega and Nintendo.

I actually have never bought a console's successor... I had a Sega Megadrive (Genesis to those in the US), bought a Sony PS1, then a Sega Dreamcast, and then an Xbox. Do you think I'll be exclusive to Xbox?
 
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