PSN not profitable yet

[Scott_Arm]

http://www.joystiq.com/2010/12/24/sonys-hirai-playstation-network-not-yet-profitable/

Sony's biggest mistake, this gen, if you were to point one out, would be the way they massively misunderstood and underrated the importance of online service.

 

[corduroygt]

http://www.joystiq.com/2010/12/24/sonys-hirai-playstation-network-not-yet-profitable/

Sony's biggest mistake, this gen, if you were to point one out, would be the way they massively misunderstood and underrated the importance of online service.

Actually, it's not PSN losing money. It's PSN + video + eBooks + QRIOCITY + etc lost money this year and that Hirai's explanation for the red ink is the startup costs of spinning up all these new services recently. So actually, Sony does understand the importance of online service, and they're investing heavily to improve it. I hope they have good management leading that division though, I am not so sure of that.

 

[NRP]

It's interesting that they feel the subscription-based service will allow them to increase revenues tenfold. A lot of the sentiment I've heard on this forum and others is that Sony fans won't pay for online services. I wonder if this will backfire on Sony. I imagine it will depend on whether they keep online multiplayer free.

 

[Xenus]

I don't think they understated the importance of online. It's more like they have this grand vision that they have yet to pull off and in doing so realized a strickly free model was a money sink despite how good it looks to the consumer or not depending on features.

 

[Scott_Arm]

There is no doubt in my mind that if they'd launched with an online service more comparable to xbox live, the scenario in North America would look drastically different, more in line with last gen.

 

[patsu]

The article is actually pretty neutral. Sony hasn't really started to milk PSN until second half of 2010 when we get a slew of new video, music stores, sped up Home; plus assorted membership schemes. It shows in their revenue (Almost doubled in the same period).

The more interesting question is: What is PSN in the context of Sony Online Services ?

It's interesting that they feel the subscription-based service will allow them to increase revenues tenfold. A lot of the sentiment I've heard on this forum and others is that Sony fans won't pay for online services. I wonder if this will backfire on Sony. I imagine it will depend on whether they keep online multiplayer free.

I don't think Kaz said that. ^_^

He only implied that PSN revenue would increase (ten fold) by 2012 without specifying the exact revenue sources. For example, it could be additional $$$ from downloads (Android, Bravia and other Sony devices). Qriocity serves music and videos for "all" devices.

I see they are in the process of beefing up their CRM. It's an expensive setup, especially if it comes with an analytics backend. So we should be seeing more aggressive promos (to increase sales) next year.

It'd be interesting to see how PSN online framework changes when they focus more on PSN $$$.

 

[Toaddio]

I don't think the article states that PSN has never been profitable nor does is say PlayStation Plus is going to be responsible for a ten fold increase in revenue. The JoyStiq article is a little thin in details.

 

[patsu]

This part ?

In addition to increased game and video sales, it's likely PlayStation Plus -- Sony's premium content subscription service -- will contribute greatly to the overall profitability of the network. (Undoubtedly, Sony will want to closely replicate the success of Microsoft's competing Xbox Live service.) Sony has been monetizing the service in other ways as well, such as the extensive advertising partnerships featured in its original video programming.

It's Joystiq's speculation. The original article doesn't mention it at all.

I don't think Sony is interested in replicating XBL with PS+. It's a very different concept altogether.

 

[Shifty Geezer]

A translation of the original interview is needed for clarity (because we can't trust reporters to be accurate). By PSN being profitable, is he talking specifically about network gaming services, or the glut of media distribution? Qriocity is one example of a subscription service that may do well. Also the article actually mentions PSN sales are expected to increase tenfold, not PSN revenues. Again, is that Hirai's actual prediction, or the article's interpretation?

 

[corduroygt]

Well, google translate isn't very useful on the original article, but indeed he was talking about a bunch of services, not just PSN. Can someone translate the original?

http://jp.reuters.com/article/companyNews/idJPnTK049554820101222

 

[patsu]

Qriocity is one example of a subscription service that may do well.

Qriocity is not fixed to the subscription model. Music Unlimited has a subscription model, but Qriocity Video-on-demand is a pay-per-download service (like PSN video store).

On-paper, the DRM system behind Qriocity should enable a plethora of business models.

 

[Graham]

It does feel a bit like Sony is taking a shotgun strategy to online services.
It feels to me like they are bombarding us with new services with little clear long term direction. How many tv/movie services does the PS3 have now?

While options are good, I'm not sure it'll work long term unless you get the basics (integration, ease of use, consistency, etc) spot on.
Apple and Microsofts are pursuing more focused services that are quite tightly integrated, be they first or third party.
Yet even Home, which is hugely successful feels very disconnected from the rest of the PS3 platform.

Another example would be Netflix;
Tightly integrated with the 360 and it's UI, whereas I was boggled to learn the PS3's netflix app randomly assigns interface layouts. WTF!

Quriocity is a step in the right direction with platform integration as a primary goal, although I feel that should be the natural result of a well designed ecosystem (I hope it isn't forced, XMB style). We'll see. I'm a natural cynic so perhaps it'll all go brilliantly. I just wish it had a better name (well, not as bad as Zune I guess)

 

[Arwin]

It does feel a bit like Sony is taking a shotgun strategy to online services.
It feels to me like they are bombarding us with new services with little clear long term direction. How many tv/movie services does the PS3 have now?

PSN is progressing nicely with Kaz' vision of opening up the platform to various third party services I think, at least. There are a lot of them, but not all services are available in all regions. Personally, I only have MUBI for instance, and under my TV icon there is only the national news repeats streamed.

As all Sony's own services are being consolidated into Qriocity though, I suspect they will be trying to offer some of the content in the other services through Qriocity as well, much like many content is now also available through iTunes.

While options are good, I'm not sure it'll work long term unless you get the basics (integration, ease of use, consistency, etc) spot on.
Apple and Microsofts are pursuing more focused services that are quite tightly integrated, be they first or third party.
Yet even Home, which is hugely successful feels very disconnected from the rest of the PS3 platform.

Yeah, Home was very disconnected at launch. They aren't completely blind to that though, as since then they gave it an XMB type menu interface which feels a little more 'Sony'. However, it could probably still be better. They could have tried to get it into a Game menu that showed you spaces to launch into straight from the XMB, much like they show recently played games and stuff.

Tightly integrated with the 360 and it's UI, whereas I was boggled to learn the PS3's netflix app randomly assigns interface layouts. WTF!

That was at launch, yes, don't know if that still holds today though (as they've updated to solve that region issue as well for instance, at least that's what I've read). I do think that the PSN Store, Play TV, PSN Video / Qriocity and such share the same Singstar style user interface?

But yeah, I think Sony should probably try to offer all services through Qriocity sooner rather than later, if they can. But not before they get Qriocity to the Netherlands.

 

[Graham]

Stop being so reasonable!

You are quite right that things are improving.

By the end of 2011 I'd love to see:

• Sony core services all under one umbrella service (clearly the goal)
• With consistent UX, account management and features sets, with platform tailored interaction
• Tighter intergration of the services into the platform OS (eg, music streaming)
• Access to the services on non-sony platforms (android, etc)
• Thirdparty service integration standardization (VidZone is perhaps the most confusing software I've used in a long time)

It's very easy to throw this into a bullet point list, but in practise this would be exceptionally hard to pull off, and realistically would require significant work to pretty much all service software on the PS3. Despite that I feel this is critical in brining Sony services to the masses.

Imagine if PlayTV, Mubi, VidZone, iPlayer, Netflix, etc all integrated with a common TV / Movie / Music service. Bloody hell!

 

[Rangers]

I still suspect Sony will throw online multiplayer under the pay umbrella soon. They even changed their TOS to allow it recently.

I want to say I read an article where XBL made 1.2 billion (last year?). That was about evenly split between Gold fees and everything else. So that would suggest overall Live is raking in 4 times the revenue of PSN, and 2X the revenue if you remove Gold fees. all this is based on PSN revenue=36b Yen=~$300m according to the article.

Most shocking though is Hirai's supposed claim that Sony expects PSN online revenue to increase ten fold three years from now. That is remarkably, ahh, aggressive! It might suggest Sony is planning on PS3 being $99 by then, they will start charging for multiplayer, or something of that magnitude.

Ahh, and here is my link for the XBL numbers http://www.gamasutra.com/view/news/...ke_1_Billion_In_Revenues_Last_Fiscal_Year.php

 

[Silent_Buddha]

That's also assuming everyone paid 50 USD for a 12 month live gold membership. At least in the US it's been fairly easy to find those starting at around 40 USD at retail locations. But I'm nitpicking a bit as that's at most about 120 million USD less than their estimate of 600 million USD.

The bigger problem is that 50 USD is the MSRP, which in most cases we can assume MS is getting far less than that. Especially if retailers can heavily discount cards and still pull in profit from selling them. So I wouldn't be surprised if MS only got 300-400 million USD from memberships (which is still a lot) compared to their 600 million USD estimate.

Regards,
SB

 

[KKRT]

I still suspect Sony will throw online multiplayer under the pay umbrella soon. They even changed their TOS to allow it recently.

This wont help Sony at all. People who already pay for Live wont be paying for PSN and there are enormous amount of people who will never pay for p2p online [like me for example]. But they can introduce something like DICE model, pay for dedicated server or pay for playing games like MAG that will find they're niche and wont screw whole audience and Sony's bullet point - free online gaming [which was and should be standard].

And about translation, two posts from neogaf

Umm... Hold the horses this is inaccurate.
http://jp.reuters.com/article/compan...49554820101222

The actual Japanese article indicates the online service structure including their music play for QRIOCITY as well as E-Book and no doubt anything digital was not making money YET. That includes the video store.

They use the term PSN as the amalgram of their entire online digital play. That as an aggregate cost assessment and has not yet yielded profit due to the simple fact that its still being built.

This is NOT a quote from Kaz Hirai saying PSN games are not profitable. That's completely out of context for the article.

The context of the article is stating that due to all the expansion they have put into PSN including their Video, Music, Games, E-book... They have yet to be profitable.

Anything else being said is not relevant to the original article and statement by Kaz.

You want to POO-POO on something at least make sure the original article is understood.

 

[Scott_Arm]

It's pretty clear that PSN is way behind Live in terms of revenue. Live is also a better online service, and has been profitable for quite a while. PSN still can't match Live in terms of service, and doesn't seem to be close to catching up. Maybe if PSN is slightly profitable, and is being dragged down by other online services, it changes the picture a little bit, but I still think the information paints PSN as a relative failure, when you compare it to Xbox Live. We're five years into this gen, and PSN is lagging behind Live in every possible way. They should have been ready to be competitive out of the gate, at launch, but they massively underestimated the importance of online. I don't think they knew how aggressive Microsoft was going to be with DLC and they thought they could win just by providing a more basic service for free. They just ended up behind on features, content and delivery.

 

[KKRT]

We're five years into this gen, and PSN is lagging behind Live in every possible way.

You mean in every possible way, except the most important feature of both services - gaming? :>
Actually i think PSN exceed Live! in gaming, because they provide games like Warhawk, MAG, Home and Resistance 2 without additional subscription and still they support things like GT 5 web-based interface or community tools Killzone 2 whole web infrastructure [without game replays and tactical maps] and lbp2.me site for free.

 

[corduroygt]

It's pretty clear that PSN is way behind Live in terms of revenue. Live is also a better online service, and has been profitable for quite a while. PSN still can't match Live in terms of service, and doesn't seem to be close to catching up. Maybe if PSN is slightly profitable, and is being dragged down by other online services, it changes the picture a little bit, but I still think the information paints PSN as a relative failure, when you compare it to Xbox Live. We're five years into this gen, and PSN is lagging behind Live in every possible way. They should have been ready to be competitive out of the gate, at launch, but they massively underestimated the importance of online. I don't think they knew how aggressive Microsoft was going to be with DLC and they thought they could win just by providing a more basic service for free. They just ended up behind on features, content and delivery.

You are being way too biased towards XBL. PSN has improved by leaps and bounds, and it has some features XBL can't match such as 1080p Netflix (without requiring a sub as well), VUDU, MLB/NFL, Home, Web Browser, etc. Party chat and invites are the only big features in XBL that are missing, and party chat wasn't there before Fall 2008.

Just look at COD sales distribution over time, it has steadily improved from COD4. That's despite COD having timed DLC, and not buggy in the PS3 version. It also doesn't help that PS3 players are far more singleplayer focused, they're not predominantly the "brogamers" that play on 360 Live.

I mean where on the 360 do you get single player only games that are not open world and with a linear campaign and only 6-10 hours of gameplay sell well, such as Heavy Rain and GOW3?