PSN not profitable yet

[dobwal]

You are cherry picking quotes to help your argument, inflating XBL revenue to 1.5B. Go Team Go!

The $60/year just started and no way everyone suddenly started paying that. Also it's all analyst estimates on how much XBL is making, and it only surpassed the 1B mark last summer. Sony's number is for FY2009 ending march 2010.

In short, the article that started this thread is a horribly inaccurate translation, we do have some revenue numbers from Sony on PSN, and we don't really have a breakdown of XBL numbers directly from MS. Too many variables, pointless discussion.

I am not cherry picking quotes. That's the only direct qoute from a Microsoft official. Every other estimate is generated by some website or analyst using the straight 12 month fee multiplied by number of gold subscribers. I admit he might be using 60 12 month fee that with into effect in nov but the average paying gold member = (month subs +quarter subs + yearly subs)/ total number of gold members. And that could produce a figure above $50 dollars. I produced that estimate using 2 numbers directly from an ms official not just one figure and some arbitrary number that looks rights.

Talking about go team why don't you read the quote
first.

No one really knows what MS makes off Live because they been really coy about it and from my memory have only confirmed Live being profitable years back. I am of the opinion that the estimates are low not because I want to create a gap between Sony and MS revenue but because it hard to me to fathom that there exist such a big gap between the level of revenue MS needs for Live to be profitable and the amount of revenue that PSN needs to be profitable. By many PSN is considered the lesser service yet we have a quote from Sony that states PSN will produce revenue of 800 million in 2010 but won't see profits until 2011. Yet this is the first time Live has been estimated to be over 1 billion dollars.

How is Live making money hand over fist for years and just within the last year push above 800 million when Sony can't see profit at that level? Live is suppose to be the more feature rich service thats more heavily used by its userbase but somehow its able to see profitablity at a far lower level than Sony? I have a hard time buying that argument.

 

[dobwal]

Whole service. The interview is talking about all Sony network revenue as it's to be rolled out across devices, and not just sales to PS3 (+PSP).

I am not so sure, Doing a translation of that article using google. The 36 billion yen refers strictly to PSN and the doubly in 2010 while the 300 billion refers to their overall network service, which makes sense because I doubt PSN can go from 36 billion yen to 72 billion yen to 300 billion yen in 2 years. Thats about almost $4 billion dollars, a number that Live is no where near pushing.

 

[patsu]

It's worth noting the US and EU stores are pretty different. I find it easier to find stuff on the US store. I think for a long time the EU store didn't even have an alphabectical index, but it has now.

I think the big issue with PSN may be lack of consistency or predictability. eg. When I went to rent Up, although listed among the films there was nothing to say it wasn't available to rent until you selected it. Tried this with a couple of other films until I found one that could be rented. That having to dig around is unfriendly and will discourage people. With something like LoveFilm, chances are people will use that instead, decreasing PSN revenues for the same content.

Yeah... Sony should consolidate their online platforms across regions. For movie or TV rental in the US PS Store, they have a separate category for them. I remember they even have a separate HD only rental category.

They should measure, review and update the PS Store "continuously". They can tune the PS Store interface so that the shopping process is "fun" and interesting, without being too distracting. When iTunes was first launched, it made music shopping a rather refreshing experience.

To encourage Music Unlimited sign up, they may want to encourage developers to add Custom Music into all games. It is not easy because Music Unlimited stream songs (instead of download them). I believe XBL doesn't allow last.fm to be used in Custom Music also.

I disagree with the like of Joker who feel the store front is enough to turn people off buying content. If I want to buy a game or film, it's easy enough to find and choose buy. Purchasing is transparent, just entering my password to confirm the transaction. I could even choose to ignore the password and always buy. So there's absolutely nothing making it hard to part with cash.

And also lots of us experienced PSN in the earlier years when it was pretty crap and empty, and like Home, felt there was nothing there for us and lost interested, never to try again. Things may have improved considerably, but telling that to customers who have already formed a negative opinion is hard. Sony's fault for not having everything in place from the beginning. Live by comparison was already a generation established. Next gen, PS4 can offer a clean integrated interface (I don't think PS3 will get such an update but instead will remain a LittleBigPlanet mash-up of features and services!) and consumers will start again.

Even without a unified interface, Sony has a lot to do this gen. Getting their first parties to standardize on a few online party implementations (depending on resource usage) would be a good start. It will help them refine the UI. Sharing these party implementations with third party is also a good idea. GameSpy and others will react accordingly.

I'm also not sure features like demo's help. I've bought content I wouldn't have bought had I tried a demo. Considering most demos don't present a game terribly well, I wonder if they do more harm than good in many cases, and PSN sales have a net gain from people taking a chance on a £5 title? The topic of demo effectiveness is one for another thread.

The current form of demo can be improved further to promote sales. But their quality has to improve first.

The question then is, how does Hirai expect things to improve? What exactly is going to change over the next 3 years?

From his latest interview, he intends to open up the offerings and audience of Playstation Store. We have been talking about PSN in the context of PS3. If PSN (or rather "Sony Online Services") also sell to iOS, Android Phone, and PC, then it should be able to exceed its current revenue easily. Connected TV and BD-Live players are icing on the cake. It would be cool if the online gaming part is open this way too (What is Sony Online Entertainment doing ? ^_^).

Where the store mechanics are concerned, Sony should learn from Amazon and iTunes. They need to hire people who are experienced in (digital) merchandizing.

Personally, I'm more interested in Sony modularize their home theater stack, and offer a new line of stackable/pluggable SPU or Cell-based electronics (from mid-low end and up). Then hook them up to the online store. They can even sell the expansion modules direct only from Sony eStore to lower the price.

EDIT: Since eBooks is mentioned in Kaz's interview, Sony's eReader and ReaderStore for iPod + Android in January 2011:
http://ebookstore.sony.com/rme/

 

[corduroygt]

I am not cherry picking quotes. That's the only direct qoute from a Microsoft official.
Talking about go team why don't you read the quote first.

Only quote that's from MS there is the 12.5M gold members. The $60 fee is new, and he didn't explicitly multiply the two together, so it's not like MS is getting that much on subs. That was just a form of marketing that MS did over there. You have to factor in processing fees and retailer margins for XBL fees.

 

[dobwal]

Only quote that's from MS there is the 12.5M gold members. The $60 fee is new, and he didn't explicitly multiply the two together, so it's not like MS is getting that much on subs. That was just a form of marketing that MS did over there. You have to factor in processing fees and retailer margins for XBL fees.

"Of our 25 million members [worldwide], about half of them are subscribers to the business and pay us about $60 a year for that"

Thats the exact quote. Your right, it may be a form of fud. But inherently $60 dollars shouldn't represent a flat annual fee it should represent basically an average. Given the discounts and the different level of subscriptions everyone doesn't pay the same fee. Furthermore, if 12.5 million represents the total number of user unders subscription right now then it can't be used to produce a yearly revenue figure because that figure doesn't include all those purchased 1 and 3 months subscriptions that were bought and expired in the first half of fiscal year 2010.

For subscription fee multiplied by total number of membership to actually produce a true annual revenue figure those two figures have to be the average total number of subscribers at any one time multiplied by the average fee paid by the average subscriber. Otherwise, you are producing some arbitrary figure that may or may not reflect true annual revenue.

 

[corduroygt]

"Of our 25 million members [worldwide], about half of them are subscribers to the business and pay us about $60 a year for that"

Thats the exact quote. Your right, it may be a form of fud. But inherently $60 dollars shouldn't represent a flat annual fee it should represent basically an average.

If you're going to take it literally, then it means there were no new XBL gold members and live subscriptions added since this summer, when MS announced the same membership numbers and XBL was still $50. He's just taking the 12.5M number MS announced earlier in the summer and combining it with the new price tag. It's obvious that he's not really looking at the current numbers, it's marketing, plain and simple.

The average price and number of customers of XBL is harder to compute, since there are people who don't always have live gold, but only get it when they need it/have money, like you said.

 

[dobwal]

If you're going to take it literally, then it means there were no new XBL gold members and live subscriptions added since this summer, when MS announced the same membership numbers and XBL was still $50. He's just taking the 12.5M number MS announced earlier in the summer and combining it with the new price tag. It's obvious that he's not really looking at the current numbers, it's marketing, plain and simple.

The average price and number of customers of XBL is harder to compute, since there are people who don't always have live gold, but only get it when they need it/have money, like you said.

No I assume what you don't and thats that the userbase is literally fluid, people flow in and people flow out. I assume that the vast majority of 360 purchased within the last 3 months were for Christmas who are taking advantage of the free month and won't have to buy a subscription till the beginning of next year. I can see the gold membership being relatively stagnant for months at a time depending the holidays for any substanial growth.

You have every right consider Durkins numbers as suspect thus my numbers may be flawed just as I have the right to point that the methodology behind the 1-1.2 billion dollar by using the 12 month annual fee and userbase is outright wrong and thus should not be even considered.

 

[corduroygt]

No I assume what you don't and thats that the userbase is literally fluid, people flow in and people flow out. I assume that the vast majority of 360 purchased within the last 3 months were for Christmas who are taking advantage of the free month and won't have to buy a subscription till the beginning of next year.

So 360 is still at 25M combined live users? All the people who bought a 360 since the summer were existing customers upgrading to a slim, or getting a second console? New owners never signed up for Live, not even the free version, despite the new 360's have built in wifi?

What you said does not make sense. Dennis is just quoting the Live account number from the summer and combining it with the new $60 price tag.

 

[dobwal]

So 360 is still at 25M combined live users? All the people who bought a 360 since the summer were existing customers upgrading to a slim, or getting a second console? New owners never signed up for Live, not even the free version, despite the new 360's have built in wifi?

What you said does not make sense. Dennis is just quoting the Live account number from the summer and combining it with the new $60 price tag.

Your right he very well maybe using numbers from early in July. I don't claim my numbers as absolute fact but neither can you claim that he simply using a number thats a flat annual fee. In July he wan't quoting 25 million and $50 but just the userbase number. He claims that everyone is paying about $60. "About" denotes an approximation or an average not a flat specific number. There is nothing to say that he using some ASP that just happens to coincide with the new flat fee. He is the COO, he should know how much money is being collected from the average subscriber.

I used his numbers because they came out his mouth and I can at least assume that his numbers have some validity versus using a methology that is flat out wrong that you had no problem buying into in the first place since you made your arguments based off it. You are just taking your own assumptions and trying to push them as the most likely reality just like you dismissed 60 million PSPs as having little bearing on PSN revenue because the PSP Gos aren't flying off the shelves.

 

[egoless]

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