Report: Developers are steering away from PS3

[BenSkywalker]

Analyst projections are based on their proprietary demand models (a set of statistical/regression formuli key'ed off 100s variables like product attributes, competing forces, content contributions, ... plus any other VooDoo variables).

You forgot a huge issue with pre product analysis- focus groups. You can not underestimate how much weight they have on analysts predictions- and unfortunately they are almost always too small to get anything remotely resembling a good sampling.

For the launch price issue-

Microsoft's Xbox 360 is going for the gold on eBay. According to eBay president and CEO, Meg Whitman, 40,000 Xbox 360 consoles have sold through the online auction site. That's 10% of the total number of units estimated to have sold in the U.S. since the product was released.

http://itrain.org/itinfo/ebay_boosts_sales_figures_of_microsoft_xbox_360.php

Another-

The small supply and large demand moved many to "flip" their Xbox 360 purchases on eBay. During the week of Nov. 22 through Nov. 28, each successful Xbox listing on eBay garnered an average of 19 bids, and sold at an average price of $718.

http://www.techweb.com/wire/ebiz/174910036

Using basic market principles the fact that people were not willing to sell their 360s at that price point(given that the demand was clearly there to support such transactions) obviously MS could have charged a lot more for their system.

As far as pricing moving forward- why does anyone think that the 360 will have a long term price advantage? Right now the big difference in price can be narrowed down to one device- the BluRay drive. It is currently an emerging technology, in four years it will be a commodity. Xenos+Xenon are more complex then Cell+RSX, RAM is comparable between both systems as is almost every other function of the machines. Looking out long term it seems to me that Sony should be able to, worst case, pull nigh even with MS in terms of cost per unit produced. What is the difference in production cost between a CD drive and a DVD drive? $1? less? You can pick up high speed dual layer DVD burners for well under $40 now, devices that were four figures not all that long ago. BluRay is not a long term major factor for the PS3, it is a short term issue- history has shown us this time and time again. MS's ability to move to a single chip GPU solution seems like a larger hurdle as far as pricing is concerned to me. Then you need take into account that MS has to pay another company to handle the fabrication and production of their machines, something that requires them covering another company's margins(even if they are operating under none for the 360 hardware themselves).

What exactly leads people to believe that Sony will be at a long term pricing disadvantage? The only possible reason I can see this as being a viable concern is if MS ends up subsidizing the 360 heavily this generation(which they seem to be stopping).

Sony also does have the advantage that they will be a BluRay player. Right now people are laying down $1K for players that do nothing else- I think there will probably be a market for $500 units that also serve as a next gen console in four months

 

[Shifty Geezer]

That's fine but in the same breath one should not presume then that ps3 will be the place for diversity and selection in games this gen yes?

I think that's a fair presumption to make. Maybe not the (as in the only? Or the best?) place for diversity but certainly a place you can expect diversity. As I say, at launch (launch period, not day one) you have a fair bit of diversity there already. Then as you say, 3rd party exclusives are likely to be few and far between for any platform if console sales are similar, so 3rd party wise PS3 ought to be as strong as any other brand (or at least XB360, seeing as no-one knows what's going to appear on Wii!). And finally plenty of diversity comes from Sony 1st party. They've given (or are giving us) us ICO, Collosus, LocoRoco, EyeToy, SingStar, God of War, The Getaway, Eyedentify, Eye of Judgement, and plenty more very different games.

So I think presuming PlayStation's history of something for everyone will continue is pretty sound.

 

[Shifty Geezer]

Never underestimate the power of bad publicity and unhappy customers.

Even then, what is a disgruntled customer, upset by buying a PS3 at $100 more than someone a week later, going to say on internet fora to discourage new customers? Unless they decide to lie that their PS3 has lots of issues just to spite Sony (which might happen), I don't see how simply being upset over a price drop will adversely affect other's opinions of the product.

Patsu has made a good explanation of market affects though that give insight into why pricedrops have to be carefully managed.

 

[TheChefO]

I figured you had the ability to answer your own question, re: why would XXX ignore XXX% of the market.

So, why ask?

rhetorical - I knew the answer and if everyone here has been listening over the past year they would too. This gen "3rd party exclusive" is an oxymoron. Unless there is a significant financial incentive, it doesn't exist. The smaller titles is a bit more of a mystery as they are typically smaller dev teams with smaller budgets that might not have the cash to make every game multiplat. In this case I suspect these smaller games will be targeted as best they can and in addition should see significant support from MS/Sony with their online "Arcade" initiatives where available.

Point is:
ps3 != ps2 games selection
xbox != 360 games selection
gc != Wii games selection

Those that think otherwise have another thing coming.

 

[Powderkeg]

Even then, what is a disgruntled customer, upset by buying a PS3 at $100 more than someone a week later, going to say on internet fora to discourage new customers?

How about something like "I will never buy from Sony again! Those lying bastards basically stole $100 from me and every one of their other hardcore fans who bought the system early. They totally rip off their own best, most dedicated customers and don't give a crap, all for a little bit of extra profit. I'll never buy another thing from them, and I'll tell everyone I can just what lying, thieving dirtbags they really are!"

Start with something along those lines, mutliply by tens of thousands of people all saying essentially the same thing, and spread it around not only on every internet forum you can think of but also count the face to face discussion these people will have with family, friends, and aquaintances.


But I'm sure you are right. Nobody ever listens to the hardcore fans and early adopters, right? I mean, suggesting they would would be like suggesting that lots of people think there was a major reliability problem with the 360 at launch when the actual failure rate was below 5% and well within industry norms, right?

 

[TheChefO]

I think that's a fair presumption to make. Maybe not the (as in the only? Or the best?) place for diversity but certainly a place you can expect diversity. As I say, at launch (launch period, not day one) you have a fair bit of diversity there already. Then as you say, 3rd party exclusives are likely to be few and far between for any platform if console sales are similar, so 3rd party wise PS3 ought to be as strong as any other brand (or at least XB360, seeing as no-one knows what's going to appear on Wii!). And finally plenty of diversity comes from Sony 1st party. They've given (or are giving us) us ICO, Collosus, LocoRoco, EyeToy, SingStar, God of War, The Getaway, Eyedentify, Eye of Judgement, and plenty more very different games.

So I think presuming PlayStation's history of something for everyone will continue is pretty sound.

Agreed - So were on the same level here in not presuming ps3's 3rd party library to have the "exclusives" advantage they had last gen and we can drop this "ps3 = games diversity" mess.

As I've stated, I expect Sony to continue producing 1st party gems that will lure gamers as they have done since day 1 - But so will Nintendo and so will MS. The difference this gen will be for those who were/are not "sold" on Sony's 1st/2nd party games and were mostly interested in their 3rd party exclusives as they will now have an option if they choose.

 

[TheChefO]

"I will never buy from Sony again! Those lying bastards basically stole $100 from me and every one of their other hardcore fans who bought the system early. They totally rip off their own best, most dedicated customers and don't give a crap, all for a little bit of extra profit. I'll never buy another thing from them, and I'll tell everyone I can just what lying, thieving dirtbags they really are!"

tell us how you really feel...

 

[Shifty Geezer]

This gen "3rd party exclusive" is an oxymoron. Unless there is a significant financial incentive, it doesn't exist.

You're assuming an even console distribution. If one platform sells 100 million to the others' 25 millions, 3rd party exclusives will be around again. I'd also like to point you to DOA, Tekken, FFXIII, Red Steel and Sadness as a few of these non-existent 3rd party exclusives of yours.

 

[Shifty Geezer]

we can drop this "ps3 = games diversity" mess.

What 'ps3 = games diversity' mess?

 

[patsu]

You forgot a huge issue with pre product analysis- focus groups. You can not underestimate how much weight they have on analysts predictions- and unfortunately they are almost always too small to get anything remotely resembling a good sampling.

Very true ! New product pricing has always been problematic. Many large organizations are willing to invest millions of dollars to find the right price. I also do not know how analysts can conduct focus group (do they ?) without a working unit of PS3 and the games. Also yes, sample size would be a problem.

Personally, I would take any analysts' numbers in the hi-tech/creative market with caution because I don't know what kind of secret sauce they use to come up with the report. If the churned result is different from what the analyst expects, what would he/she do ? Talk to more colleagues, find more variables to add to the formula, tweak the input parameters until it matches his/her expectation ? The statistical results have confidence values associated with them but (i) it's hard to ignore intuition; and (ii) GIGO. There are many "right" answers. Much may fall back on experiences and intuition.

Usually the validation process is to match it against old sales record. In this case, there is no raw data. People may also have multiple demand models to cross check each other. But the basic problem above remains. Human without intimate knowledge of what's happening behind the scene, decide the final numbers based on inherent bias and educated guess.

In this case, I would rather trust the source (e.g., Sony, MS or Nintendo) more since they have the power to create/change things to tame the numbers. Second I would trust my own eyes using the analysts reports as a supporting document (to validate my belief). Third, who cares... let's go for beer. I'm starving.

 

[Shifty Geezer]

How about something like "I will never buy from Sony again! Those lying bastards basically stole $100 from me and every one of their other hardcore fans who bought the system early. They totally rip off their own best, most dedicated customers and don't give a crap, all for a little bit of extra profit. I'll never buy another thing from them, and I'll tell everyone I can just what lying, thieving dirtbags they really are!"

Well I can only talk for myself, but if they're only moaning about a company making a profit it wouldn't discourage me - that's what they all do! That's very different to internet rumours of reliability issues that suggest a product you buy might be defective (of which didn't appear to have stopped XB360 sales any more than PSP's 'issues' stopped it selling), rather than a product you buy being $100 cheaper than someone else's.

I'd say the downside to the pricecut (which is going to happen at some point, and there will be people who buy a console, XB360 included, at one price, only for the next week for it to be $100 cheaper) too early is on the next generation, early adopters might wait for the price drop if they anticipate it'll come quickly.

 

[TheChefO]

You're assuming an even console distribution. If one platform sells 100 million to the others' 25 millions, 3rd party exclusives will be around again. I'd also like to point you to DOA, Tekken, FFXIII, Red Steel and Sadness as a few of these non-existent 3rd party exclusives of yours.

exclusive ... for now

And yes I'm assuming a close to equal console distribution which I feel is a safe bet until the market shapes otherwise.

As for the "ps3 = games diversity" mess, I'm talking about the assumption that has been ongoing that ps3 will be just like ps2 and get exclusives left and right which dwarf the other two systems. It isn't happening this gen for a couple reasons. One of which is market distribution and the other is development costs.

 

[patsu]

ChefO, people are giving Sony good will, preferential treatment and benefit of doubt because of what Sony has established over the past 10 years. Most PS2 users would continue to buy PS3 given the chance. It cannot be tore down easily unless there are very compelling reasons. This is one of the main factors why it's hard to enter a new market with a dominant player.

At this point in time, the impact of the high price point is still an open issue. Most people seem to agree PS3 can clear out its stock initially and want Sony to drop PS3 price after 1 year (The sooner the better). The only thing for Sony to ramp up is to lower its price (independent of how much XBox 360 sell for).

The developers are likely to communicate with Sony privately to get the inside scoop and make a judgement call (with contingency plan). It is a managed risk helped by cross-platform development.

So PS3 is still likely to get its game diversity, but perhaps fewer exclusives. Like last time, the cross-platform titles may use special features on each platform. I may still pick Sony's version if online gaming is free and it comes with new and good controlling schemes.

Powerderkeg, If I remember correctly, the average number is 1 to 5 for good PR and 1 to 10 for bad PR. There are ways to cushion the price drop without the side-effect of angering early adopters. What's more, the price drop is not as bad as "bad product" or "bad company" scenarios, and certainly no worse than Microsoft's "scratched disk" fiasco. Early adopters also get real PS2 chips for backward compatibility. This is why I prefer a first-batch PS3.

 

[Powderkeg]

Well I can only talk for myself,

well, then there is no reason to go on further. If all you are going to take into consideration is your own personal feelings then whatever conclusion you draw is simply a reflection of your own personal bias on the subject. You will believe what you want, and nothing anyone else can say makes any difference.

I do not possess the will nor tools to pry open a closed mind.

 

[Powderkeg]

Powerderkeg, If I remember correctly, the average number is 1 to 5 for good PR and 1 to 10 for bad PR.

That's old-school thinking. Pre-internet.

These days a single post on an internet forum can reach tens of thousands. Even if only 1% are influenced you are still talking about hundreds of people influenced by a single post.

 

[patsu]

Silly me. You're right. I should go dig up some new numbers quantifying word of mouth effect on the Internet.

 

[Farid]

but there is two things that you should consider, first the others will always have a price advantages

Who said, as a fact, that the competitor will _always_ have a pice advantage?
That take us back to my initial question: when and how could sony drop the price of the product?
It is not set in stone that the PS3 had to have a MRSP 66% higher than the one of its competitor.

How about something like "I will never buy from Sony again! Those lying bastards basically stole $100 from me and every one of their other hardcore fans who bought the system early. They totally rip off their own best, most dedicated customers and don't give a crap, all for a little bit of extra profit. I'll never buy another thing from them, and I'll tell everyone I can just what lying, thieving dirtbags they really are!"

I'd be surprised if eight year olds received enough pocket money to buy a PS3 on their own.

Because only a, not so bright one, eight year old or an intellectually challenged teenager would react like that.

well, then there is no reason to go on further. If all you are going to take into consideration is your own personal feelings then whatever conclusion you draw is simply a reflection of your own personal bias on the subject. You will believe what you want, and nothing anyone else can say makes any difference.

And what method other than your own imagination or anedotical evidences did you use to get to the conclusion that a consumer who'll buy a product just to see that same product drop in price a few months later will be disgruntled enough to make use of his free time only to cast a bad publicity campaign upon the evil company that did announce a public MRSP price drop of one of its product?
You're making a stange comparison between a conjecture of yours - that a quick price drop of the PS3 MRSP would spawn bad publicity from its early adopters - and Shifty's own opinion on this type of price drop situation, and yet you find a way to conclude, that Shifty's opinion can't contribute to the debate because it's clouded by some bias of his?
None of you guys can discuss future and hypothetical consumer behaviors in an objective way, simply because non of you have double sight powers. All you guys can do is exchange opinions on what you think is the most probable scenario according to you. Based on the information you possess, anedoctical or not, or simply on your own experiences, it remains but an opinion.


Anyway, the consoles do always drop in price in their lifetime, same with other electronic devices, the main difference in this case being the fact that console models tend to have a longer presence in the market and therefore have more significant price difference between the end life of the product and their launch.
Whatever it is, it did never stop anyone to buy a console, nor did it spawn legions of angry consumers - swearing the destruction of the evil commercial entity that did a price drop on them - everytime a console did drop in price.

For instance, just to take one of the many example, of a real market situation, available, the American folks who bought a $299 PS2 in in early 2002 didn't make a fuss, nor started any angry consumer campaign, when the machine MRSP was dropped to $199 a month later.
Why? Because that's business life and that's how things go.
It's the same with computers, if you have $1000 to spend, it a certain fact that you'll get better parts for these dollars in 6 months than today. But with this train of thoughst you'll never buy a computer, ever.
As we say, the right to buy a computer is _now_.
Same goes to any other electronic devices, consoles include as well as a lot of other products.

 

[Shifty Geezer]

As for the "ps3 = games diversity" mess, I'm talking about the assumption that has been ongoing that ps3 will be just like ps2 and get exclusives left and right which dwarf the other two systems.

Ummm...why does software diversity require exclusives? If Console A gets a platformer, shooter, jelly balancing game and 'Colour Your Singing voice with Stars' from Namco, and Console B gets the same, don't they both have diversity?

Then if on top of those 3rd party games that are diverse, you add the first party exclusives to Console A of : Interactive Camera cardgame, motion controlled tightrope walker, Dinosaur Trainer and Tiddlewinks Challenge, and on Console B you get the first party titles space shooter, WWII shooter, spy shooter and zombie shooter, does not Console A have more diversity than console B?

From where I'm sitting, given Sony's history and PS3's current lineup versus MS's history and XB360's software lineup, I expect more variety from PS3, also because it has more options. It might not hold the EyeToy advantage any more as MS are adding an interactive camera to their repertoire, but it does have motion control which means variety in gameplay modes that XB360 isn't in a position to duplicate. Any gameplay dependent on that motion can't be ported to XB360, so any ports would be different and lack that variety (note Variety can be forfeit on the PS3 if all games end up being motion controlled! You need a mix of classical and different). I expect Wii to have plenty of variety too, but it might not have as much classical gaming - we'll have to see where it goes.

In conclusion, assuming console sales are fairly equal and 3rd party exclusives disappear, the console with the most diversity/variety to it's gaming library will be that who has the strongest first-party software, no? And who would you expect that to be? Thus when considering consoles, the buyer isn't looking at equal software libraries on two differently priced but similar machines. They're looking at two diffeent libraries with some original titles in each, and two differently priced machines with different functions. The sure-fire 'I'll buy the cheaper console as it has exactly the same games library' argument doesn't exist, and the console gamers who pick XB360 over PS3 for no other reason than it being cheaper will likely be in the minority. The choice between machines is based on a lot of factors, none of which are predictable. And from that, we see the market could go absolutely any way, which means the consoles selling fairly equally isn't at all a safe assumption, and if they don't sell equally with one rushing ahead of the others, it will attract 3rd party exclusives. We don't know where the market will be in a year or two, so looking at the topic of software variety all we can look at is now and the upcoming titles, in which there most certainly is a difference in my eyes between platforms.

 

[Shifty Geezer]

I do not possess the will nor tools to pry open a closed mind.

Oh, sorry.

...

I've got some WD40 here if that helps? 3-in-1 pentrating and easing oil?

 

[dubyateeeff]

Sorry, I should have linked you to the full article...
http://www.bizjournals.com/austin/stories/1999/03/22/smallb3.html

Never underestimate the power of bad publicity and unhappy customers.

Yeah, the Internet, but people don't care about a random guys ramblings about a random product on the Internet. We just ignore it because it is just too much. Even for a specific product which one is interested in you can't go around reading all the bad publicity.

Furhtermore the number of people told isn't equal to the number of people affected. If someone has a first hand experience with a product and tells me about it, their critique is gone uncriticised by me because my knowledge and experience with the product isn't comparably to his/hers. But on the Internet if the same person is posting something to tell everyone about it, by the time I get to read it, a bunch of happy customers have already meet his/hers critique.