Sony is bleeding money - business strategy discussion

[Silent_Buddha]

People who make unsubstantiated claims like this on the internet, without any more evidence other than claims to a vague off the cuff PR statement, honestly make me facepalm.

You cannot possibly think that Sony's hit rate on profitability on their exclusive franchises is so low, when they continue to not only spit out title after title in those multi-million selling franchises, but also pour money into buying up the developers of those franchises like MM and Sucker Punch.

I would bet good money that Sony, MS and Nintendos exclusives are significantly more profitable on the whole than most 3rd party publisher's games, for the sole reason that they don't have to share platform royalties on each title.

I certainly wouldn't take that bet. Especially since the division that houses Playstation wasn't particularly profitable during the PS3 years. I'm sure some of their franchises are quite profitable, while others are loss leaders to showcase what the platform can do. Platform holders have the advantage of not having to pay the console holder fees for each game sold, but on the other hand they don't get to leverage multiplatform sales except in the case of Microsoft where they sometimes release on PC as well. Hell GTA 5 may have had great sales, but it's also possible it wasn't as profitable as the sales numbers would normally indicate due to the incredibly long developement time of the title. Something a platform holder can do for a platform showcase, but which a 3rd party developer wouldn't do as it wouldn't be profitable.

And while they've been buying some studios they have also been closing studios or not retaining 2nd party exclusive studios.

Regards,
SB

 

[dcbronco]

Prophecy you may remove your hand now.

http://www.dualshockers.com/2014/07...ke-money-but-sony-will-always-support-talent/

 

[Prophecy2k]

Prophecy you may remove your hand now.

http://www.dualshockers.com/2014/07/04/shuhei-yoshida-only-four-out-of-ten-playstation-games-make-money-but-sony-will-always-support-talent/

Can only read the headline, but yeah Ok. It seems like their hit rate on profitability of titles is about the same as the rest of the industry. That still contradicts the original premise I was arguing against that Sony's exclusives generally perform worse than other games from other publishers. Which obviously wouldn't be the case.

 

[dcbronco]

Sorry about the link. The story was there when I linked it. But he was saying how one or two titles allow them to break even or make a small profit. I have no problem with their efforts to support new developers and bring new experiences I just think they were not in a position to do so during the PS3 days. Even currently when they are bleeding money, it may not be in their best interest.

Microsoft has been criticized for releasing the same franchises, but quickly dropping franchises that didn't work and buying exclusive content or exclusives was a better business decision. If Microsoft had done the strategy Sony uses it wouldn't be a big deal. They can afford it. Sony should be more selective. Their problems could become far worse this month despite PS4. But again, as a gamer, I admire the strategy.

 

[eastmen]

People who criticize MS for releasing the same franchises over and over again but not sony have a messed up perspective.

The ps3 generation gave birth to 3 uncharted on the ps3 and two on the handhelds I believe. It gave us 3 resistances , 3 motor storms , 3 little big planets and I'm sure there are more.

Both companies are going to milk what sells. With the ps3 sony really had to get some exclusive software and so they took more risks some of them worked some of them did not.

I expect we will see a reversal this generation with MS making more exclusives as the generation goes on while sony sticks to what works

 

[Shifty Geezer]

read the post before mine.

Does not compute...

Microsoft has been criticized for releasing the same franchises, but quickly dropping franchises that didn't work and buying exclusive content or exclusives was a better business decision.

People who criticize MS for releasing the same franchises over and over again but not sony have a messed up perspective.

These people haven't actually been raised in dcbronco's post. He said, "MS has been criticised." There's nothing about whether those critics praised Sony or criticised Sony for milking franchises.

If we check the exclusives lists, about a third on PS3 from Sony are sequels to PS3 games or PS2 games (~90 games), and about half on XB360 are sequels to XB or XB360 games (~70 games). Which has little to do with anything, really. Everyone invests in games that sell. The main argument is whether it's wise to invest in more games without a proven track record. Sony clearly funded more original titles than MS last gen.

 

[eastmen]

MS seems to have just as many games from left field as sony. I'm not sure where your perception comes from.

 

[wco81]

Sony still has some bizarre ventures.

How about a $1200 digital audio player in this day and age:

http://www.theverge.com/2015/1/5/7493145/new-sony-walkman-zx2-ces-2015

 

[London Geezer]

Made by geeks for rich geeks.

 

[eastmen]

I think there could still be a place for a dedicated music player but those prices are crazy.

I still use my zune hd daily dispite having a note 3. I like having all my music on one device and not having to worry about draining my phone battery. I keep the zune in my car .

I'd love for something new and better to come along for me to replace it but I wouldn't spend more than $200 or so for it $1200 is just insane to me.

 

[London Geezer]

It should be filed in the "Absolutely Unnecessary" cabinet.

 

[BRiT]

Sony still has some bizarre ventures.

How about a $1200 digital audio player in this day and age:

http://www.theverge.com/2015/1/5/7493145/new-sony-walkman-zx2-ces-2015

They would have had better success with trying to bring back betamax!

Any guesses as to how much they had to spend to actually bring that product to market? Could it have been less than a million dollars?

 

[zed]

Sony still has some bizarre ventures.

How about a $1200 digital audio player in this day and age:

http://www.theverge.com/2015/1/5/7493145/new-sony-walkman-zx2-ces-2015

how so bizzare?
heres a music player for $2500
http://www.digitaltrends.com/mp3-player-reviews/astell-kern-ak240-review/

A guy on the radio the other night was talking about high quality audio rigs here in NZ , there is a market here for speakers @ $250k each! thus a half million dollars for both your speakers, add in the amp etc an your system is over a million, and he's actually installing these in poeples house, (NZ is not the biggest or richest country)

https://www.kickstarter.com/projects/1003614822/ponomusic-where-your-soul-rediscovers-music

no demand for host quality high cost audio? yeah naaaah
you've gotta wonder why they dont do something like this for phones (not made from gold etc) but a super high end phone with the best of all components & charge ~2500k
there will be a market for this

 

[wco81]

Oh there's a demand.

Not mass market demand.

I'm sure there are tech executives with millions in stock options buying up tube audio equipment, just because they can, not necessarily because they're audio nazis.

Sony won't have a huge business from making audio players which cost over $1000.

 

[Shifty Geezer]

MS seems to have just as many games from left field as sony. I'm not sure where your perception comes from.

No-one said anything about 'left field'. Statistically, Sony released more (numerically more and higher proportion of its library) games that weren't sequels than MS. Therefore, Sony has been the greater risk taker. That's indisputable, assuming the reference data is complete and accurate.

 

[FarticusMaximus]

Sony has been the greater risk taker. That's indisputable.

Not really. What's indisputable is that Sony produced proportionally more new IP than MS.

If the player base is known to be more receptive to new/experimental products and IP's then producing these titles poses less of a risk.

Xbox 360, rightly or wrongly, had the reputation of being the 'Shooter/Racer/Sequel' console. Releasing left-field or unproven IP titles on it could be seen as taking a greater risk than releasing the same game on Playstation.

In fact I would go as far as to say that one of the prime drivers of PS3 sales, certainly later in the console cycle, was that there were more new IP's appearing on it at a time when a lot of people (mostly forum dwellers seemingly) were complaining that the games industry, due to it's reliance on sequels, was getting stale.

Is it riskier as a long term business strategy to put all your eggs in one metaphorical basket, or to diversify?

A case can be made either way.

 

[milk]

Is it riskier as a long term business strategy to put all your eggs in one metaphorical basket, or to diversify?

A case can be made either way.

Good point. Sony's support for diversity is building them a legacy that with time will be comparable to something like nintendo's. I think MS will feel the lack of that sort of thing more and more as time goes by. Halos and Gears sell a lot on the short term, but their Mark-centric design sure makes them come out sort of soul-less.

 

[Shifty Geezer]

I agree a case can be made either way - it's all rather subjective. But in terms of raw numbers, it's proven that sequels are more likely to return a profit than new IPs (hence why every publisher milks franchises), and so any investment in new IPs is a good chance of throwing money away. And in terms of raw numbers, Sony threw more money away on new IPs than MS did. That may be less risky than MS doing exactly the same, but it's still an industry standard risk that Sony have been more willing to gamble with (and so build up a reputation for diversity which supports a particular niche of console gamers).

 

[Nesh]

My biggest gripe with milking is when we get sequels way too often. Otherwise I dont mind getting sequels

 

[London Geezer]

What exactly is being argued here? The concept of "Cash cow", whereby a business (every business!) will have one or more well established products they make the most money from, for the least amount of effort? The ones that can sometimes be updated with the least amount of work and will bring in the most profit? Be it movies, games, smartphones, cars, everything?

Of course the gaming industry will also follow the same strategy and release games that have proved to sell even in their third or fourth sequel - though there is certainly a limit where the cash cow turns into a 'dog', and I'm sure we can name many, many instances of this happening in any industry.

Stop buying sequels. Start buying and supporting the odd new IPs. Or stop complaining!