The reasons and consequences of the decline of Playstation in Japan [UPDATE: New Guidelines]

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I thought a separate thread should be created for this discussion because it seems to be a recurring topic in the Media Create thread.

Historically, PlayStation has been a dominant force domestically. But over the past few years, the PlayStation ecosystem has shown signs of decline in Japan.

To illustrate this decline, here are compiled sales figures of the Japanese video game market from Media Create White Books that look at the decline from various perspectives.

Data Sources: 1 2 3 4 5 6 7 8 9



SCE / SIE total first-party retail software sales in Japan per year:

2013: #10. Sony Computer Entertainment - 1.224.576
2014: #08. Sony Computer Entertainment - 1.683.025 <3,91%>
2015: #06. Sony Computer Entertainment - 1.537.730 <4,12%>
2016: #06. Sony Interactive Entertainment - 1.366.861 <4,25%>
2017: #06. Sony Interactive Entertainment - 1.917.935 <5,95%>
2018: #05. Sony Interactive Entertainment - 1.608.904 <5,65%>
2019: #06. Sony Interactive Entertainment - 1.290.509 <4,80%>
2020: #05. Sony Interactive Entertainment - 1.586.003 <4,83%> (16 new games)


Note a stagnating presence in the market that hasn't improved in the past eight years despite the explosive worldwide success of PS4 and PS5.

Compare to Nintendo who shows a general upwards trend with their first-party games even if they have weak years:

2013: 13,069,179
#01. Nintendo - 9.034.530
#05. Pokemon Company - 4.034.649

2014: 10,697,098
#01. Nintendo - 7.864.301 <18,27%>
#06. Pokemon Co. - 2.832.797 <6,58%>

2015: 9,666,720
#01. Nintendo - 8.796.933 <23,55%>
#10. Pokemon Co. - 869.787 <2,33%>

2016: 8,746,336
#01. Nintendo - 5.208.950 <16,19%>
#03. Pokemon Co. - 3.537.386 <10,99%>

2017: 11,531,533
#01. Nintendo - 9.161.857 <28,41%>
#04. Pokemon Co. - 2.369.676 <7,35%>

2018: 11,967,292
#01. Nintendo - 9.971.257 <35,00%>
#04. Pokemon Co. - 1.996.035 <7,01%>

2019: 11,120,034
#01. Nintendo - 7.903.662 <29,42%>
#02. Pokemon Co. - 3.216.372 <11,97%>

2020: 16,634,035
#01. Nintendo - 15.270.147 <46,48%> (9 new games)
#06. Pokemon Co. - 1.363.888 <4,15%> (1 new game)


This weakness is also reflected in total PlayStation ecosystem software sales.



Total retail software sales by console manufacturer:


PlayStation:

2009:
#03. PSP - 10.269.963
#04. PS3 - 8.343.862
#05. PS2 - 3.495.732
#07. PS1 - 17.372
= 22,126,929

2010:
#02. PSP - 16.418.424
#04. PS3 - 10.149.132
#06. PS2 - 842.607
= 27,410,163

2011:
#01. PSP - 13.898.361
#02. PS3 - 12.531.566
#07. PSV - 496.808
#08. PS2 - 209.404
= 27,136,139

2012:
#02. PS3 - 11.627.502
#03. PSP - 7.653.834
#06. PSV - 1.918.940
#09. PS2 - 48.780
= 21,249,056

2013:
#02. PS3 - 11.965.634
#03. PSP - 4.280.106
#04. PSV - 3.512.352
= 19,758,092

2014:
#02. PS3 - 7.510.433 <17,44%>
#03. PSV - 5.062.082 <11,76%>
#05. PS4 - 2.441.876 <5,67%>
#06. PSP - 1.053.282 <2,45%>
= 16,067,673

2015:
#02. PSV - 5.205.609 <13,94%
#03. PS4 - 5.114.598 <13,69%
#04. PS3 - 4.185.655 <11,21%
#06. PSP - 304.545 <0,82%
= 14,810,407

2016:
#02. PS4 - 8.672.086 <26,95%>
#03. PSV - 4.823.793 <14,99%>
#05. PS3 - 1.629.591 <5,06%>
= 15,125,470

2017:
#02. PS4 - 10.021.801 <31,08%>
#04. PSV - 1.967.023 <6,10%>
#06. PS3 - 225.470 <0,70%>
= 12,214,294

2018:
#02. PS4 - 10.740.999 <37,70%>
#04. PSV - 1.023.787 <3,59%>
= 11,764,786

2019:
#02. PS4 - 9.235.333 <34,38%>
#04. PSV - 301.706 <1,12%>
= 9,537,039

2020:
#02. PS4 - 7.839.893 <23,86%> (211 new games)
#04. PS5 - 109.374 <0,33%> (16 new games)
#05. PSV - 69.251 <0,21%> (7 new games)
= 8,018,518

As you can see, the decline in retail software sales for PlayStation is precipitous year-over-year.


Compare to Nintendo:

2009:
#01. NDS - 27.832.529
#02. WII - 13.521.656
#07. GBA - 53.075
= 41,407,260

2010:
#01. NDS - 21.904.434
#03. WII - 11.669.083
#07. GBA - 7.724
= 33,581,241

2011:
#03. WII - 8.687.291
#04. 3DS - 7.365.636
#05. NDS - 7.275.021
= 23,327,948

2012:
#01. 3DS - 16.737.113
#04. WII - 5.071.405
#05. NDS - 4.882.276
#07. WIU - 848.202
= 27,538,996

2013:
#01. 3DS - 23.575.562
#05. WIU - 1.978.062
#06. WII - 1.580.993
#07. NDS - 505.089
= 27,639,706

2014:
#01. 3DS - 23.387.031 <54,32%>
#04. WIU - 2.826.564 <6,57%>
#07. WII - 477.334 <1,11%>
= 26,690,929

2015:
#01. 3DS - 18.438.698 <49,37%
#05. WIU - 3.926.000 <10,51%
= 22,364,698

2016:
#01. 3DS - 14.780.505 <45,93%>
#04. WIU - 2.206.047 <6,86%>
= 16,986,552

2017:
#01. 3DS - 12.008.236 <37,24%>
#03. NSW - 7.328.882 <22,73%>
#05. WIU - 646.738 <2,01%>
= 19,983,856

2018:
#01. NSW - 13.690.616 <48,05%>
#03. 3DS - 2.942.191 <10,33%>
#05. WIU - 66.655 <0,23%>
= 16,699,462

2019:
#01. NSW - 16.646.620 <61,97%>
#03. 3DS - 664.355 <2,47%>
= 17,310,975

2020:
#01. NSW - 24.636.454 <74,98%> (220 new games)
#03. 3DS - 200.354 <0,61%> (0 new games)
= 24,836,808


H9hM5eW.png


Unlike PlayStation which is clearly shrinking year-over-year, Nintendo remains consistent and even jumped in 2020.



Top 1000 retail software sales by platform:

2013:
PS3 - 273
PSP - 225
3DS - 194
PSV - 122
NDS - 52
WII - 49
360 - 45
WIU - 40
= Sony: 620
= Nintendo: 335
= Microsoft: 45

2014:
PS3 - 271
3DS - 225
PSV - 207
PSP - 111
WIU - 58
PS4 - 58
WII - 34
360 - 22
XB1 - 14
= Sony: 647
= Nintendo: 317
= Microsoft: 36

2015:
PSV - 284
3DS - 266
PS3 - 194
PS4 - 148
WIU - 63
XB1 - 24
PSP - 19
360 - 2
= Sony: 645
= Nintendo: 329
= Microsoft: 26

2016:
PSV - 294
3DS - 290
PS4 - 236
PS3 - 105
WIU - 60
XB1 - 15
= Sony: 635
= Nintendo: 350
= Microsoft: 15

2017:
PS4 - 347
3DS - 264
PSV - 245
NSW - 52
WIU - 43
PS3 - 40
XB1 - 9
= Sony: 632
= Nintendo: 359
= Microsoft: 9

2018:
PS4 - 422
NSW - 206
3DS - 193
PSV - 155
WIU - 13
XB1 - 10
= Sony: 577
= Nintendo: 412
= Microsoft: 10

2019:
PS4 - 469
NSW - 362
3DS - 104
PSV - 60
XB1 - 5
= Sony: 529
= Nintendo: 466
= Microsoft: 5

2020:
NSW - 471
PS4 - 455
3DS - 49
PS5 - 14
PSV - 11
= Sony: 480
= Nintendo: 520
= Microsoft: 0

In 2020, for the first time, the majority of titles in the Top 1000 were released on Nintendo platforms.




Looking forward to 2021, there are further indicators of PlayStation's decline in Japan.

For example, PS5 software sales seem disproportionately small to the amount of hardware they are selling. The Top 30 is dominated by Nintendo titles.

Famitsu reported the best selling software for PS5 from April-September 2021 was Resident Evil Village which only sold 69K packaged units.

Famitsu also reported the install rate of packaged software for PS5 is <7%, which is a very low figure.

Publishers previously swearing to PlayStation exclusively (like Falcom) have announced Switch development.



So what are the reasons for this decline? Can it be stopped or mitigated? Can Sony bounce back? Or is PlayStation destined for obscurity and has Sony written off the Japanese market? Or is all of this fearmongering overblown / supplanted by digital and the decline is mild at best? I'd like to hear your thoughts.
 
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Great summary of data. It's still a shame Sony just dipped out of portables with no real back-up plan.

I don't think Sony will ever be "obscure" in Japan or anything but it'll take a very interesting product from them to really bump numbers back up in Japan.
I actually think Japan's current PS performance is "partly" why Sony is pushing on PC gaming as well now.
 
Sony has written off the market imo.

Looking at SCEJ's publishing before it was wound down (an issue in itself which speaks to Sony's lack of interest in the market). Wikipedia based, so numbers are probably not 100%:

100 PSX games
98 PS2 games
35 PS3 games
16 PS4 games
1 PS5 game

Sony used to be the driving force behind a lot of the smaller games that kept the platform going, but those games don't exist anymore.
And without Sony's proactive involvement, small studios will default to switch and PS development will be an afterthought to them.
 
Sony has written off the market imo.

Looking at SCEJ's publishing before it was wound down (an issue in itself which speaks to Sony's lack of interest in the market). Wikipedia based, so numbers are probably not 100%:

100 PSX games
98 PS2 games
35 PS3 games
16 PS4 games
1 PS5 game

Sony used to be the driving force behind a lot of the smaller games that kept the platform going, but those games don't exist anymore.
And without Sony's proactive involvement, small studios will default to switch and PS development will be an afterthought to them.
To be fair almost every single publisher publishes far less games today than in the past (even Nintendo). For example EA published over 40 different games in 2006. Just 13 last year. Add PSP and Vita (which obviously shared the development resources) and the decline is more gradual until very recently.
 
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Ghost of Tsushima was the last Sony IP made by their western division to be a hit in Japan, but that was a game set in the country, so I doubt they can or will replicate that same sales effect with their other teams. Based on Herman Hulst, Sony seems to be content with partnering up with Japanese devs who are very popular in the west like Kojima and FromSoft.
 
Thanks for making this thread! I was considering making it, but I’ve been so busy as if late. Do you think you could add Celine’s consent from the previous media create thread? It has a lot of insight and history that would serve as a good primer to anyone looking to get into the topic.
 
I'm very very curious how the third party situation will be in 2025. It's changed a lot in the last four years, will we see as big a change in the next four?
 
To be fair almost every single publisher publishes far less games today than in the past (even Nintendo). For example EA published over 40 different games in 2006. Just 13 last year.

True, but Sony's decline is greater, and they are a platform holder so should really be looking for a lesser decline then an EA, who only need to care about the sales of each individual game and not the platform as a whole - for example Nintendo publishing Bayo 3, which sales wise is not really worth their time, but probably helps bring niche gamers to the platform who will then also buy other games. EA don't need to release games like that, but Sony do.

Nintendo has already published more games on Switch then SCEJ did on the PS3/4/5 combined, and may well beat out the PSX total of 100 by the end of the Switch's lifetime. To be fair, there's a lot more internally developed titles and Sony has other publishing output than SCEJ, but the difference is that the non SCEJ stuff has little impact in Japan whereas most of Nintendo's published releases do as they've never really westernised their output.
 
The decision to gut Studio Japan will never not baffle me, especially with the resurgence of home console Japanese games that we've been seeing these last few years.
 
True, but Sony's decline is greater, and they are a platform holder so should really be looking for a lesser decline then an EA, who only need to care about the sales of each individual game and not the platform as a whole - for example Nintendo publishing Bayo 3, which sales wise is not really worth their time, but probably helps bring niche gamers to the platform who will then also buy other games. EA don't need to release games like that, but Sony do.

Nintendo has already published more games on Switch then SCEJ did on the PS3/4/5 combined, and may well beat out the PSX total of 100 by the end of the Switch's lifetime. To be fair, there's a lot more internally developed titles and Sony has other publishing output than SCEJ, but the difference is that the non SCEJ stuff has little impact in Japan whereas most of Nintendo's published releases do as they've never really westernised their output.
Before last few years I even wouldn't say that their decline over the time was that much higher than industry average (when it comes to amount of games released). Remember that they also had PSP and Vita to support which automatically meant less PS3/PS4 games compared to PS2 days. Sure now after abandoning handheld market and gutting Japan Studios (and putting even more focus on big AAA) the collapse has been big. Also sure Nintendo still releases a lot of games and is more open to smaller titles but while I don't have figures at hand I assume that if you looked back to DS/Wii times they released a lot more games back then compared to today so even they are following industry trends in this regard.
 
i'm just waiting next year to see how PS5 software improve, because as of now the situation is traumatic.
 
They simply weren't able to adjust. It's not even about the overall output when you see long-running IP such as Gran Turismo declining so much.
 
Good thread, but I hope this doesn't result in a "this topic is now no longer allowed in Media Create threads". For the bigger discussions, a separate thread is fine, but at times you want to make a comment about it in the context of weekly sales.

Anyway, the whole decline of PlayStation is kinda in stasis right now. There's nothing going on in the next couple months that will improve nor worsen the situation. I think we'll have to wait for the Switch 2 announcement and launch to see the next big development in this "saga". If Nintendo doesn't self-sabotage, then I expect the situation to grow dramatically and exponentially worse for Sony, not only in Japan, but ultimately worldwide, too. Portable devices are only getting more popular, and a DLSS-Switch that can run all modern games at a clean resolution? That thing would be popular on a level that the current Switch never saw.

Gamepass is only growing, too, and word of mouth about the ridiculous low prices you pay on Xbox and PC will hurt PlayStation, too.

Sony really needs to show something big in the next year or two that shows to the world "we're the #1 place for gamers". No idea what that will be, though. It won't be a PSP3. And the technology for sleek, lightweight, wireless and affordable VR-headsets doesn't exist, either. I don't know ... maybe strike a deal with TV-manufacturers to make TVs with built-in PS5-hardware? Eh ...
 
They simply weren't able to adjust. It's not even about the overall output when you see long-running IP such as Gran Turismo declining so much.
This too. I mean only million sellers from Sony in Japan during PS2 era were GT and Hot Shots Golf games. Those franchises still had games on PS4.
 
Before last few years I even wouldn't say that their decline over the time was that much higher than industry average (when it comes to amount of games released). Remember that they also had PSP and Vita to support which automatically meant less PS3/PS4 games compared to PS2 days. Sure now after abandoning handheld market and gutting Japan Studios (and putting even more focus on big AAA) the collapse has been big. Also sure Nintendo still releases a lot of games and is more open to smaller titles but while I don't have figures at hand I assume that if you looked back to DS/Wii times they released a lot more games back then compared to today so even they are following industry trends in this regard.
Yes, the PSP had excellent support from SCEJ, but remember that it ran in tandem with the PS2 for quite a while. Almost 40 of the PSP SCEJ published games were released before the PS3 even came out.

The Vita was inconsequential to this, SCEJ only published 10 vita games. PSP got more SCEJ published content in its first year. Vita was not starving PS3/4 of SCEJ games, Sony's choices were (and to be fair, in the PS3 gen the state of the market as a whole with the effect of HD on development times).

For Nintendo it was inevitable that switching to development on one platform will result in less overall games, but again they have the advantage in the JP market that almost every game they publish will have been developed in Japan. I think only about 6 of the ~75 nintendo published games wasn't. So even with less published games, almost everything it releases is relevant to the local market to some degree.
 
To respond to @UnusMundus

PS2 isn't really their high-point, though. The decline had already begun by then. They were a very strong publisher on the PSX. They had 11 million sellers on the PSX, which is about two a year. Sure, the third party games are what really made the system a success, but they knew how to consistently create a hit for Japan at the time. If any publisher other than Nintendo had that level of performance today, everyone would be praising that publisher endlessly.
Sony, during the PS1 days, was more proactive since they were launching a totally new platform therefore they needed to find ways to sustain it with software
which is why they began splashing cash at already existing development teams (or to developers forming new studios).
It's evident that SCE were looking back at what worked (and what not worked) on Super Famicom to decide the direction for PS1.
SCE million sellers on PS1 must be looked with a critical eye, because just like with the Famicom, there was a set of first-party games that performed very well due to specific circumstances (being pushed by the platform owner on a brand new exciting platform that exploded on the market).
Looking at Nintendo's million sellers on Famicom there are a bunch of games that were successful due to a first mover advantage and couldn't bring Nintendo an enduring success (look at the generic titles: Baseball, Mah Jong, Volley Ball, Tennis, Soccer, F1 Race, Mah Jong, 4 Players Mah Jong, Pro Wrestling; these accounted for 16.40 million units sold!).
Seemingly a chunk of SCE's first-party million sellers on PS1 weren't really iterable for prolonged success and a few were successful only because they were pushed by SCE during a favourable time (just consider Arc the Lad!).


Copy & paste from an old post of mine (months/years old? can't remember):

Let's look at SCE million seller history in Japan (miss Minecraft on PSV).

Total shipment data in Japan (in million units):

Gran Turismo PS1 SCE 2,55
Everybody's Golf PS1 SCE 2,13
Gran Turismo 3 A -spec PS2 SCE 1,89
Gran Turismo 2 PS1 SCE 1,71
Everybody's Golf 4 PS2 SCE 1,56
Everybody's Golf 2 PS1 SCE 1,49
Parappa The Rapper PS1 SCE 1,48
Crash Bandicoot 3: Warped PS1 SCE 1,45
Everybody's Golf 3 PS2 SCE 1,39
Crash Bandicoot 2 PS1 SCE 1,33
Gran Turismo 4 PS2 SCE 1,27
Devil Dice PS1 SCE 1,12
Arc The Lad PS1 SCE 1,11
Arc The Lad II PS1 SCE 1,06
Intelligent Qube PS1 SCE 1,01
Doko Demo Issyo PS1 SCE 1,01

As you can see Sony million sellers are a bunch of new franchises on PS1 when Sony was on board of a winning train* and sequels of the more enduring success on PS2 (GT, Everybody's Golf).
Full stop (until they published the PSV version of Minecraft).

Now you can make excuses that PS3 and PS4 userbase weren't that large but Splatoon hit 1.5M on the pitiful WiiU install base.
PSP sold like a market leading PlayStation console in Japan (around 20M) and yet still nothing.

Are we really sure we should cry at the japanese consumers for not buying Sony games in masses?
Wouldn't be better to scrutinize Sony's output?

* Also games in a franchise they didn't own (Crash Bandicoot).

LTD from Famitsu:

Arc the Lad
PS1 Arc the Lad 311.236 1.090.000 SCE 30/06/1995
PS1 Arc the Lad III 209.088 379.040 SCE 28/10/1999
PS2 Arc the Lad: Twilight of the Spirits 80.627 185.862 SCE 20/03/2003

PaRappa the Rapper
PS1 PaRappa the Rapper [All Versions] 28.082 1.244.237 SCE 06/12/1996
PS1 Um Jammer Lammy 181.904 406.376 SCE 18/03/1999
PS2 PaRappa the Rapper 2 50.193 98.251 SCE 30/08/2001

XI (Devil Dice):
PS1 XI 131.815 864.844 SCE 18/06/1998
PS1 XI Jumbo 24.417 64.207 SCE 22/12/1999
PS1 XI Go ?? ?? SCE 19/12/2002 (so low it didn't chart?)

Intelligent Qube:
PS1 I.Q Intelligent Cube [All Versions] 24.531 834.677 SCE 31/01/1997
PS1 I.Q Final 63.330 295.084 SCE 23/12/1998
PS2 I.Q Remix+ 10.999 10.999 SCE 23/03/2000

Doko Demo Issho:
PS1 Doko Demo Issho 64.312 808.057 SCE
PS1 Doko Demo Issho: Additional Disc - Koneko Mo Issho 101.775 181.172 SCE 27/01/2000
PS2 Doko Demo Issho: My Real Show 16.316 35.889 SCE 24/04/2003


Number of SCE/SIE published games that sold at retail more than 300K per system in Japan (source: Famitsu):

PS1: 26 (2 Everybody's, 2 GT, 4 Crash Bandicoot which isn't owned by Sony)
PS2: 11 (3 Everybody's, 4 GT)
PSP: 3 (2 Everybody's, 1 GT)
PS3: 7 (1 Everybody's, 3 GT, 1 Minecraft which isn't owned by Sony)
PSV: 2 (0 Everybody's, 0 GT, 1 Minecraft which isn't owned by Sony)
PS4: 7 (0 Everybody's, 0 GT, 3 Call of Duty which isn't owned by Sony, 1 Minecraft which isn't owned by Sony)

EDIT:
The PS4 stat obviously refer at the time when I've written the post, so it's obsolete.
 
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Despite the above post, as I often repeated in the past, I believe that PlayStation was always a third-party driven platform.
PlayStation decline in Japan is strictly connected with the performance of third-party software.
 
One thing regarding the future of the PS5, prior PS devices have never had to compete with such a dominant platform like the Switch where third parties are gaining big success.

Capcom's Monster Hunter Rise is likely to end up their best selling title in Japan
Konami's Momotaro is already their best selling title of all time in Japan
Marvelous Olive Town is already their best selling game in Japan of all time in Japan

That's just three publishers who embraced Switch with exclusive titles, but I think the story will repeat for many others that are starting to embrace the Switch right now. If you release enough games on the system, sooner or later you are likely to get a break-out hit.
Even when we look at those who haven't embraced the Switch like Bandai Namco, we see that Fishing Spirits & Taiko no Tatsujin are likely their best-selling games since One Piece: Pirate Warriors which sold 828K physical and launched in 2012. I have no doubt that these two titles are going to end up over 700K physical this year and with even 20% digital both titles are likely to surpass 1 million shipped in Japan in their lifetime the first Bandai titles to do so since Tamagotchi Connection: Corner Shop on the DS.

So the environment is much different than when PS4 launched and you had an in-decline 3DS which was difficult to develop for and a flop Wii U competing with the PS Ecosystem. The current environment will accelerate the decline of the PS5 as we are already seeing third parties achieve over 80% of their sales in Japan on the Switch in 2021(not confirmed but results within the Top 30 point towards this happening). Also, Switch isn't only successful in Japan, in China it's the leading dedicated platform, in South Korea & Taiwan we are also seeing that similar trends are being observed. This is very important for the PS5's future, if those markets trend the same way than strategic decisions for Japanese third parties for their future investments will be very simple. East Asia is the fastest-growing game market in the World, where they have a big opportunity for growth if Switch is the dominant dedicated platform, co-marketing will be key for third parties to be able to cease on this growth opportunity.
 
People talk a lot about Japan Studio while discussing PS in Japan. Unfortunately J. Studio rarely developed games that found success worldwide. Sony is clearly not interested in developing games that perform well in Japan only (same as Nintendo, in fact their biggest strength is being able to develop games which are loved all across the world and not just in one country) and Japan Studio failed multiple times (Freedom wars, Gravity rush, etc.). During the PS4 generation they only released Gravity Rush 2, Knack 1-2 and The Last Guardian (which has been in development since 2007 at least). Japan Studio has not been a major factor, even in Japan alone, since years.
 
Many posters and Celine have written excellent write ups for this problem in the past.

To add to the discussion:
From my experience, only a few hit games can massively drive an install base and that creates the environment for future support which is like pouring gasoline on a fire. The art is to create the fire by launching hits in the first and second year and the rest comes from the momentum gained in those years. I think the problem with Sony is that they don't have the ability to create those games for Japan (but they do for the west with stuff like Uncharted, God of War and The Last of Us) and third parties have lost the ability to create hit games for the Japanese market as they try to appeal to a world wide audience with AAA games and over iterated mid tier game franchises (by not focusing on new trends or innovation). The western support for Playstation is so strong though that it sells well in the west because all the big hit games are on their platform. It's specifically the Japanese support that is lacking and Sony doesn't want to only target Japan with their first party games.

On the other side Nintendo always thinks of Japan first when creating games with the hope their games will have worldwide appeal. The casual nature of their games makes this easier because of the graphical styles. The genres they tackle also are more casual as something like Smash is like a hybrid between a party game and fighting game and even when they tackle an FPS they call it a first person adventure (that's what they called Prime) and adjust the controls so that it is more intuitive to play. Nintendo at their heart always thinks of world wide appeal but also takes Japan very seriously. I think they would not be happy if their games sell millions of copies world wide and not sell well in Japan (outside of a few exceptions in the line up) It would lead to a complete rethinking of their strategy if that ever happened.
 
Do you think you could add Celine’s consent from the previous media create thread? It has a lot of insight and history that would serve as a good primer to anyone looking to get into the topic.
The current situation, which see Nintendo totally dominating Japan, was decades in the making.

Here a condensed recap (as condensed as possible for describing 40 years of events):

1) Nintendo launched the Famicom (NES) in 1983 and with it created the mainstream videogame console market in Japan.
The strategy adopted for the platform is first-party driven which setup Nintendo with the ambition to be the number one software publisher in Japan.

2) Third-parties seeing how successful the Famicom was, jumped on board to develop games for it and were forced to submit to Nintendo's rules (remember Nintendo's ambition to be the number one software publisher?).
Since everything was quite new back then, the fortune of these young software publishers were linked to the creation of new genres/sensations.
For example the RPG boom (Enix, Square), fighting games boom (Capcom), puzzle games boom (BPS, Nintendo, Banpresto/Compile) and so on.

3) On Super Famicom, while Nintendo was firmly the number one publisher, a group of big third-party publishers achieved a large share of software sales, combined larger than Nintendo (namely Square, Enix and Capcom).

4) Sony introduced in 1994 the first successful third-party driven console.
Japanese publishers jumped en mass on board, of particular importance was the contribution of Square (that dragged along Enix) which cemented PS1 as the new market leader by releasing an array of ultra popular games in 1997.
Don't mistake the Nintendo - PlayStation passing of the baton as a mere change of brand, in actuality it was a revolution where the incumbent first-party driven model was superseded by the challenger's unprecedented third-party driven model.

5) Nintendo find itself battling against the rest of industry alone (the only big publishers that supported seriously the N64 were Konami and Hudson Soft).
Their software hits' sales potential was limited by the low install base (due to the lack of quantity/variety of software which were provided by third-party publishers on FC and SFC) but were still able to create new mega hit franchises.

6) Sony launched PS2 in 2000, all the japanese publishers were already commited to support it even before launch due to all the profits they reaped on the predecessor.
It continued the PlayStation domination in the Country.

7) In early '00s Nintendo launched its next-gen consoles to mild reception (GBA sold a lot of hardware but software sales were no match for PS2).
The popularity of Nintendo software declines.
At the same time Nintendo publicly warn the industry of the worrying trend of declining software sales in Japan, which for Nintendo was caused by publishers focusing only on core gamers instead to try to cater to a more broad audience.
Third-party publishers responded that software sales may be declining but are still high and dismissed Nintendo pleads to reinvigorite the japanese market as excuses from a company in a weak position.

8) Sony is ready to introduce a new line of PlayStation handheld console to definitely dispose Nintendo from the console business.
Third-party publishers that have earned good money on PS2 prepare to move resources to PSP, as the next logical step to extend the business of games with "PS2-like" budget.

9) Nintendo is ready to introduce their answers to the declining trend shown by the japanese market in the previous years, in the form of hardware-software integrated products: Nintendo DS and Wii, plus an array of broad reaching software for both consoles.
Third-party publishers don't trust Nintendo new weird console propositions and only provide limited support in the beginning.
Nintendo was correct in their assumption, both DS and Wii were huge successes in Japan (especially the former).
Nintendo's first party software sales boomed and third-party publishers rushed to support the DS as quickly as possible (instead the Wii remained always badly supported by japanese third-parties which preferred to diverge those kind of budgets for DS and PSP projects).

10) PSP became successful in Japan pulled by third-party software hits like Monster Hunter.
It's the last PS console to achieve mainstream popularity in Japan however it failed miserably in its intent to push out Nintendo, in fact the console is merely an also run compared to Nintendo DS.
PS3 has trouble to attain the same level of success as PS2 and barely sold more than 10 million units.

11) Three very important aspects to consider for the period 2006-2016:

- Since 2006 most of the annual software sales take place on the Nintendo ecosystem (except for 2011) however in almost all these years the PlayStation ecosystem kept receiving the most number of game releases (from third-party publishers).
This big quantity of game releases weren't just AAA games, a very important contribution was given by the mid/small budget games from third-parties that grew their affiliaton to PlayStation from the PS1 days and that appear only or mostly on PlayStation consoles (and not, or very little, on Nintendo consoles).


- Nintendo first-party software began grew its popularity since the DS/Wii days while at the same time third-party big hits began to lessen their influence on the japanese audience.
A quick analysis of the Nintendo mega hits (million seller) in Japan before and after DS/Wii shows as much:

Total sales of the million sellers produced by Nintendo on NES (FC), GB, SNES (SFC), N64, GBA, GC (roughly the period 1983-2004)
= 124.73 million units

Total sales of the million sellers produced by Nintendo on DS, Wii, 3DS, WiiU, NSW (roughly the period 2005-2021)
= 202.41 million units

This is an important factor because the whole rivarly between Nintendo and PlayStation is in essence a power struggle between a first-party driven model and third-party driven model.


- In this period the market was heavily segmented, with each platforms having its own role.
For example even if Capcom had wanted, they couldn't port Monster Hunter on DS without compromising the gameplay.
Games that relied heavily on touch screen/wiimote made no sense on PSP/PS3.
Expansive games that utilized the modern capabilities of PS3 weren't viable on Wii.
In our current present dominated by the idea of multiplatform development this segmentation makes little sense however the japanese industry was used to custom develop for specific hardware since early arcade days/Famicom days so it wasn't actively opposed, at least not until the early/mid '10s.
So in a way, even if PlayStation had lost the leadership of the market, its significance within it was still intact.
However the core issue is that each time Nintendo goes upstream with a next-gen hardware (more capable) it would erode the PlayStation position in the market because more third-party games could in practice run on them and the rise of the adoption of multiplatform engines in the '10s has widened the problem for Sony (read below).


12) Nintendo released the 3DS in 2011, the goal was pretty obvious: to terminate the PlayStation line of handheld console.
The announced line up was very PlayStation like (I'm referring to PS1, PS2) and Nintendo secured the exclusivity rights of Monster Hunter (which now could run on the hardware).
The actual performance of 3DS was mixed.
Weak in the west but very good in Japan though the initial push from japanese third-party support waned after the first two, three years in the market.
3DS was a conceptually obsolete console which required custom development for specific hardware and wasn't well suited for digital distribution in a time when the multiplatform development mantra and digital distribution were arising.
WiiU bombed spectacularly in Japan and elsewhere but once again Nintendo created new software hits on it that would become very useful for the future (Splatoon, Mario Maker).

13) Sony prepared to retire from the handheld business and try to converge all its third-party support on PS4 after a brief period of multiplatform development within the PS ecosystem (PS3, PSV, PS4).

14) The checkmate move to PlayStation: Nintendo Switch.
Once again Nintendo introduced an unprecedented piece of hardware whose aim was to destroy the boundary between TV consoles, handheld consoles and tabletop consoles.
Crucially for the first time Nintendo planned from the start to support all the most popular multiplatform engines out of the gate.
In the beginning third-parties didn't trust to support much the new Nintendo console but since Nintendo is a first-party driven console maker that wasn't a problem at all.
When Switch proved it's viability in Japan to great popularity (and in Asia, America and Europe) slowly but surely mid/small budget third-party software that previously were mainly targeting the PlayStation ecosystem began to gravitate toward Switch on a permanent basis with multiplatform releases.
This shift is epochal because those mid/small budget games were the backbone of the PlayStation ecosystem, the more third-party software receive multiplatform releases between PlayStation ecosystem and Nintendo ecosystem, the weaker the PlayStation ecosystem will become.
The more third-party software is shared between Switch and PS4/PS5, the more PlayStation will lose its relevancy because Nintendo is the dominant player and those mid/small budget games were part of PS identity, thus making PS more and more redundant.
It's not a coincidence that for the first time in forever the number of game releases on the Nintendo ecosystem was larger than the one on PlayStation ecosystem in 2020.

You may ask but what about those high budget games that couldn't run on Switch like Final Fantasy XV or the upcoming XVI.
The remaining exclusive third-party high budget games on PS are dwarfed by Nintendo's first-party mega hits and none of them (that couldn't run on Switch) have shown to possess huge pull with the mainstrem market (selling millions of units like the Nintendo mega hits, Minecraft, Monster Hunter, Dragon Quest, Momotaro Dentetsu).
The power balance between Nintendo's mega hits and third-party mega hits is completely different from 1996, now it's heavily in favour of Nintendo.


EDIT:
I forgot to mention that another circumstance that put PlayStation at a disadvantage in Japan is that characteristics typically chased by Sony like producing cinematic experiences and high quality graphics/photorealism don't seems to be selling points capable to attract the japanese mass market at large.
The mega hits in Japan are typically driven by the game mechanics, more than the presentation, and usually become hugely successful thanks to positive word of mouth.
The taste of japanese mass market seems to be more keen at videogames like a form of amusement than a form of interactive movie.

------

I didn't cite narrative, I said aspects as movie like presentation and today high quality graphics / photorealism doesn't seem alone capable to turn as much heads in Japan as in other parts of the world (relatively to the market size).
Or to add to the heap, sport game simulations in Japan didn't have the same consistency of high sales through history that happened in America and Europe.
In Japan you have some booming sport games that eventually fizzled out after some time like Nintendo's first-party simulation games on Famicom (which had a huge first mover advantage), Namco/Jaleco's baseball games on FC, the Camelot Software fathered Everybody's Golf on PS1/PS2 and Mario Tennis 64 on N64, Konami's Winning Eleven on PS2, Wii Sports on Wii.
Also when I referred to "mass market" I didn't mean games selling several 100Ks, I meant the one in the million(s).
Million sellers at retail in Japan on PSP/PS3/PSV/PS4/PS5 (roughly the last 15 years; Famitsu):

NCWzeFD.jpg

Million sellers at retail in Japan on DS/WII/3DS/WIU/NSW (roughly the last 15 years; Famitsu):

9bdHOAy.jpg

Some more recent games would crippled in with digital sales while other already present would add quite a lot of sales (looking at you ACNH) but overall it illustrates well the difference in the wide reaching department.
Also sorry for the fuzzy quality of the Nintendo's screenshot, I had to zoom out a lot.
 
People talk a lot about Japan Studio while discussing PS in Japan. Unfortunately J. Studio rarely developed games that found success worldwide. Sony is clearly not interested in developing games that perform well in Japan only (same as Nintendo, in fact their biggest strength is being able to develop games which are loved all across the world and not just in one country) and Japan Studio failed multiple times (Freedom wars, Gravity rush, etc.). During the PS4 generation they only released Gravity Rush 2, Knack 1-2 and The Last Guardian (which has been in development since 2007 at least). Japan Studio has not been a major factor, even in Japan alone, since years.

Can't speak for others but for myself their role has been infinitely more important as a publisher than a developer.
 
Sony are now laser focused on AAA games and nothing else; same is true of developers both in the west and in Japan.

Look at how they have turned back on their support of independent developers; Sony simply don’t provide the same kind of support and do not place importance on smaller games like they used to. The only thing that Sony really care about anymore is the support of the absolute biggest publishers with the biggest sellers. It’s all about having the biggest worldwide blockbusters now, everything else be damned.

Meanwhile, at the same time as when Sony made this shift across the PS4 generation, Sony have slowly but steadily become increasingly dependent on their first party production capabilities. And while sure, Sony’s first party presence has been steadily growing since the PS2, it really took a massive leap forward with PS4. Now with PS4 and PS5, the biggest hits on Playstation platforms each year are suddenly the first party titles more often than not; something that certainly was never the case during the eras of PS1, PS2 or even PS3. Sony have shifted their general strategy towards being more first-party driven, not unlike Nintendo actually! (though obviously not to the same extent yet). But even here, Playstation Studios are primarily focused on the safe heavy hitters now (as evidenced by the dissolution of Japan Studio). The need to distinguish themselves from Xbox (who have Game Pass as a pretty big feather in their cap as far as 3rd party release go), will only further fuel Sony’s desire to grow their first party studios’ power even further as we go forward too.

This shift in attitude and strategy has ended up having a knock-on effect within the Japanese market as a whole. The majority of games coming out from Japan just aren’t on the same kind of production scale as those coming out in the west; and simply don’t have the same worldwide sales potential & console hardware pushing power that the big western AAA titles do. As such, Sony simply aren’t all that bothered to push and support anything other than the biggest staple franchises coming out of Japan (Final Fantasy, Dragon Quest, Resident Evil Monster Hunter etc); and as long as they’re continuing to get those games and they’re getting released in top form worldwide on their platforms? They don’t really care all that much about conceding Japan and the smaller Japanese developers to Nintendo.

It’s a fundamental cultural change that has occurred throughout Playstation as a whole, and their waning presence within the Japanese market is just collateral damage that has come as part of that change. But so long as Playstation continues to truck along unabated in the west? I don’t see any reason why they would look to course correct. Their market presence may continue to wane in Japan to the point of irrelevancy, but they will continue to get the biggest Japanese franchises regardless; so long as they continue to dominate in the west. As such, I don’t think it’s a matter of saying that Sony can’t change their fortunes within Japan, but rather that the market, and the smaller non-AAA games that come out of it, simply aren’t important to them anymore.
 
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This is really funny to me, as I was thinking of making a thread about this this other day, but wasn't sure how to go about this.

Awesome thread, that said!

Can't speak for others but for myself their role has been infinitely more important as a publisher than a developer.

I think this is important to bring up, especially since they were involved with handling localizations for Sony's first and second party titles for the Japanese market (which is now as of last year or so, being handled by Sony's US branch going forward).
 
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But so long as Playstation continues to truck along unabated in the west? I don’t see any reason why they would look to course correct. Their market presence may continue to wane in Japan to the point of irrelevancy, but they will continue to get the biggest Japanese franchises regardless; so long as they continue to dominate in the west.
And what when that stops continuing? When GamePass convinces enough people that Sony's 70 Dollars games are not okay? When Switch 2 has all the Japanese games plus Nintendo-games? Should Sony start course correcting only when "shit hits the fan" already?

We learnt a lot about the childish leadership at Japanese third-party companies (Western companies maybe, too?), but I refuse to believe that a company like Sony wouldn't think about the wider consequences BEFORE they become a pressing issue.
 
Now with PS4 and PS5, the biggest hits on Playstation platforms are suddenly the first party titles more often than not; something that certainly was never the case during the eras of PS1, PS2 or even PS3. Sony have shifted their general strategy towards being more first-party driven, not unlike Nintendo actually! But even here, Playstation Studios are primarily focused on the safe heavy hitters now (as evidenced by the dissolution of Japan Studio).

The "danger" I see here: Playstation first party games are mainly driven by bombastic graphics and action sequences that will a cost a lot to produce. Unlike Nintendo games that are mainly gameplay (and sometimes gimmick) driven. Thats not to say that Sonys First Party have not good gemplay, but people buy them because they are blockbuster with state of the art graphics.

That Sony sees its necessary to release their first party games on PC and increase the games price are a strong hint that these games cost a lot so they try to quench every dollar out of them. Nintendo could survive some dire years because even with a smaller userbase they could make money with their games. If playstation userbase would shrink, it would make the concept of their first party games unreliable. The user base would not suddenly accept less than state of the art graphics.
 
And what when that stops continuing? When GamePass convinces enough people that Sony's 70 Dollars games are not okay? When Switch 2 has all the Japanese games plus Nintendo-games? Should Sony start course correcting only when "shit hits the fan" already?

We learnt a lot about the childish leadership at Japanese third-party companies (Western companies maybe, too?), but I refuse to believe that a company like Sony wouldn't think about the wider consequences BEFORE they become a pressing issue.
Don't get me wrong, I don’t think that Sony is making the right decision by focusing purely on the biggest hitters at the expense of everything else. But nonetheless, that is what they are doing. Call it arrogance, call it the 5th Console Curse, call it whatever, but right now? Sony is content to stay the current course. They are the incumbent winner of the last generation and as is pretty well demonstrated throughout the history of the industry? Previous success often blinkers the view of the victor.

Sony’s next major step is expanding their audience to the PC, which is already well underway, and I can’t see any sign of them changing tack with the PS5 any time soon. Likewise, I can’t see them making a serious effort to recapture the Japanese market; everything about the PS5 and their current strategy is engineered with the US and EU markets exclusively in mind.

The other thing is, Sony's not dominating the west either.
Compared to Xbox (their primary competition), they certainly are. And PS5 is still tracking pretty close to PS4, so I doubt that they are feeling threatened by Nintendo right now.
 
And what when that stops continuing? When GamePass convinces enough people that Sony's 70 Dollars games are not okay? When Switch 2 has all the Japanese games plus Nintendo-games? Should Sony start course correcting only when "shit hits the fan" already?

We learnt a lot about the childish leadership at Japanese third-party companies (Western companies maybe, too?), but I refuse to believe that a company like Sony wouldn't think about the wider consequences BEFORE they become a pressing issue.
I mean there had been obvious some power struggles within Sony in recent years. Within Sony USA and between Sony USA and Sony Japan which USA obviously won. The goal of some "suits" was to completely destroy Sony Japan to get more power. I don't think they had a concept to maintain a strong position in japan after the victory and they don't needed it, because Playstation is strong in the west so that losing Japan seemed no catastrophy for investors. We will see if these management decisions bites them back in the long run.
 
Personally I believe their success has always been about being the goto all in one console. All of Japan from big to small, and best of the west. Nintendo’s was mostly getting the smaller Japanese games, and Xbox is the western machine. Over the years majority of the big Japanese games have declined worldwide, and the western games. Due to them embracing the multiplatform game development IMO. Sony dropping out of the portable game left the bigger handheld games homeless. With no real highly successful first party other than Gran Turismo. It was only a matter of time before this would happened. IMO
 
Compared to Xbox (their primary competition), they certainly are. And PS5 is still tracking pretty close to PS4, so I doubt that they are feeling threatened by Nintendo right now.
If PlayStation's not continuously planning to compete with Nintendo overseas then that's another strategic blunder on their part. They're also not really dominating Xbox in the west, the only region they having a dominating lead over Xbox is probably Japan/Asia.
 
The current situation, which see Nintendo totally dominating Japan, was decades in the making.

Here a condensed recap (as condensed as possible for describing 40 years of events):

1) Nintendo launched the Famicom (NES) in 1983 and with it created the mainstream videogame console market in Japan.
The strategy adopted for the platform is first-party driven which setup Nintendo with the ambition to be the number one software publisher in Japan.

2) Third-parties seeing how successful the Famicom was, jumped on board to develop games for it and were forced to submit to Nintendo's rules (remember Nintendo's ambition to be the number one software publisher?).
Since everything was quite new back then, the fortune of these young software publishers were linked to the creation of new genres/sensations.
For example the RPG boom (Enix, Square), fighting games boom (Capcom), puzzle games boom (BPS, Nintendo, Banpresto/Compile) and so on.

3) On Super Famicom, while Nintendo was firmly the number one publisher, a group of big third-party publishers achieved a large share of software sales, combined larger than Nintendo (namely Square, Enix and Capcom).

4) Sony introduced in 1994 the first successful third-party driven console.
Japanese publishers jumped en mass on board, of particular importance was the contribution of Square (that dragged along Enix) which cemented PS1 as the new market leader by releasing an array of ultra popular games in 1997.
Don't mistake the Nintendo - PlayStation passing of the baton as a mere change of brand, in actuality it was a revolution where the incumbent first-party driven model was superseded by the challenger's unprecedented third-party driven model.

5) Nintendo find itself battling against the rest of industry alone (the only big publishers that supported seriously the N64 were Konami and Hudson Soft).
Their software hits' sales potential was limited by the low install base (due to the lack of quantity/variety of software which were provided by third-party publishers on FC and SFC) but were still able to create new mega hit franchises.

6) Sony launched PS2 in 2000, all the japanese publishers were already commited to support it even before launch due to all the profits they reaped on the predecessor.
It continued the PlayStation domination in the Country.

7) In early '00s Nintendo launched its next-gen consoles to mild reception (GBA sold a lot of hardware but software sales were no match for PS2).
The popularity of Nintendo software declines.
At the same time Nintendo publicly warn the industry of the worrying trend of declining software sales in Japan, which for Nintendo was caused by publishers focusing only on core gamers instead to try to cater to a more broad audience.
Third-party publishers responded that software sales may be declining but are still high and dismissed Nintendo pleads to reinvigorite the japanese market as excuses from a company in a weak position.

8) Sony is ready to introduce a new line of PlayStation handheld console to definitely dispose Nintendo from the console business.
Third-party publishers that have earned good money on PS2 prepare to move resources to PSP, as the next logical step to extend the business of games with "PS2-like" budget.

9) Nintendo is ready to introduce their answers to the declining trend shown by the japanese market in the previous years, in the form of hardware-software integrated products: Nintendo DS and Wii, plus an array of broad reaching software for both consoles.
Third-party publishers don't trust Nintendo new weird console propositions and only provide limited support in the beginning.
Nintendo was correct in their assumption, both DS and Wii were huge successes in Japan (especially the former).
Nintendo's first party software sales boomed and third-party publishers rushed to support the DS as quickly as possible (instead the Wii remained always badly supported by japanese third-parties which preferred to diverge those kind of budgets for DS and PSP projects).

10) PSP became successful in Japan pulled by third-party software hits like Monster Hunter.
It's the last PS console to achieve mainstream popularity in Japan however it failed miserably in its intent to push out Nintendo, in fact the console is merely an also run compared to Nintendo DS.
PS3 has trouble to attain the same level of success as PS2 and barely sold more than 10 million units.

11) Three very important aspects to consider for the period 2006-2016:

- Since 2006 most of the annual software sales take place on the Nintendo ecosystem (except for 2011) however in almost all these years the PlayStation ecosystem kept receiving the most number of game releases (from third-party publishers).
This big quantity of game releases weren't just AAA games, a very important contribution was given by the mid/small budget games from third-parties that grew their affiliaton to PlayStation from the PS1 days and that appear only or mostly on PlayStation consoles (and not, or very little, on Nintendo consoles).


- Nintendo first-party software began grew its popularity since the DS/Wii days while at the same time third-party big hits began to lessen their influence on the japanese audience.
A quick analysis of the Nintendo mega hits (million seller) in Japan before and after DS/Wii shows as much:

Total sales of the million sellers produced by Nintendo on NES (FC), GB, SNES (SFC), N64, GBA, GC (roughly the period 1983-2004)
= 124.73 million units

Total sales of the million sellers produced by Nintendo on DS, Wii, 3DS, WiiU, NSW (roughly the period 2005-2021)
= 202.41 million units

This is an important factor because the whole rivarly between Nintendo and PlayStation is in essence a power struggle between a first-party driven model and third-party driven model.


- In this period the market was heavily segmented, with each platforms having its own role.
For example even if Capcom had wanted, they couldn't port Monster Hunter on DS without compromising the gameplay.
Games that relied heavily on touch screen/wiimote made no sense on PSP/PS3.
Expansive games that utilized the modern capabilities of PS3 weren't viable on Wii.
In our current present dominated by the idea of multiplatform development this segmentation makes little sense however the japanese industry was used to custom develop for specific hardware since early arcade days/Famicom days so it wasn't actively opposed, at least not until the early/mid '10s.
So in a way, even if PlayStation had lost the leadership of the market, its significance within it was still intact.
However the core issue is that each time Nintendo goes upstream with a next-gen hardware (more capable) it would erode the PlayStation position in the market because more third-party games could in practice run on them and the rise of the adoption of multiplatform engines in the '10s has widened the problem for Sony (read below).


12) Nintendo released the 3DS in 2011, the goal was pretty obvious: to terminate the PlayStation line of handheld console.
The announced line up was very PlayStation like (I'm referring to PS1, PS2) and Nintendo secured the exclusivity rights of Monster Hunter (which now could run on the hardware).
The actual performance of 3DS was mixed.
Weak in the west but very good in Japan though the initial push from japanese third-party support waned after the first two, three years in the market.
3DS was a conceptually obsolete console which required custom development for specific hardware and wasn't well suited for digital distribution in a time when the multiplatform development mantra and digital distribution were arising.
WiiU bombed spectacularly in Japan and elsewhere but once again Nintendo created new software hits on it that would become very useful for the future (Splatoon, Mario Maker).

13) Sony prepared to retire from the handheld business and try to converge all its third-party support on PS4 after a brief period of multiplatform development within the PS ecosystem (PS3, PSV, PS4).

14) The checkmate move to PlayStation: Nintendo Switch.
Once again Nintendo introduced an unprecedented piece of hardware whose aim was to destroy the boundary between TV consoles, handheld consoles and tabletop consoles.
Crucially for the first time Nintendo planned from the start to support all the most popular multiplatform engines out of the gate.
In the beginning third-parties didn't trust to support much the new Nintendo console but since Nintendo is a first-party driven console maker that wasn't a problem at all.
When Switch proved it's viability in Japan to great popularity (and in Asia, America and Europe) slowly but surely mid/small budget third-party software that previously were mainly targeting the PlayStation ecosystem began to gravitate toward Switch on a permanent basis with multiplatform releases.
This shift is epochal because those mid/small budget games were the backbone of the PlayStation ecosystem, the more third-party software receive multiplatform releases between PlayStation ecosystem and Nintendo ecosystem, the weaker the PlayStation ecosystem will become.
The more third-party software is shared between Switch and PS4/PS5, the more PlayStation will lose its relevancy because Nintendo is the dominant player and those mid/small budget games were part of PS identity, thus making PS more and more redundant.
It's not a coincidence that for the first time in forever the number of game releases on the Nintendo ecosystem was larger than the one on PlayStation ecosystem in 2020.

You may ask but what about those high budget games that couldn't run on Switch like Final Fantasy XV or the upcoming XVI.
The remaining exclusive third-party high budget games on PS are dwarfed by Nintendo's first-party mega hits and none of them (that couldn't run on Switch) have shown to possess huge pull with the mainstrem market (selling millions of units like the Nintendo mega hits, Minecraft, Monster Hunter, Dragon Quest, Momotaro Dentetsu).
The power balance between Nintendo's mega hits and third-party mega hits is completely different from 1996, now it's heavily in favour of Nintendo.


EDIT:
I forgot to mention that another circumstance that put PlayStation at a disadvantage in Japan is that characteristics typically chased by Sony like producing cinematic experiences and high quality graphics/photorealism don't seems to be selling points capable to attract the japanese mass market at large.
The mega hits in Japan are typically driven by the game mechanics, more than the presentation, and usually become hugely successful thanks to positive word of mouth.
The taste of japanese mass market seems to be more keen at videogames like a form of amusement than a form of interactive movie.

------

I didn't cite narrative, I said aspects as movie like presentation and today high quality graphics / photorealism doesn't seem alone capable to turn as much heads in Japan as in other parts of the world (relatively to the market size).
Or to add to the heap, sport game simulations in Japan didn't have the same consistency of high sales through history that happened in America and Europe.
In Japan you have some booming sport games that eventually fizzled out after some time like Nintendo's first-party simulation games on Famicom (which had a huge first mover advantage), Namco/Jaleco's baseball games on FC, the Camelot Software fathered Everybody's Golf on PS1/PS2 and Mario Tennis 64 on N64, Konami's Winning Eleven on PS2, Wii Sports on Wii.
Also when I referred to "mass market" I didn't mean games selling several 100Ks, I meant the one in the million(s).
Million sellers at retail in Japan on PSP/PS3/PSV/PS4/PS5 (roughly the last 15 years; Famitsu):

NCWzeFD.jpg

Million sellers at retail in Japan on DS/WII/3DS/WIU/NSW (roughly the last 15 years; Famitsu):

9bdHOAy.jpg

Some more recent games would crippled in with digital sales while other already present would add quite a lot of sales (looking at you ACNH) but overall it illustrates well the difference in the wide reaching department.
Also sorry for the fuzzy quality of the Nintendo's screenshot, I had to zoom out a lot.
This post says it all basically
 
If PlayStation's not continuously planning to compete with Nintendo overseas then that's another strategic blunder on their part. They're also not really dominating Xbox in the west, the only region they having a dominating lead over Xbox is probably Japan/Asia.

Aren't they 2:1 to xbox s/x at the moment? Given the overall figures they've got to be beating them handily somewhere in the west (europe I assume).
 
Dominance is what we're seeing with Switch in Japan right now. Not 2:1, but like 5:1, 10:1, sweeping the top 10 software, etc.
 
Europe is dominated by PC, then Switch. Doesn't mean PS5 isn't successful here, too, but there's definitely no PlayStation dominance.
I know but I meant in relation to xbox they are but nice to know too where Europe trends too thanks
 
Europe is dominated by PC, then Switch. Doesn't mean PS5 isn't successful here, too, but there's definitely no PlayStation dominance.
Do you have data to backup this claim? If no, you shouldn't use assumptions as gospel.
 
The issue (as always) when PS’ poor Japanese performance gets discussed by this community is the extrapolation of it to the worldwide performance and you have folks saying things that just blatantly aren’t true.

PS is in a bad state in Japan. PS is in an incredible state worldwide. Both of these statements can be true, and they are! There’s absolutely no evidence to suggest Sony have anything to worry about when it comes to worldwide performance yet that very obvious agenda still gets pushed by some here with no backing evidence.
 
The real threat of losing Japan to Nintendo is that they're going to have control of the #2 console market in the world and all the revenue that comes with it. Nintendo gets more aggressive in overseas markets the more secure their hold on Japan is.

The decision to gut Studio Japan will never not baffle me, especially with the resurgence of home console Japanese games that we've been seeing these last few years.
If Sony sees Japan as a declining market for home consoles due falling TV adoption rates, then it doesn't make sense to field developers aimed at making games for Japanese audiences.
 
Compared to Xbox (their primary competition), they certainly are. And PS5 is still tracking pretty close to PS4, so I doubt that they are feeling threatened by Nintendo right now.

They definitely feel threatened by Nintendo, just because Nintendo sells more in some markets.

Anyway I think because of the low production capacity the PS5 is still in the "launch" phase. Every console has a minimum user base that will buy the console regardless of any concerns or prices. The interesting parts begins when this userbase is satisfied and the wider audience thinks about buying the console.

The PS4 was extremely lucky that the XOne marketing was terrible and Wii U was a flop. This time the PS5 has serious competition.
 
They definitely feel threatened by Nintendo, just because Nintendo sells more in some markets.

Anyway I think because of the low production capacity the PS5 is still in the "launch" phase. Every console has a minimum user base that will buy the console regardless of any concerns or prices. The interesting parts begins when this userbase is satisfied and the wider audience thinks about buying the console.

The PS4 was extremely lucky that the XOne marketing was terrible and Wii U was a flop. This time the PS5 has serious competition.
The don't feel threatened by Nintendo as much as Xbox because Nintendo is mainly 1st party driven. Both Xbox and PS are 3rd party ones (even if they're trying to change that). I can't find the actual graphics, but the last split was:

Nintendo: ~70% 1st party - ~30% 3rd party.
Sony: ~25% 1st party - ~75% 3rd party.
Xbox: only MS knows.

Someone please feel free to correct the splits, couldn't find the graphic charts but remember a bit.
 
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