"I want you to put the word out there that we back up" Sony
talking to pubs reminding them they're the best and to stop making deals with other companies probably
The reasons and consequences of the decline of Playstation in Japan [UPDATE: New Guidelines]
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talking to pubs reminding them they're the best and to stop making deals with other companies probably
One game does not make for an analysis. I am asking you to list games because you need a lot of data points to make a valid analysis and I don't think there has ever been enough data to rule out anything up until the this Insomniac breach. So again. Do you have an actual decent list of games used to say digital was never in contention?
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Probably similar to what I’ve said about their China Hero Project in the past: to “teach” devs the value of AAA gaming and to consistently push them to support PlayStation as the default platform and skip other platforms. “Educate” them that PlayStation is “number 1” and that you get bonus resources and support from aligning with them.
It means educate them on the value of PS and what releasing your titles and content on their platform can do for them. Which is correct language. You're suppose to educate your consumers (whether it is B2B or B2C) on the value of your products.
The launguage really should not bother you. Especially when you are looking at an internal document you're never meant to see.
It really is cultural shift in the sense that Playstation will not be as successful as it once was in Japan, precisely because they do not have a handheld.
Now I understand that the Vita did not do well globally, but I believe it did well in Japan. The basic problem with Playstation handhelds is the very thing Nintendo conquered with the Switch - streamlined development.
Sony got caught up making handheld-specific games and none of their studios, especially the western ones, wanted to make them. Nintendo's major breakthrough with the Switch was the elimination of the "handheld" game. Games are games now. Some are small, some are large, some have high end graphics, and some don't. All can be equally fun.
I still believe Switch-like devices are the future. Sony will continue to struggle in Japan without a handheld presence. Either they develop their own handheld, or they make games for the Switch. Otherwise, I think they will continue to lesser and lesser relevance in Japan.
What does help things though is that no matter how small the market, there is a market for 1 high end system. In Japan, that system is the Playstation for obvious reasons.
To me the question is not - will Sony turn things around in Japan - given their current choices - they won't.
I mean let's be real - they eliminated Japan's preferred gaming platform - handhelds. They then closed the one studio that could help them cater to the Japanese audience - Studio Japan. Now they aren't stupid. The closure of Japan Studio was an acknowledgement of their failure - it was them giving up on Japan.
Edit: Another very important bit in their slides - I see is an acknowledgment that they don't have enough money to sustain the big tentpole games and diversify and do other kinds of games. This is why they leverage partnerships with Capcom, Square Enix, etc.
If you don't have enough capital to invest in anything other than your tentpoles - you are hamstrung in doing pretty much anything innovative and original. You are too heavily invested in one thing and it's just shaky development and economics. I mean I sit here and question their judgment and I think I need to realize they are making the best choices they can - they simply cannot do the things we want or expect of them.
One thing to think about - were handhelds scrapped, was Japan Studio eliminated because they couldn't afford them while development costs ballooned at Naughty Dog, Santa Monica, etc? I think that's the truth of the matter. They are Icarus getting too close to the sun with these games.
Now I understand that the Vita did not do well globally, but I believe it did well in Japan. The basic problem with Playstation handhelds is the very thing Nintendo conquered with the Switch - streamlined development.
Sony got caught up making handheld-specific games and none of their studios, especially the western ones, wanted to make them. Nintendo's major breakthrough with the Switch was the elimination of the "handheld" game. Games are games now. Some are small, some are large, some have high end graphics, and some don't. All can be equally fun.
I still believe Switch-like devices are the future. Sony will continue to struggle in Japan without a handheld presence. Either they develop their own handheld, or they make games for the Switch. Otherwise, I think they will continue to lesser and lesser relevance in Japan.
What does help things though is that no matter how small the market, there is a market for 1 high end system. In Japan, that system is the Playstation for obvious reasons.
To me the question is not - will Sony turn things around in Japan - given their current choices - they won't.
I mean let's be real - they eliminated Japan's preferred gaming platform - handhelds. They then closed the one studio that could help them cater to the Japanese audience - Studio Japan. Now they aren't stupid. The closure of Japan Studio was an acknowledgement of their failure - it was them giving up on Japan.
Edit: Another very important bit in their slides - I see is an acknowledgment that they don't have enough money to sustain the big tentpole games and diversify and do other kinds of games. This is why they leverage partnerships with Capcom, Square Enix, etc.
If you don't have enough capital to invest in anything other than your tentpoles - you are hamstrung in doing pretty much anything innovative and original. You are too heavily invested in one thing and it's just shaky development and economics. I mean I sit here and question their judgment and I think I need to realize they are making the best choices they can - they simply cannot do the things we want or expect of them.
One thing to think about - were handhelds scrapped, was Japan Studio eliminated because they couldn't afford them while development costs ballooned at Naughty Dog, Santa Monica, etc? I think that's the truth of the matter. They are Icarus getting too close to the sun with these games.
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I've never understood why Sony never made a PC storefront, an online platform just like Steam. They can do significantly better than something like the Epic games store. It would keep the hardcore JP players as well. Instead they partnered with Steam to put their 1st party titles there, which is a braindead move from a business perspective. It can be done significantly cheaper than making a console. They also haven't done much for mobile, instead of making consoles they should first work on making a good mobile device. PS3 was the turning point imo, should have shifted away from consoles there.
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The Vita didn't do well in Japan either.
Sony's expertise isn't in the PC space. What would the value proposition or competitive advantage be over Steam? They have the money to do it but the ROI on something like this is set to a ppretty long term horizon. For the money they would have to pump into it, I don't really see the reason why they would want to do this?
I think a legitimate Steam competitor should come about at some point. That said I feel like it needs to come from someone deeply embedded in the PC space with the know how, understanding and long term vision to get a piece of the pie. I can't really see any time in Sony's history where that would have made sense.
And shifting away from consoles after the PS3? Why? They had 2 successful consoles and a successful handheld. PS3 was a financial disaster due to hardware and decisions by Sony early but ultimately still had a big market of players and sold more than 80 million units. They took the lessons learned their and made boatloads of cash on the PS4. I can't understand the logic in abandoning the field you have extensive experience in to chase PC or Mobile, areas they had little knowledge of. That's way way riskier and a lot harder to justify to shareholders or even your staff.
It's like saying Nintendo should have abandoned consoles after the N64, the Gamecube or the WiiU. In the end with the 3DS and WiiU, Nintedo recognized that they couldn't fully support 2 platforms. They also noticed that in the West consoles have significantly more pull especially on the software side where as in Japan handhelds are a lot more viable. So they made a hybrid. They didn't abandon any of their expertise to chase mobile or some other venture. They used their core value proposition and framed it to consumers as best they could.
Likewise, I can't see how Sony whose biggest value in gaming is being the console where you get most big games, stands to gain by totally abandoning that vision. I'd argue that they could have embraced mobile earlier while it was cheap to enter (which tbh I feel like most publishers look at what they missed out on and kick themselves) but outside of that, I don't think Sony made any big mistakes thus far outside of closing Japan Studios. (Not because they were rockstars, they were not great) The value propostion of a console starting in the PS3/360 era is in its exclusive content since 70% of the library is the same. They gave up formed talent in an industry where it takes more and more people to make less and less content. That's a foresight issue imo.
Otherwise though, I don't understand some of these takes. Sony is making a fuck to of money. They have exposure that they need to work to correct but the house isn't on fire yet as long as they don't over react.
As someone has already mentioned, it's not that it did "well" in Japan, it's that it did "less bad". If we consider the console sold in the 12-15m range, somewhere between half and a more than a third of that came from Japan, which is a massive proportion relative to elsewhere.
It did form somewhat of a successful ecosystem for software, but only in conjunction with PS3 and PS4.
On your point about handheld-specific games, I'm not sure I quite get that either. Nintendo were very successful in the exact same era that Vita was out, releasing handheld-specific games for the 3DS.
On the broader point of whether streamlined software development for one adaptable platform rather than having two separate lines is sensible, then I don't think many people will disagree that it makes perfect logistical sense.
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It's making a ton of revenue.
That is not an acceptable conversion of revenue to profit. This is why Jim Ryan is "retiring" and Sony Group is sending in the big guns from Japan to be interim head of SIE. Their spending clearly outweighing their profitability is a problem, one that is getting worse instead of better.
Yeah Sony should be making a tonne right now with its market position.
I don't think some people realise Sony are probably going to be happy sacrificing market share for profitability.
I don't think some people realise Sony are probably going to be happy sacrificing market share for profitability.
Well, no surprises here. Profit margins are going to take a hit if you inflate revenue by booking 100% of digital sales. This is why this practice baffles me so much... wouldn't showing high margins be much better than inflating revenue? Or are investors really so dumb as to be fooled by this.It's making a ton of revenue.
That is not an acceptable conversion of revenue to profit. This is why Jim Ryan is "retiring" and Sony Group is sending in the big guns from Japan to be interim head of SIE. Their spending clearly outweighing their profitability is a problem, one that is getting worse instead of better.
I don't think I agree with you here. I don't think Sony have a choice accounting wise. A store on the high Street would do the same.
Revenue is money coming in and the expenses will be the cost of the goods sold. Gross profit is the difference
Considering the cut for Sony is 30% it should have no material impact on their margins. The bigger issue is their own development costs.
I find it odd as well. As a practice, that sort of number should be a footnote. It comes back to bite either directly or down the line when problems come up and actual profit becomes an eyebrow raiser.
It's making a ton of revenue.
That is not an acceptable conversion of revenue to profit. This is why Jim Ryan is "retiring" and Sony Group is sending in the big guns from Japan to be interim head of SIE. Their spending clearly outweighing their profitability is a problem, one that is getting worse instead of better.a
For the 4 years of 2018 April to 2022 March their operating income margin is in double digits and is some of their most profitable. It's only last year where you see costs explode way out of line with revenue dropping the margin. The last 5 fiscal years show margins of:
13.5%
12%
12.9%
12.6%
6.7%
Any of the years prior in that graph show worse ratios than 4 of those 5 even though by logic, the costs would have been much lower. They are in fact making fuckton of money, revenue or otherwise.
I never said that they have no exposure. I said the opposite in fact. I did say, the house is not on fire yet which is true. They have to reign in their costs which is obvious. And given how Sony (and Mircrosoft) count digital revenue compared to Nintendo, they will always have materially worse margins.
And really, whoever they shift into the Jim Ryan role is not going to be able to fix this with hopes and dreams. There are obviously some strategic choice to be made but again, in the last 11 years, they only posted double digit margins in the more recent half. Last FY wasn't good, we'll have to see what this years full results look like but I fundamentally do not get your point. Unless what you mean to say is, at no point since the launch of the PS4 has Sony been doing well, you're conclusion doesn't make sense to me.
How they count revenue will 100% have an effect on their margins. It wouldn't have any effect on their profit take home at the end of the day. But it absolutely changes how their finacial ratios look.
Only becomes an issue if they aren't consistent with how they count it. I dunno if this has always been their practice or if not, when they changed it. But materially, I would assume that Sony would want to book all the revenue flowing through their ecosystem to show investors how much more spend their platform is generating. It also shields them better from from peaks and valleys in the business wildly changing their profitability margins. Basically when they look good they would really look good but when they look bad they'd really look bad. Which if anything would suggest their last fiscal year had some wild expenditures to cut the margin by roughly half.
And since there are only 2 other major console competitors, there isn't any good frame of reference for investors to go "this is a good margin, this is a shit margin" for the industry. Which I mean sucks for us but 100% is what a company would want to hide their performance.
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Yeah cuz Sony was definitely an expertise at making consoles before the PS1 right? U gotta start somewhere, and PCs are less risky, more future-proof. Sony should have planted their seeds with their own PC store before the PS4 era, to expand their business. They should have put effort to smartphones than the PSP or Vita.
No it's not the same with Nintendo, because they did something that was different from a traditional console. So technically, they did abandon consoles after the Gamecube. They're looking for ways to expand the whole indsutry. I personally think Nintendo missed a lot of opportunity from a "business perspective" as well, but that's a topic for another day. Playstations are basically the same thing as a PC in what they do nowadays. I worded it wrong, I'm not saying they should have abandoned consoles, however I think they mixed up the priority. Should have focused on making a decent smartphone device and PC storefront. Although all of this is wisdom of hindsight. Sony used to be one of the biggest company in the world. They definitely could have rivaled Microsoft today with better decisions. Sony might be the biggest value in gaming, but they haven't made much profit from gaming since the PS3. They are successful today, just saying they could have been more successful. Maybe they don't care about financial success as much, that's fine, my opinion.
I've seen multiple people on message boards saying that the low software numbers on PS5 are because people are just playing free PS Plus games instead.
We get some indications of low digital sales from the charts. For example:
1. In the whole of July 2023, the third best selling PS5 game digitally in Japan was Exoprimal
2. The physical sales of Exoprimal were under 7,000 (probably much less)
Which means that, even if we are generous and say Exoprimal sold 6,500 physical copies and had a 75% digital ratio, that means it got to third in the digital rankings by selling 19,500 in a whole month.
The PS5 has pretty good hardware sales, but bad software sales.
The issue isn't the form factor, it's the games.
I would say they absolutely do have a choice since Nintendo do it differently.
If Sony switched to Nintendo's method, their digital games and add-on revenue would probably fall by a half or more, so it would absolutely impact their margin.
Honestly, I don't think that it is this because even in historic down times (like the PS3 years), the Playstation brand was rather strong and maintained popularity. This is different, if I am to make a personal option over it: It feels like the brand of Sony and Playstation, in particular, has been hollowed out in Japan and the rest of Asia.
A majority of that been a lack of focus on the region, not just in games that folks want to buy but also in the development of people to build the games, both in and outside of Sony. That is much more important than it looks, and that takes time.
Looking over those slides, Sony seems to be of the option that this is a short term issue. That with the right bags in the right hands, they can change this.... I am not sold on the idea that money will fix this, it will help but it will not leivate the issues that this lack of focus is causing.
There is little if anything Sony could have done against that, I don't think that matters all that much given how much issues they have in their own house.
While I don't disagree with the general logic here (I've said several times that even if you doubled or tripled the PS5's physical software sales, they would still be historically poor) there is a difference between saying higher digital rates can account for some of these low physical sales versus saying digital has never been in the equation at all.
Which is why if someone wants to definitely say digital was never in consideration at any point, they should be able to list me more than 1 or 2 games. That's not asking for much. That's asking for literally the most basic data possible as opposed to "trust me bro" lol
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Yeah, I’m here to tell you that less than 15% operating income on a near consistent basis ain’t great, it only rises to the level of good at best, but when their revenue-to-profit conversion stayed relatively flat while revenue is climbing, it’s bad news, as it defies the natural expectation; it exposes a highly-inefficient and ossified business strategy. Sony shareholders are happy because it’s better than the dark days of PS3 and because they’re investing in an entire conglomerate rather than just a game company, but a weak revenue-to-profit conversion means one false step and yeah, the house would be on fire at a moment’s notice, but also with little to no time to put it out effectively.
And while I have misgivings on the way Sony and MS report revenue to include 100% of 3rd-party digital sales revenue that they know they’re not entitled to in the first place, it makes the situation look even more actively worse than it should, but I don’t imagine it would invalidate the trend of revenue climbing with profit conversion remaining flat, it’d just make the revenue peak smaller while demonstrating the same trend.
Like, you compare this to another platform holder and it becomes alarming.
| Fiscal year… | Sony G&NS division | Nintendo |
|---|---|---|
| ending Mar 2019 | 13.5% | 20.8% |
| ending Mar 2020 | 12.0% | 26.9% |
| ending Mar 2021 | 12.9% | 36.4% |
| ending Mar 2022 | 12.6% | 35.0% |
| ending Mar 2023 | 6.7% | 32.6% |
This is with next to nil GaaS revenue outside MKTour and FEH. And it’s also while performing their own business expansions. Their spending is just far more efficient than Sony’s is in this business segment. The worst Nintendo has performed in this regard is during FY 03/2017, when OI was ~5% because it was booking a bunch of new hardware expenses with barely any sales for said hardware, on top of just languishing sales of its current platforms at the time. That’s within spitting distance of SIE’s most recent revenue-to-profit conversion rate.
And this consistent problem, with no sign of a turnaround after many years, was certainly enough to spook Sony Group into taking action. Cuz let’s not mistake Jim Ryan’s exit as just some banal retirement, you do not send in the conglomerate president as interim head of SIE for no reason, that is unprecedented, not even Kutaragi’s massive failure warranted such a drastic step (though were Hirai not sitting there waiting for the job, it probably would have happened that way back then, too). It’s not a move done because of potential business risks as you’re suggesting, it’s the move you make when (to extend your metaphor) the house isn’t on fire but your executives are verifiably throwing lit matches at it.
Q&A Q2 2023 :
"Fiscal year 2023 will be the peak of costs related to acquisitions, notably Bungie. We assume these costs
will decrease by approximately 20% in U.S. dollar terms in fiscal 2024 compared to this fiscal year. For the material, we
Consider that this financial year will be the peak of sales volumes, so we expect a decrease in sales promotion expenses
and logistics costs to also generate profits in fiscal 2024".
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Yeah, and they originally forecasted a YoY OI reduction of ¥41b in Apr 2021 for the following FY that was less than half of what the actual YoY reduction was (¥96b), so their bullish forecasting about profitability isn’t really meaning much to me right now. They can say what they like, I’ll believe it when I see it.
This has always been industry dependent.
Grocery chains for example operate with margins between 1-3%. Are grocers gonna stop selling food now?
Automotive producers have margins average around 7.5%. Obviously luxury brands have higher margins but not every brand can just sell luxury cars. Unless again we suggest that every car has to be a high end vehicle now in order for an automaker to have good margins.
Oil and gas margins float anywhere from like 4% to 11% on average.
Saying less than 15% OI is poor is not necessarily accurate. I do not agree with that.
It depends on the industry and what you are selling. It depends on global market conditions. It's like saying that making a product in the US is less efficient than making the same product in Mexico because you can utilize the significantly cheaper labour. The actual output may not be inferior in any way but you just can't compare on wages. But that doesn't mean that an American based company is actual therefore running poorly. It means the price economics don't favour that approach anymore. That's a different issue all together. (This is just an example)
You don't analyze a company's health just based on a profit margin. Not all revenue growth can be sustained on the same cost basis. No one has said that Sony's latest results were great but if you are saying the company is doing poorly and has been during the entire PS4 era, then that suggests a lot of other things are going on in your analysis. Stuff that I don't necessarily agree with.
I don't agree with this. It's a vast simplification but I'm not even going to get into it on this one.
Eh no. This would infact have a very material effect on Sony's profit margins. Not that I think profit margins are the end all be all but you brought them up. There is no way you can seriously argue that Sony, a company that makes most of its game revenue by selling third party titles compared to Nintendo where the bulk of it's revenue comes from selling its own games and hardware, will not have materially different margins when one is booking full price of revenue for digital products while one is only booking royalties. There is 0 way any reasonable person who knows what they are looking at is going to take that seriously. Regardless of whether Sony's cost trend is concerning, if you're going to sit here and tell me less than 15% margin is poor and Sony gaming has not been well run for 11 years, no way you seriously expect me to take that at face value. Cause I don't and I would be exceptionally dumb too.
The way they count revenue is so different I don't see value in comparing margins unless the statements are normalized. I sure as hell am not going to waste time normalizing them because I already know Nintendo is better able to capitalize on lower expenditures. But when you compare company performance you are suppose to normalize all the financials statements. Which is time consuming but if it isn't a like for like comparison, it holds little value. I wont say this is common knowledge but I will say that if you want to jump all the way to Sony hasn't been well run in 3 generations, I'm gonna need more than profit margins that aren't even built on the same basis.
I don't know what to fully read into Jim Ryan's retirement honestly. Some of the moves made were poor imo (though they aren't being felt now, they will probably in 3 or so years) but he wasn't there in the SIE president role long enough for me to attribute much in the way of success or failure. President of SIE has been sorta a revolving door. 2019 to 2024 is basically just the launch of the PS5 under his belt. I don't know if the direction is preferable but nothing has really happened yet outside of the GaaS not really coming to fruition (and we had a global pandemic in there that basically killed 18 months of productivity in the industry.)
We can say they are pushing him out but the direction of the playstation brand in terms of costs doesn't materially change regardless of who is in charge unless we think that someone else would have sooner come to the realization that they need to make more money from cheaper productions (cause you wont make AAA game significantly cheaper just because you change presidents). We're free to speculate on that forever and a day but feels pointless to me.
I would guess that Sony will write down a good chunk of Bungie's book value through impairment since they definitely have less carrying value than they were purchased for given their current woes. And that's going to get expensed when the time comes. This sorta financial statement analysis aint my strong suit though but if you asked me, I would assume they wont realize the cost reductions they are claiming vs everything else. It may go back up in the next FY but I can't see a huge bounce back in double digits.
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At the time there was this tremendous friction between the top development teams at Sony and having to support Playstation handhelds. Many resisted it or pawned off the task on untried teams. It was obviously B-level effort.
This is in stark contrast to Nintendo, who put a lot of effort into their handheld games.
My point was that Playstation Studios may have benefitted the most from streamlined development so that nobody was working on B-tier type stuff. I think that whole perception made Playstation handhelds untenable because nobody from the major Sony studios wanted to support it with top-tier effort.
Part of the failure of Vita was sales, but the main problem, in my opinion, was the fact that it had very little support in the first place. Sony abandoned handhelds not entirely because of sales, but because their dev teams didn't want to work on it. That impression is what led a lot of people to believe Sony didn't want people to buy the Vita.
This mentality is also the basis for why Final Fantasy has been such a staple of Playstation system. Their obvious philosophy is high-end graphics and presentation - meaning they don't want to work on anything less. This makes my previously bold prediction of a numbered FF on Nintendo systems even more bold, but I think if anything FF 7 Remake has saved that fate moreso than FF 16.
My initial thought went to Monster Hunter Wilds, but then I am not sure Worlds sold well in Japan.
Wouldn't that suggest it's the form factor?
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World sold incredibly well in Japan, 3.4m+ between physical and digital across PS4 and PC. It was a decline but not at all the sort of collapse some of us had feared.
No, if it was, sw sales would still be on par with a system that has sold 5million (or whatever the PS5 is at now). But sales aren't bad they're less than WiiU bad, that suggest something we've never seen before.
PSV performed better in Japan than in other markets like the US in which it sold less than the Dreamcast but really even in Japan wasn't much successful.
Total software sales at retail in Japan looks "good" only when compared to low tier consoles like WiiU and Xbox 360 but when compared with the full extent of options released into the market it reveals its inadequacy.
SIE basic problem in Japan is that is going through a hellish scenario in which Nintendo's first-party is stronger than the combined output of third-party publishers and third-party software is selling more on Nintendo platforms anyway despite Nintendo adopting a "first-party driven" business model.
In the past Nintendo might have had exploits in which they've sold tons of first-party software and tons of third-party software however at the same time third-party software held down the PlayStation fort with strong performance.
Total third-party software sales at retail:
NDS: ~80M
PSP: ~70M
WII: ~18M
PS3: ~67M
3DS: ~68M
PSV: ~21M
WIU: ~2M
PS4: ~51M
NSW: ~37M (until end of 2022, still active)
PS5: ~1.5M (until end of 2022, still active)
Nowadays PS5 software sales at retail are horrendous and the first-party share on it is at an all-time high for a PlayStation console (35% as the end of 2022 when historically tended to be lower than 15%).
This is even before Nintendo drops the bomb with the successor that can scoop out the majority of the remaining third-party software that couldn't run/be ported economically on NSW1.
If before the Switch launch third-party publishers were mostly sceptic of its future, for the successor the expectations must be very different because Switch has proven the great viability of the hybrid concept.
The walls of PlayStation fort have already crumbled.
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Saying ”it’s industry dependent” and then listing expectations of industries we were not discussing instead of other companies within this industry is a choice. Especially when a comparison with Nintendo, which operates more similarly to Sony in this business, was provided. But since there’s objection, I could provide others. EA’s last FY shows ~18% OI margin. ABK was 22.6% OI margin on their final independent FY. If I’m reading the financials right, T2 is 14%, the 2nd worst of the Western publishers I’ve seen outside of Ubisoft, which earned zero profit last FY (and I could say a bunch on that, but that’s for another thread), but T2 is also sinking most of their money into GTAVI R&D right now (gotta reinvest in the most anticipated game in the industry, after all) and STILL has better OI margins than Sony. Capcom’s OI margin is absolutely insane, sitting at ~40% for their last full fiscal year for their whole business and over 50% just for their video games business. Koei Tecmo isn’t far behind with ~49% OI margin; even Konami, the company that barely makes games, reported ~25% OI margin for the games segment of their business last year. (This is why there is a fair amount of investment interest in Japanese publishers going on right now, they are largely considered undervalued in spite of this significant profit generation and OI margin). Sony’s OI margin is most akin to Sega’s in the consumer games business right now. I’ll let you draw any conclusions you like from all of that.
Honestly, I do not believe that it makes as much difference as one would think, you’d still likely see a significantly higher percentage out of Nintendo if the numbers were normalized, given the ratio of 1st and 3rd party sales comparatively with SIE.
If only Microsoft (who calculates 3rd-party digital revenue the same as SIE does, last I heard) actually split OI by segment, we could gain a proper comparison with a business in a precisely similar business model as a platform holder, but they obscure that info by bundling Xbox OI in with Windows and other businesses related to the average consumer facing side of their business on their financial statements in terms of reporting their OI margin and only report revenue figures for the individual segments within (and it doesn’t take a genius to figure out why, despite them saying that profit overlaps across segments, it’s all about hiding how much certain segments spend by soaking costs across multiple segments and Xbox is likely wrapped up in that).
And yet, when we look strictly at publisher data provided, less than 15% OI margin is clearly seen as not good overall especially for such a prolonged period, and they are your best point of comparison within the same industry, as they don’t have any revenue-expense fiddle-faddle to deal with.
I don't think people believe that digital has absolutely no part to play at all, but that it has not played a significant role, given that digital ratios are unlikely to have tripled between PS4 and PS5.
World sold fairly similarly to Rise. If PS4 got more games on the level of MH World, its hardware sales would have been better.
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That's true. However, some people believed it without evidence and tried to reverse the order of proof of the question itself (rather than proving their point). See this type of behavior many times in Gematsu. In addition to real market analysis and historical consumption habits demonstrating the dominance of the physical market, without any materialism indicating this transition to digital had not and still has no proof of a great leap and dominance, as some had hoped. Cesa made a rough estimate (pool) posted by the Game Data Library demonstrating digital with 35% for the PS5.
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Rise sold at least 1.5M more than World did and still sells.
While World sold better in Japan than most expected, as already said, Rise is at another level entirely, just by being on a popular platform. And there is literally 1 other third party franchise on the level of MH in Japan and it also had a PS4 release (DQ11) the rest are Nintendo franchises, it was Sony's job to create franchises on the level of MH and DQ in Japan to make it's platform popular, but Sony is not interested.
I think the mistake is trying to apply a number to every game on that platform, the percentages in that poll (also it's a poll not official numbers, so even if the poll is being made on people that might be in the know of some digital percentages, they are still guessing from an unknown sample) take in account new and catalog games, no one can say that most new releases on the Switch are going to have around 23% digital like that poll says when we have examples from Nintendo games where some even go up to 50% digital (helped by vouchers most of the time) and the same could be said about PS releases where some new releases may go higher than the 35% and some may go below that, the truth is that we don't really know.
To be fair World is still selling too but yeah the difference is getting bigger not smaller.
It seems like PC gaming has grown quite a bit in Japan recently. Could it actually replace PlayStation's market position over there?
I mean what are defining as a replacement at this current time.
In the short term, taking a noticeable chunk of PS' current marketshare. Long term would be the number of Japanese Steam users exceeding 15 M, so in the neighborhood of what PS consoles used to sell when they were more mainstream platforms over there.
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I think to achieve either the short or long term:
- PS software sales either stay the same or worsen over a few generations
- JP Steam needs all big games to hit day & day, or at least closer than they are
I think you're going to see that over the next few years, given what we've been hearing from companies like Capcom over the last few months.
Given that the difference is between the PlayStation platform and a Personal Computer are pretty much nonexistent, it does beg the question of when the inflection point is coming.
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Of course Sony is interested, it's just unable to do it.
Cranking up production values to make movie-like games won't net you sales of 3-4 million in Japan...
We have the total shipments from Nintendo and physical sales from Media Create, so it will be interesting if the Switch % is accurate.
I'm sure Sony would love to have more franchises on that level (and they will be pleased Tsushima's success), but doing so is incredibly incredibly difficult.
Pretty relevant article and a serious one that we don’t usually see on the state of the video game market in Japan. Of course it doesn’t really dive into too much on PlayStation five has had minimal software sales as it’s mostly surface level but one that I found relevant.
www.vgc.news
Nintendo has now dominated Japan game sales for 19 consecutive years | VGC
Switch led software and hardware sales comfortably in…
www.vgc.news
As we have been discussing here, Sony has made it's bed with this part of the market.... It's going to lay in it. The only constructive way that I see out of it is if Sony is will to build and rebuild it's ecosystem and, more importantly, it's developer supports.
It's been clear by the latest reports that Sony doesn't think that it needs to do so.
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Resident Evil is another game. You need to prove your allegation and have none. The belief in digital expressive growth( or digital dominance) in the Japanese market doesn´t have a touch with the reality market. Any proof of this, where is the proof at that time?
A change in this scope needs to be proven. Not the market slow digital adoption and increase in the Japanese market.
From what I have been looking at, it is a question of how bad the damage is. If you ask me, it puts the PS6 in question because if dev's don't see a business case in the platform.... they will avoid it, they will not invest in it.
I don't think that it will get this dire but there is a chance it will. That is not an easy issue to fix, and requires that every penny spent is effectively used. The Switch's was paved with the WiiU's failure, Sony should not expect any different.
Don't that Insomniac leak does show that digital split for PS5 is nothing special worldwide. Considering how low digital adoption in Japan is, it will not be surprising if digital for PS5 in Japan is lower than many expectation.
30% is going to be utmost highest there unless there is outside factor like special discount on launch or shortages hit.
Eh, maybe you forgot what the actual point of contention was given it's been 3 weeks but I never claimed anything outside of saying we haven't had solid digital to make the claim it played no factor. You did lol. You said it was never a consideration since we had key titles.
I asked you for the key titles and you provided me 1 unsourced title and are expecting that to be sufficient? Like I said, if we have had key titles tell us this info that you can so definitively say digital was "never" a consideration, you should be able to name more than 1 or 2 and actually be able to source them. Saying Resident Evil is another game isn't helpful. You know how many fucking Resident Evil games there are lol?
You're the one that needs to prove the claim. I didn't make any grand statements, you did. 1 or 2 titles an analysis does not make.
I'm sorry if I lost pieces of this discussion, but I think that nowadays we have many digital info on a variety of games (Resident Evil 8, Falcom games, all Sony's first party games leaked by Insomniac, other surely I'm forgetting right now) to understand that the digital ratio is overall good, higher than the average Switch one, but in the same ballpark of Switch 1st party games with vouchers in Japan?
Yes you have lost pieces of the discussion but even ignoring that, the Insoniac leak had been out for 3 days at the time of that post and the first party digital splits hadn't even been posted. But Resident Evil 8 and some Falcolm games can't seriously describe digital adoptiom broadly over 3ish years in a market of hundreds of games. To say digital never had "any" consideration, yes I'm going to need more than like 1 or 2 point in time examples.