Xbox + Microsoft FY24 Q3 Results: Total Gaming +51%, Content and Services +62%, Hardware -31% (next quarter guidance in OP)

[Welfare]

PS4 Sell-in for Q1 CY 2022 was only 100k and for Q2 CY 2022 it was litterally 0.

Then After June 2022, Sony stop updating PS4 sales.

Business Data & Sales

Sony Interactive Entertainment offers its business and sales information for those seeking to understand our sales wins.

sonyinteractive.com

I didn't actually have that Q1 2022 in the spreadsheets, thanks. I can put PS4 shipments as 0 for Q2 and Q3 2022 but starting with Q4 2022 they do begin shipping PS4's again at least. That's when they released the MW2 Bundle and some more standard SKU.

 

[GodlyTrident]

I was talking about a potential Switch 1 port if it were to happen, re: a switch 2 port yeah I agree with everything you said.

I do not expect it to come to Switch 1 at all. Though at this point it is hard to tell when the first COD is gaming to Switch 2 anyway.

They already committed to every Xbox first party game being Day 1 on Game Pass back in the February podcast.

Considering the amount of money COD brings from MTX, I think even launching it in Game Pass won't change the calculations much as people might subscribe to GP or spend money on MTX in COD in comparison to just buying a game

 

[allan-bh]

I’ve been waiting to see if they’re actually going to do this also. It’s like a game of chicken at this point. Putting new COD into gamepass seems like a very short-sighted idea that will end very badly for them which is why we still haven’t heard anything concrete about it.

I feel like it would be very hard to even blame them for not doing it. There is no way when they announced gamepass they ever thought COD would be something that would need to go into the service day one nor did they probably expect sub services to plateau like they have so quickly.

It seems Microsoft can't put CoD day one on gamepass until 2025 based on info from CMA, so Black Ops Gulf War will not be there on launch anyway.

 

[JMECH2000]

With gamepass not being able to grow will they just milk the remaining user base and increase the price of the service all the time? Because that seems to be the only revenue growth for gamepass as long as their consoles are declining.

This ignores PC (established market) and cloud (far more dubious). Not to mention geographic expansion as I imagine there's been little penetration into even the Chinese PC market.

 

[allan-bh]

PC potentially can be a big factor for growth of gamepass, but Microsoft needs first to address the terrible reputation of Xbox app on Windows.

Another venue for growth is mobile when they launch their store.

On Xbox console I think it's close to the roof unless somehow they manage to increase substantially their base, something unlikely. A more robust first party line up (including CoD) can help but not that much.

 

[JMECH2000]

PC potentially can be a big factor for growth of gamepass, but Microsoft needs first to address the terrible reputation of Xbox app on Windows.

Another venue for growth is mobile when they launch their store.

On Xbox console I think it's kinda on the roof since it's unlikely they have another Xbox 360 moment.

Yes, to be clear, all of these avenues require good execution. But the point I am making is that there are avenues for growth.

I also missed mobile PC / handheld. Could be an avenue to go beyond the current userbase. (Not saying it will take all the Switch 2 folks at all, but it would be more possible to get a few new folks)

 

[GodlyTrident]

On Xbox console I think it's close to the roof unless somehow they manage to increase substantially their base, something unlikely. A more robust first party line up (including CoD) can help but not that much.

Console market is capped at this point. I would not be surprised that even Switch 2 will be basically be "Switch 1 people are buying Switch 2". So it should sell fast and reach the peak faster but the final mileage won't be that different - either smaller or the same. After all even Switch 1 did not reach DS numbers and probably won't. And it was in the era when Nintendo had other consoles too.

 

[Jin+Jang]

Down 4% isn't too bad if Playstation and Nintendo are also down. Let's wait and see.

It is. Sony and Nintendo console sales are way higher. Nintendo selling NSW more than XSeries in this stage of lifecycle utter catastrophe for Xbox

 

[JMECH2000]

It is. Sony and Nintendo console sales are way higher. Nintendo selling NSW more than XSeries in this stage of lifecycle utter catastrophe for Xbox

....or it indicates the Switch managed to capture users who were never going to buy a PS5 or an Xbox Series.

 

[enpleinjour]

Why would console subsidies "wipe out" ABK profits? Xbox was profitable before ABK. ABK only makes it more profitable since it has higher margins.

This quarter hardware revenue was -31% and yet content & services revenue was +1% without ABK. Not sure where you get your numbers from.

No one knows how Phil Spencer accounts for profit.

We're talking about the scenario were Xbox console sales have collapsed causing sub and 1st/3rd P software revenue on Xbox to also collapse hence the hardware subsidy and GP budget can no longer be held up by Xbox and will eat in ABK's already declining profits.

Xbox profits prior collapse were single digit margin per Phil
Xbox hardware subsidy was $2B iirc
Xbox GP budget is $1B

At such a point MSFT may rather axe console hardware, instead of continuing to sell low amounts and bring down ABKs margin.

What would be a healthy margin? And didn't you just claim 90% of their software and subs are on console, yet you argue they need to leave the console market?

Considering how the CFO was talking about WoW subs and ABK being high margin, likely 20-30%.

What don't you get? Xbox is a very low margin business, with half the revenue of its direct competitor and declining. MSFT's dilemma is that its console audience that pays for 90% of its sub and 3rd P ecosystem revenue is leaving to PS/PC/NSW.

So they have to make a choice:
- become high margin, by leaving the console hardware space, but consequently massively reduce GP's viability and destroy revenue
- continue years with far lower margins, perhaps slightly higher profit at the beginning but also risk Xbox console hardware ultimately leaving the market anyway.

This doesn't explain how you arrived at $0.32B. Could you provide a calculation like I did for mine above?

1.97 - (1.65) = 0.32

 

[PatrickStarBox]

Not surprised by the (bad) hardware results.
Hope Microsoft don't give up like Windows Phone and continue to support the console part of Xbox ecosystem.

 

[Liha]

It is. Sony and Nintendo console sales are way higher. Nintendo selling NSW more than XSeries in this stage of lifecycle utter catastrophe for Xbox

Switch is the ideal gaming console for children under 14. It cheaper, hosts all major third-party games aimed at younger players like Fortnite and Minecraft. In contrast, first-party games from Sony and Microsoft, such as Gears of War, The Last of Us, and God of War, are generally targeted at adult players. The price for 1st party games is also significantly higher than at Nintendo.

 

[reksveks]

I’ll believe it when i see it, this is a company that doesnt stick on their plans time and time again

Fortunately we will probably know in 6 weeks what the plan is.

 

[Copilot]

It is. Sony and Nintendo console sales are way higher. Nintendo selling NSW more than XSeries in this stage of lifecycle utter catastrophe for Xbox

I'm talking about the Xbox division, not consoles. Xbox being down only 4% when almost eveyone in the gaming industry will fall way bigger this quarter is not a bad thing.

 

[Bernd Lauert]

No one knows how Phil Spencer accounts for profit.

Just say that you think he's lying, that would be more honest

We're talking about the scenario were Xbox console sales have collapsed causing sub and 1st/3rd P software revenue on Xbox to also collapse hence the hardware subsidy and GP budget can no longer be held up by Xbox and will eat in ABK's already declining profits.

Is this some future scenario/prediction/hope of yours? Because this hasn't happened.

Xbox profits prior collapse were single digit margin per Phil
Xbox hardware subsidy was $2B iirc
Xbox GP budget is $1B

At such a point MSFT may rather axe console hardware, instead of continuing to sell low amounts and bring down ABKs margin.

Again, how are (shrinking) hardware subsidies bringing down ABKs margin? It doesn't make any sense.

Xbox is a very low margin business, with half the revenue of its direct competitor and declining.

What's the profit margin of that direct competitor, again? Would you say it's healthy?

So they have to make a choice:
- become high margin, by leaving the console hardware space, but consequently massively reduce GP's viability and destroy revenue
- continue years with far lower margins, perhaps slightly higher profit at the beginning but also risk Xbox console hardware ultimately leaving the market anyway.

What do you mean by "continue years with far lower margins"? Where do these lower margins come from, exactly?

1.97 - (1.65) = 0.32

This doesn't account for all acquisition related costs. The correct number is $0.59B which is in line with the profit margins of the Q3's of previous years. The profit margin magically halving doesn't seem plausible.

 

[Jin+Jang]

I'm talking about the Xbox division, not consoles. Xbox being down only 4% when almost eveyone in the gaming industry will fall way bigger this quarter is not a bad thing.

Xbox wouldn't go 3rd party it is not a bad thing for them. As Satya literally confirmed yesterday they will bring more games to other platforms

Switch is the ideal gaming console for children under 14. It cheaper, hosts all major third-party games aimed at younger players like Fortnite and Minecraft. In contrast, first-party games from Sony and Microsoft, such as Gears of War, The Last of Us, and God of War, are generally targeted at adult players. The price for 1st party games is also significantly higher than at Nintendo.

Short term yes, long term aren't. Zelda BOTW is still a full priced game after so many years. Alongside with other Nintendo games

 

[Copilot]

Xbox wouldn't go 3rd party it is not a bad thing for them. As Satya literally confirmed yesterday they will bring more games to other platforms

Playstation is also bringing their games to other platforms. That's a industry trend.

 

[Koti]

I've been saying for a long time, that both Sony and Microsoft should have moved away from consoles. Especially Microsoft, it never made sense why they keep making hardware when they haven't won a single time. They have Windows, literally the monopoly of the operating system for gaming PCs. It should be easy to make their storefront like Steam and promote it to all Windows users. Easy money for them, blows my mind why they haven't done that. Nintendo is the only one that understands the console business. It needs to be affordable, provide something unique, have good exclusive games, and not subsidize. Hardware business is super risky, Microsoft may not make as much revenue, but their profit would rise significantly if they abandon consoles.

 

[Celine]

After all even Switch 1 did not reach DS numbers and probably won't.

Switch 1 is likely going to surpass the DS number.

 

[AViewtifulMind]

Switch 1 is likely going to surpass the DS number.

I don't see how it won't with its current momentum. We are ten days away from Nintendo's next fiscal report when they'll confirm that Switch has passed the 141 million mark in LTD shipments after a fiscal year performance of approximately 15.5m. Even with the expectation of a significant decline in the ballpark of 30-35% for the fiscal year ending March 2025, that's still another 10m year, putting Switch just 3m shy of the DS by then.

 

[Rotimiade]

Right now Xbox is in a tight spot. We don’t know the profits that’s the major problem.

Hardware doesn’t sell then gamepass can’t grow significantly. PC is not doing the expected numbers. Meaning gamepass may not cover all their spending.
Low hardware sales means lower third party revenues. If this trend continues into the next hardware I feel third party support would take a hit
The more they release software on other platforms the more the Series console lose value.

I believe they should release new hardware as soon as possible. Deliver on their promise to make great games at a sensible release cadence. Then hopefully cloud usage would take off. Then they would be in good position.

But I don’t trust Microsoft and Phil. I have been philnessed enough. The disruptions haven’t worked and keep breaking promises. Less talk more actions. They also have problems sticking to plans and don’t inspire a lot of confidence

 

[My Tulpa]

While revenue dropped by just 7,16%, unit sales definitely dropped by a fair bit more compared to the corresponding quarter for Xbox One due to the different price points. As a reference, here's the pricing history for Xbox One in the period between January and March 2017 in the US, courtesy of @Welfare

NPD (Circana) 2017 Full Year Results: Discussion Thread

NPD Archives Dates in Tracking: January 01, 2017 - December 30, 2017 [52 Weeks] Hardware Month3DSPS4Xbox OneSwitch January71,000211,000158,000- February125,000398,000215,000- March111,000397,000244,000911,000 April68,000206,000110,000281,000 May59,000187,000109,000165,000...

www.installbaseforum.com

Prices at the start of the year
[XB1] $349 S Model 1TB
[XB1] $299 S Model 500GB
[PS4] $399 Pro Model 1TB
[PS4] $299 Slim Model 500GB

[3DS] $199 New 3DS XL Model
[3DS] $199 New 3DS Model
[3DS] $79 2DS Model

----

[#2] February - 4 Weeks
[XB1] [Week 1] $349 S Model Forza Horizon 3 1TB Bundle
[XB1] [Week 2] $299 S Model Forza Horizon 3 500GB Bundle
[XB1] [Week 3] $349 S Model Halo Wars 2: Ultimate Edition 1TB Bundle
[XB1] [Week 3] + [Week 4] Temporary Price Drop: $349 S Model 1TB > $299 (February 12 - February 25)
[XB1] [Week 3] + [Week 4] Temporary Price Drop: $299 S Model 500GB > $249 (February 12 - February 25)

[#3] March - 5 Weeks

[XB1] [Week 3] Temporary Price Drop: $299 S Model Minecraft 500GB Bundle > $249 (March 12 - March 18)
[XB1] [Week 5] Price Drop: $299 S Model Minecraft 500GB Bundle > $249

Just wanted to point out that the OG Xbox was also still selling early 2017. For around $229 I think? That list only lists the slim models.

Hardware will continue to decline rapidly in the coming quarters. Interest in the Xbox brand is at an all time low

I’m pretty sure ps5 hardware will continue to decline in the coming quarters as well.

 

[Welfare]

Just wanted to point out that the OG Xbox was also still selling early 2017. For around $229 I think? That list only lists the slim models.

In the US (and worldwide probably) the original Xbox One was not selling anything after 2016.

 

[My Tulpa]

It will be interesting to see how ABK will be transformative to Xbox's business.

They still havn't leveraged these IPs in a meaningful way.

Hardware is the concerning figure once again.

Sorry, im gonna use this post which is a general sentiment here, not directed at you specifically…

Why is it concerning?

Xbox has been positioned as hardware agnostic gaming service platform. It’s advertised to Xbox game everywhere/anywhere (the only place restricted for the most part are PlayStation and Nintendo machines)

Traditional home gaming consoles are a dying medium anyway. It’s really not “concerning” for Xbox because they are already pivoting.

In the US (and worldwide probably) the original Xbox One was not selling anything after 2016.

Xbox announced a $50 price cut in Feb 2017 for Xbox One and Xbox One S. So it must have been selling somewhere. And they advertised it as a “tax season” celebration event so I assumed it was a US thing.

 

[Jin+Jang]

Playstation is also bringing their games to other platforms. That's a industry trend.

Not nearly in the same way as Xbox. Especially Nintendo, so, it is not an industry trend. I guess it must pushed by Xbox community "Sony too" and "Nintendo too" narrative because Xbox is going 3rd party.

 

[Welfare]

Xbox announced a $50 price cut in Feb 2017 for Xbox One and Xbox One S. So it must have been selling somewhere. And they advertised it as a “tax season” celebration event so I assumed it was a US thing.

The amount of units of the original Xbox One was near zero after 2016. The price promo in February was mainly a One S deal, with any left over stock of the original also being included.

 

[Jin+Jang]

Traditional home gaming consoles are a dying medium anyway. It’s really not “concerning” for Xbox because they are already pivoting.

How so if PS5 is still selling well and Nintendo Switch which sold tremendously good? Doesn't mean consoles are dying if Xbox console is on life support.

 

[master94ga]

How so if PS5 is still selling well and Nintendo Switch which sold tremendously good? Doesn't mean consoles are dying if Xbox console is on life support.

Gaming has grown enormously in the last 20 years while console sales has been the same.

 

[Jin+Jang]

Gaming has grown enormously in the last 20 years while console sales has been the same.

Gaming can grow even if consoles has been the same. Software sales grew enormously on consoles and playtime

 

[My Tulpa]

The amount of units of the original Xbox One was near zero after 2016. The price promo in February was mainly a One S deal, with any left over stock of the original also being included.

Never meant to imply it was a lot, just saying they were still selling and it technically added to the revenue Jan-March 2017. (No longer being produced, but still selling unsold stock)

Microsoft officially stopped selling OG Xbox One in August 2017.

Microsoft no longer sells the original Xbox One

Xbox Gone

www.techradar.com

How so if PS5 is still selling well and Nintendo Switch which sold tremendously good? Doesn't mean consoles are dying if Xbox console is on life support.

Switch isn’t a traditional, primarily 3rd party gaming console. It’s its own thing. Nintendo software and hardware are symbiotic creatures. They both sell each other.

People are interested in 3rd Party home consoles less and less. It’s a contracting market, it’s absolutely not growing. Kids are less and less interested in the CD player version of gaming. Sony and Microsoft have been combating this fact by upselling more to the same dwindling user-base. They have little interest in trying to grow the console owning userbase. They have accepted its eventual fate in videogaming marketplace.

Sure, ps4 technically sold more units than the ps3…but were it not for much less competition from Xbox and the selling more models that gen to the remaining userbase…this would not be so. The userbase didn’t grow, they just shifted and paid more. There was no home console growth in the ps4/one era. There is none in the ps5/xbox Series era. They both even launched with 2 different models day one! Didn’t provide growth. Ps5 pro isn’t going to reverse this.

Sony has been pretty candid this year about how this hardware business is unsustainable going forward. Ps5 sales are a danger sign for them right now. Success isn’t dictated by raw unit sales numbers of console hardware. It’s a losing proposition going forward. They both have to diversify and pivot toward being hardware agnostic gaming service platforms/storefronts.

 

[Copilot]

Not nearly in the same way as Xbox. Especially Nintendo, so, it is not an industry trend. I guess it must pushed by Xbox community "Sony too" and "Nintendo too" narrative because Xbox is going 3rd party.

If 2 out 3 consoles makers are doing, yes, it's an industry trend. No one is pushing any narrative here. Almost everyone should post decline in revenue this quarter, Sony, Nintendo, Namco, Capcom, Square, T2, EA.

Xbox division, without ABK, should be 4% down. Let's wait and see the others, if their revenue declines will be bigger or not.

 

[Avitsky]

If 2 out 3 consoles makers are doing, yes, it's an industry trend. No one is pushing any narrative here. Almost everyone should post decline in revenue this quarter, Sony, Nintendo, Namco, Capcom, Square, T2, EA.

Xbox division, without ABK, should be 4% down. Let's wait and see the others, if their revenue declines will be bigger or not.

Sony will never do it because Xbox is a competitor that hunts in the same regions, so they will continue with temporary or non-temporary exclusives to be the number 1 platform for AAA third parties.

PC and mobile have a less fortunate audience compared to console gamers, so they are not direct competitors.

Nintendo is also targeting a different audience with many female players compared to other consoles.

In the end, Xbox is the only one that hasn't differentiated itself from PlayStation, it can only end badly.

Making Xbox games cross-platform can be beneficial on big games but not on small games.

Releasing the next Fallout multiplatform DAY ONE can create big hype and sell in regions where Xbox is weak, notably Europe and Asia.

 

[My Tulpa]

Switch is the ideal gaming console for children under 14. It cheaper, hosts all major third-party games aimed at younger players like Fortnite and Minecraft.

Eh…kids are mostly playing Fortnite and Minecraft on iPads, phones and PC. Not consoles, not the Switch.

All the influencers for kids and videogaming are pc gamers. (Trust me, i know, I watch everything my 8 year old son watches)

Switch appeals mostly to adults.

In contrast, first-party games from Sony and Microsoft, such as Gears of War, The Last of Us, and God of War, are generally targeted at adult players. The price for 1st party games is also significantly higher than at Nintendo.

You can get Sony and Microsoft games much cheaper than Nintendo 1st party about a month after launch. This isn’t a big factor for the mass consumer console gamer.

Not nearly in the same way as Xbox. Especially Nintendo, so, it is not an industry trend. I guess it must pushed by Xbox community "Sony too" and "Nintendo too" narrative because Xbox is going 3rd party.

Xbox isn’t going 3rd party.

Just like Disney wasn’t considered to be a future 3rd party distributor in 2017 just because their IP was on Netflix.

In other words, the way video games are distributed and the role a home console plays in that is still in flux. Xbox and PlayStation are currently doing the cable box/dvd player dance right now as they also start to slowly samba off this mortal coil.

As for the other part, Sony will eventually follow what Xbox is doing. They are just dragging their feet about it and prolonging the inevitable. They actually are more flatfooted than Microsoft in terms of looking forward and diversifying for the future.

Nintendo…don’t even need to include them here. They operate on a different planet because no one competes with them as a software publisher and they are the only console maker whose primary appeal is the 1st party videogame support. They are currently immune from the challenges the PlayStation and Xbox face.

 

[Jin+Jang]

Xbox isn’t going 3rd party.

Just like Disney wasn’t considered to be a future 3rd party distributor in 2017 just because their IP was on Netflix.

It does. Satya just confirmed that yesterday. More games will come to other platforms.

As for the other part, Sony will eventually follow what Xbox is doing.

They won't. PS is a core product to Sony. Xbox to MS isn't and we see the results. 4 games are just the beginning.

Post automatically merged: Apr 27, 2024

If 2 out 3 consoles makers are doing, yes, it's an industry trend. No one is pushing any narrative here. Almost everyone should post decline in revenue this quarter, Sony, Nintendo, Namco, Capcom, Square, T2, EA.

Xbox division, without ABK, should be 4% down. Let's wait and see the others, if their revenue declines will be bigger or not.

Looks like you haven't paid an attention or you ignoring what i've said

Not nearly in the same way as Xbox. Especially Nintendo, so, it is not an industry trend.

PS announced PC initiative 4 years ago with GAAS games day 1 and SP games in year or two later on PC. That's not the same as Xbox in any way.

Xbox will publish more and more games on PS and Nintendo consoles, not PS and Nintendo on Xbox.

 

[CaptainCrunch]

You can get Sony and Microsoft games much cheaper than Nintendo 1st party about a month after launch. This isn’t a big factor for the mass consumer console gamer.

That's simply not true since 2020.

 

[fiendcode]

The goal needs to be multiplatform Gamepass, however they can manage it.

 

[Copilot]

It does. Satya just confirmed that yesterday. More games will come to other platforms.



They won't. PS is a core product to Sony. Xbox to MS isn't and we see the results. 4 games are just the beginning.

Post automatically merged: Apr 27, 2024

Looks like you haven't paid an attention or you ignoring what i've said

Not nearly in the same way as Xbox. Especially Nintendo, so, it is not an industry trend.

PS announced PC initiative 4 years ago with GAAS games day 1 and SP games in year or two later on PC. That's not the same as Xbox in any way.

Xbox will publish more and more games on PS and Nintendo consoles, not PS and Nintendo on Xbox.

Both are launching games on other platforms, it's exactly the same thing. Xbox launch more games because they are bigger.

 

[Jin+Jang]

Both are launching games on other platforms, it's exactly the same thing. Xbox launch more games because they are bigger.

Numbers of games isn't and situation is different between the two. So, it is not the same. MLB is not published by Sony on Xbox and Marathon is multiplatform because Bungie wants it. Xbox games are published by MS corp on PS and Nintendo because catastrophic Xbox console sales and long stagnancy of Gamepass. Also, MS wants return of investment of 80 billion $ which they've spent for Xbox

 

[HFbob]

That's simply not true since 2020.

We know the average sales price of Nintendo games has been significantly higher than for Sony/MS games up until the end of the PS4 cycle. They hold their value far longer. Do you have any data showing this is no longer true?

Edit
Sorry, I should have quoted @Liha for this post. Sony and MS games average selling price is not higher, much less significantly so, than Nintendo's. Their ability to hold their price is obviously the greatest of the three.

 

[fiendcode]

Microsoft Gaming normalized PC multiplatform, now they're moving towards the same thing with Console multiplatform. In both cases they're definitely the trailblazer here. Their PC support is line wide and without conditions now while Console still has some guard rails in place (only COD and Minecraft day/date, select focus on service games and new IP for later ports) but we'll probably see a continual relaxing of this as we move forward. More acquisitions (and worse hardware/subscriber figures) will probably hasten this process.

SIE is moving ahead with continued PC support but with conditions outside service games (year+ later for non-service AAA). They do have Console multi too but under more strict conditions and only with certain agreements in place (Bungie games, MLB). SIE is definitely more guarded than MSG in both areas and I think they'll be slower to relax, but they're also exploring new opportunities driven by their fast vanishing margins. After all, they've already told most governments globally they don't consider at least Nintendo a direct competitor here, like MS don't expect current lines in the sand to be permanent.

Speaking of Nintendo, they're the actual odd one out by retaining true full console exclusivity and completely incomparable to both MSG and SIE. If we're going to group companies then it's going to be the latter two on one side and Nintendo on the other. The rationale here is two part; first Nintendo software is the primary driver for Nintendo's hardware and ecosystem (which is unlike PS and at least pre-COD Xbox) and second Nintendo has very healthy margins per title and isn't being cornered into seeking out additional revenue sources to keep their R&D going. Nintendo's the only one still operating on the classic, single console model and their lone 3rd party exploration (bespoke mobile, no multiplatform) feels like it's already been sunset given their last new release was 5 years ago.

 

[Avitsky]

We know the average sales price of Nintendo games has been significantly higher than for Sony/MS games up until the end of the PS4 cycle. They hold their value far longer. Do you have any data showing this is no longer true?

Edit
Sorry, I should have quoted @Liha for this post. Sony and MS games average selling price is not higher, much less significantly so, than Nintendo's. Their ability to hold their price is obviously the greatest of the three.

Average price increased for several reasons:

- Rise of digital
- A better start
- Price $70
- Almost non-existent drop
- Popularity of the license (a new IP is risky)


Indeed, launching a new IP like Horizon will attract fewer buyers at launch than its sequel...which means that Horizon zero dawn must lower the price to make itself known, which ultimately brings in less than its sequel at equal volume.

 

[fiendcode]

SIE has made a concerted effort with PS5 to hold ASPs. I suspect it's both to help begin conditioning the audience to buy in sooner at full price after really establishing so many major series on PS4 (TLOU, Horizon, Spider-Man, Tsushima, Death Stranding, etc) but also to retain value on software for when it's integrated into their subscription service and help funnel more budget conscious consumers into that (recurring revenue rather than sale shopping).

 

[chroeser]

SIE has made a concerted effort with PS5 to hold ASPs. I suspect it's both to help begin conditioning the audience to buy in sooner at full price after really establishing so many major series on PS4 (TLOU, Horizon, Spider-Man, Tsushima, Death Stranding, etc) but also to retain value on software for when it's integrated into their subscription service and help funnel more budget conscious consumers into that (recurring revenue rather than sale shopping).

And it works in my opinion. Prior to PS4 and in the beginning of that gen I mostly bought SIE games in the summer or winter at a discount, because my day one budget goes mostly to Japanese games. But nowadays they have some series I buy immediately because waiting 3-6 months as I did in the past won’t be rewarded anymore.

 

[JMECH2000]

A couple of points.

PC certainly has some lower end appeal than a fixed console platform, but there are certainly just as many if not more very engaged "hardcore" gamers with high-end rigs and hardware. Look at how many content creators even if they are "console fans" just play everything on PC now.

I also would note: Nintendo isn't in a perfect spot. Software didn't save the Wii U nor the 3DS-before-pricecut launch. A compelling new piece of hardware at an affordable price point *with* software people wanted is what saved them (plus cannibalizing their 2 platforms into 1).

Nintendo has a great opportunity because that hardware has let them capture and bring in new players -- but the key question will be, do they have back compat to keep that audience locked in? Or do they break people's digital libraries and open themselves up to the risk of a huge falloff?

I think it's pretty clear that all console manufacturers are nervous about the state of the industry and the relative stagnation of their platforms. As analysts have said, everyone is having multiplat conversations and layoffs.

In some ways, Xbox is the best positioned because they now have bought some of the stablest, highest player time franchises on the planet rather than having to create new ones from scratch (and people forget Bethesda has their own two stable MMOs). And are taking portions of their existing "exclusive" live games to new platforms for further growth.

 

[Garlic]

They have Windows, literally the monopoly of the operating system for gaming PCs. It should be easy to make their storefront like Steam and promote it to all Windows users.

That's the indication that first, maybe it's not so easy, and two, even if they vastly improved, Steam is the PC monopoly that already exists. There's zero chance MS becomes the dominant force in the space as long as Valve stands in their way.

 

[JMECH2000]

That's the indication that first, maybe it's not so easy, and two, even if they vastly improved, Steam is the PC monopoly that already exists. There's zero chance MS becomes the dominant force in the space as long as Valve stands in their way.

Yeah and also if MS acts as a monopoly, they will be extremely regulated quickly.

It's about if they can get more crumbs off Valves plate for foreseeable future.

 

[Koti]

That's the indication that first, maybe it's not so easy, and two, even if they vastly improved, Steam is the PC monopoly that already exists. There's zero chance MS becomes the dominant force in the space as long as Valve stands in their way.

Just like there's zero chance MS becomes the dominant force in the console space as long as Sony and Nintendo stand in their way. PC is literally Microsoft's main platform, there's a much better chance for them on PC than console. It's one thing if their console is doing well, but imo the Xbox hardware is actually holding them back. Consoles require huge R&D costs, and it's a known fact that Xbox is sold at a loss. Then why not use those resources for PC instead where they excel at. I feel like they are finally starting to realize that as well. Time will tell

 

[AViewtifulMind]

A couple of points.

PC certainly has some lower end appeal than a fixed console platform, but there are certainly just as many if not more very engaged "hardcore" gamers with high-end rigs and hardware. Look at how many content creators even if they are "console fans" just play everything on PC now.

I also would note: Nintendo isn't in a perfect spot. Software didn't save the Wii U nor the 3DS-before-pricecut launch. A compelling new piece of hardware at an affordable price point *with* software people wanted is what saved them (plus cannibalizing their 2 platforms into 1).

Nintendo has a great opportunity because that hardware has let them capture and bring in new players -- but the key question will be, do they have back compat to keep that audience locked in? Or do they break people's digital libraries and open themselves up to the risk of a huge falloff?

I think it's pretty clear that all console manufacturers are nervous about the state of the industry and the relative stagnation of their platforms. As analysts have said, everyone is having multiplat conversations and layoffs.

In some ways, Xbox is the best positioned because they now have bought some of the stablest, highest player time franchises on the planet rather than having to create new ones from scratch (and people forget Bethesda has their own two stable MMOs). And are taking portions of their existing "exclusive" live games to new platforms for further growth.

That's a weird take. You make up problems for Nintendo to arrive at the conclusion that everyone is having multiplat conversations and layoffs when neither of these things aren't happening at Nintendo. And even more puzzling, you suggest that Xbox is in a good position when they've set themselves on a path where they'll cease to be a console manufacturer.

 

[UpandAway]

Not nearly in the same way as Xbox. Especially Nintendo, so, it is not an industry trend. I guess it must pushed by Xbox community "Sony too" and "Nintendo too" narrative because Xbox is going 3rd party.

I'm still waiting for those day 1, first party Plus games Sony was going to be forced to do in order to compete with Game Pass lol.

But yeah, each of the three gaming companies share similarities but they also have unique situations. It doesn't make much sense to try and conflate them all.

 

[JMECH2000]

That's a weird take. You make up problems for Nintendo to arrive at the conclusion that everyone is having multiplat conversations and layoffs when neither of these things aren't happening at Nintendo. And even more puzzling, you suggest that Xbox is in a good position when they've set themselves on a path where they'll cease to be a console manufacturer.

The problems for Nintendo I cited were historical fact and a little bit of forecasting for the future. The point is -- software alone hasn't been the answer for a very long time (in my opinion of course, but backed by those examples).

I apologize for being unclear -- the multiplat conversations may not be at Nintendo, my point is that they are occurring (even publicly at Sony) at nearly everyone in the industry. Layoffs too seem to be limited at Nintendo (tho they did cut 100 contractors recently).

Finally, my point about Xbox's standings is not about hardware sales. Those aren't great, clearly. My point was: they have a wide and diverse set of revenue streams including some of the best live service games / franchises that are dominating playtime and play dollars on every platform (PC, mobile, and console). They have already been pushing to grow beyond hardware and these results show the benefits of that strategy. Instead of making 1-2 bets a year (does Starfield hit? does Sea of Thieves hit?), they are making dozens of bets (does WoW continue its resurgence? does Diablo 4 turn around the seasonal model? does Sea of Thieves grow on PS5 and sell a bunch of skins? does the Fallout TV show blow up? does having a mobile store work if you give 10% off every King and NetEase game?).

And that's why they are to some degree ahead of a company that has to have their hardware and software and ecosystem make the generational leap successfully. Or a company that has only 2 live service games -- 1 of which is in a really rough spot with major revenue shortfalls. Or a straight publisher like EA that's fumbling between licensed IP and their own IP every 3-5 years.