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Forums - Sales Discussion - PSN Alone Generated More Revenue Than The Entirety of Nintendo, MicroSoft's Entire Gaming Division!

Victorlink87 on 01 February 2019
pokoko said:

 

Biggerboat1 said:
An obscure football manager in Scotland once said this in a televised interview "statistics are like mini-skirts - they look good but hide the most important part"

Not saying it's the best quote ever but stuck with me for the sheer randomness factor.

I think it applies here, PSN could have more revenue than Nintendo, but how that actually translates to profit is unknown and is really the only thing that matters. Revenue for show, profit for dough!

That's not true at all.  Revenue is important for growth, which in turn can lead to increased market share and a stronger position in the marketplace.  Look at Amazon share price and tell me that it's not a viable path.  

Unfortunately it is a viable path. Not a very consumer and employee friendly path, but still very very viable.

That being said, Sony's gaming divison runs close to a 20% profit. That is awesome for everyone. The company as a whole runs under 10% which is bad business if you are not a publically traded company.



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Victorlink87 on 01 February 2019

Sony is killing it in the gaming industry. I love it.



outlawauron on 01 February 2019
Biggerboat1 said:
pokoko said:

 

It's not pointless in any measure of the word.  Revenue is very important--that's why it gets reported and why it gets talked about so much.  If Sony called it a day and just closed up shop after giving a quarterly report, then you'd be right, but that's not what's going to happen.  Revenue is the ability to keep moving forward, which is why it often means more to observers than margins.  Many of the most prominent companies in the world got that way by prioritizing revenue.  It's a measure of scope and a window on potential.  

Revenue, on it's own doesn't tell us anywhere near enough to draw a meaningful conclusion - within the context of this forum anyway.

I'm sure on the forums of The Economist where people have a deep understanding of particular companies / trends / business models, they could draw meaningful conclusions, though they'd still want to see how that translated to profit - but this forum is not that. I mean it's evident that a lot here don't even understand the distinction between revenue & profit...

You can have companies with large revenues that are healthy & other's that are haemorrhaging money...

Bottom line, I think it's asinine to compare revenue of a digital store front to a hardware/software company - don't you? And if you don't agree, can you explain why?

The point is pretty obvious. It's to show the change in the industry, why companies are acting the way they are (ie. why Nintendo is making you pay for online pay), and how truly massive the digital marketplace has become. All of that information is very important to investors because it shows how well they're doing in one of the very few growing game markets.



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Biggerboat1 on 02 February 2019
Hiku said:
Biggerboat1 said:

 

Well, you said "I want to point out that comparing a fairly straight forward online service platform to a company like Amazon is not a good comparison to make. @Biggerboat1"

 

That's why I thought it prudent to point out that I wasn't comparing those 2 companies, but simply pointing out that revenue is not a predictor of profit. Hell, I could have picked KFC or Adidas.

 

Pointing out that it was not a good comparison, to me isn't a valid point, as I wasn't comparing them in the first place...

 

No biggie though!

Well like I said, I didn't misunderstand why you posted that figure. And my point wasn't related to whether you want to call it a comparison or not, so that's just arguing semantics.
You could have picked another example, sure, but you chose one where the profit was not even 0,1% of the revenue. 

That's not an example relevant to PSN today, because it's not the kind of business model that takes risks with their investments like that.
Their entire gaming sector does, but not 'PSN alone', which is the subject.

I picked that example just to illustrate how widely revenue & profit can vary - it wouldn't have made for as effective a point if I picked an example where revenue & profit were closer.

It's clear that some people (not you) still don't get that revenue in and of itself isn't an indicator of success, so picking an extreme example was the best way I could think to show this.

Anyway, we're chasing our tails here. This whole thing would be much easier if we simply knew PSN's profit for the same period :)



Biggerboat1 on 02 February 2019
outlawauron said:
Biggerboat1 said:

Revenue, on it's own doesn't tell us anywhere near enough to draw a meaningful conclusion - within the context of this forum anyway.

I'm sure on the forums of The Economist where people have a deep understanding of particular companies / trends / business models, they could draw meaningful conclusions, though they'd still want to see how that translated to profit - but this forum is not that. I mean it's evident that a lot here don't even understand the distinction between revenue & profit...

You can have companies with large revenues that are healthy & other's that are haemorrhaging money...

Bottom line, I think it's asinine to compare revenue of a digital store front to a hardware/software company - don't you? And if you don't agree, can you explain why?

The point is pretty obvious. It's to show the change in the industry, why companies are acting the way they are (ie. why Nintendo is making you pay for online pay), and how truly massive the digital marketplace has become. All of that information is very important to investors because it shows how well they're doing in one of the very few growing game markets.

If the original poster framed it in a way such as "PSN showed 50% YOY growth" or something like that then yes, it's good info to know. But comparing it to Nintendo's revenue is misleading - it's apples to oranges.

Further more, the growth could have come from heavily discounting lots of games which would have a smaller margin, meaning that the profit could be way less than 50% YOY increase... we simply don't know.

Also Nintendo's profit could be approximately the same as Sony gaming overall - in which case who's to say which model is better? To me, running a business at a higher profit to revenue ratio (profit margin) seems preferable to me, though I'll admit that it's likely more complicated than that.

Anyway, I don't contest PSN is doing awesome - it's the flawed comparison that I have a problem with.



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Dante9 on 02 February 2019

Both profit and revenue are important indicators.
Think of it this way: Profit is the money in hand that the company made, whereas revenue shows how big a player they are in the business and how much potential there is for growth in the future, if things are done right.



Kerotan on 02 February 2019
LudicrousSpeed said:
abronn627 said:

Nope, he's right when he's saying that their alleged allies are competing against them. You're glorifying Sony for something that would have never happened in any case. The backlash Microsoft suffered started after the unveiling of the console, not at E3 and if Sony had made the same decision, the market would look different. Do I have to remind you that Sony was part of a small group of publishers which imposed a fee for online play on used games ?

If GameSpot is still afloat today, it's because they took the right decisions at the right time to postpone their downfall.

Great point about the online pass. IIRC Sony started that nonsense on PSP. That directly affected the price GameStop could sell used games for, as it made no sense for them to charge their usual $5 off MSRP on used titles when you’d then have to spend $10-20 for an online pass.

Plus he’s mistaken about Microsoft’s original intent. They weren’t killing second hand sales. They had it set up to where you could trade in games at select retailers. No way GameStop wasn’t one of those. And with only select retailers being able to take Xbox One games for trade, it would have allowed them much more leeway on controlling trade in prices and amount of credit given. In the end Microsoft’s original vision was garbage for gamers but would have likely been good for a place like GameStop.

I agree with you that the original vision was garbage. Anyway I'm off on a tangent, we should be discussing how big PSN is not this. Quite unbelievable figures they're pulling in. 



Tridrakious on 02 February 2019

Pretty clear why the guy that oversaw the Network Services is now running all of PlayStation.



Johnw1104 on 02 February 2019
Ka-pi96 said:

 

twintail said:

 

It is obviously Sony's part, this is their revenue and stated from their financial report.

I don't get how that's "obvious". The rest of the money could still be considered revenue by Sony, them having to pay it over to the publishers of the content doesn't change that.

That is actually a common tactic. One way multi-channel companies on YouTube tricked so many people into buying them out is they shared the pre-distribution revenue total as if it was their own, even though only a small percentage of it was actually theirs to keep.

It has certainly happened, though I don't know if that's the case here.



flashfire926 on 02 February 2019

Holy shit, Sony are making bank. They have come a long time since the PS3 years. Hopefully they can carry on this monumental success with PS5.

edit: here's the net income chart for game & network services:

Last edited by flashfire926 - on 02 February 2019

Bet with Intrinsic:

The Switch will outsell 3DS (based on VGchartz numbers), according to me, while Intrinsic thinks the opposite will hold true. One month avatar control for the loser's avatar.