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New Business Model for console

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Which combination of console price and gaming price would you prefer?

399 USD console; 60 USD game 11 47.83%
 
599 USD console; 40 USD game 12 52.17%
 
Total:23

I wouldn't be surprised to see console prices come down over the next decade (though this doesn't look likely for the start of next gen). Everyone is after the recurring revenue of monthly subscriptions. If MS decides that they need to compete with Stadia's upfront cost of $0-$130, they well could start selling an MS box for $99, that only works with their subscription services. Sony could well do the same.



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$399 is clearly the superior option because you pay less for console and games. Games can launch at $60, but only a few months later they are $40 or lower anyway.

This leads to the unsurprising conclusion that the $399 console would comfortably win against the $599 console.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

A Biased Review Reloaded / Open Your Eyes / Switch Gamers Club

vivster said:

Fewer people getting the console is a projection you make, there is no assurance (but yes we could say it is a bigger risk) less people would buy it, it all depends on how you explain the concept to the customer to make he see that they are not paying more for less, they are paying it differently. One way to sweeten the pill was already gave, that you have monthly payment together with the sub. Let's say you make a contract for PS+ and a PS5 for 5 year, so you pay 10 per month on the HW plus 5 for the PS+ so a 15 bucks on the HW and a cheaper game to purchase (15 is close to what stadia is charging without you having the HW).

The consumer is too stupid to do math and those who will do the math are the ones the manufacturer will lose a shit ton of money on. This is a massive lose situation for the manufacturer. And if the manufacturer loses, everyone who bought the console will lose because of held back investment. To make this a win for the manufacturer you'd have to pay a lot more up front which makes everything even worse. Lowing the general price of games is also a terrible idea because it gives publishers room to increase the price again.

It's just overall really really terrible. Stores make their money off of game sales and there is nothing wrong with that.

Don't think the console maker would lose money (first because they wouldn't be selling the console at a loss at any point, and second because they would be making the average royalties profit on the HW already), but yes it probably would be met with a lot of struggle.

I haven't said or implied that making money of game sales is bad. What I said is that this could reduce second hand and price dropping.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

DonFerrari said:
vivster said:

The consumer is too stupid to do math and those who will do the math are the ones the manufacturer will lose a shit ton of money on. This is a massive lose situation for the manufacturer. And if the manufacturer loses, everyone who bought the console will lose because of held back investment. To make this a win for the manufacturer you'd have to pay a lot more up front which makes everything even worse. Lowing the general price of games is also a terrible idea because it gives publishers room to increase the price again.

It's just overall really really terrible. Stores make their money off of game sales and there is nothing wrong with that.

Don't think the console maker would lose money (first because they wouldn't be selling the console at a loss at any point, and second because they would be making the average royalties profit on the HW already), but yes it probably would be met with a lot of struggle.

I haven't said or implied that making money of game sales is bad. What I said is that this could reduce second hand and price dropping.

They'd still have spent a tonne of money on developing and marketing the console though so unless they could sell enough consoles to recoup those costs they'd lose money.



Bet Shiken that COD would outsell Battlefield in 2018. http://gamrconnect.vgchartz.com/post.php?id=8749702

I'm not going to go into why setting the standard software price at $40 is like...impossible but I would like to keep things as is right now. 399/60.

Last edited by Ljink96 - on 18 June 2019

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Ka-pi96 said:
DonFerrari said:

Don't think the console maker would lose money (first because they wouldn't be selling the console at a loss at any point, and second because they would be making the average royalties profit on the HW already), but yes it probably would be met with a lot of struggle.

I haven't said or implied that making money of game sales is bad. What I said is that this could reduce second hand and price dropping.

They'd still have spent a tonne of money on developing and marketing the console though so unless they could sell enough consoles to recoup those costs they'd lose money.

That is true, but would be less loss or risk than a situation like PS3 where they subsided a lot of the cost expecting to recoupe on SW.

So your expectation is that if such model of 600 HW and 40 SW would end up selling less HW and thus console maker would lose money?



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

I'd rather keep the console cheaper.

Games are affordable as is, considering that 60 is the full price tag that you can invest on the games you trust most. Later on the price gets down considerably (except Nintendo because they're evil :P)



My Total Sales prediction for PS4 by the end of 2021: 110m+

When PS4 will hit 100m consoles sold: Before Christmas 2019

There were three ravens sat on a tree / They were as blacke as they might be / The one of them said to his mate, Where shall we our breakfast take?


From a pure mathematical standpoint, if you buy more than ten games new per generation, it would be more cost-effective to buy the console at $600 and the games for $40. However, if you buy fewer than ten, it would be more cost-effective if the console cost $400 and the games cost $60. Once you buy ten games, you would reach $1000 spent in either pricing scenario. Of course, the prices of hardware and most individual software releases decline over time, so for this rule to remain true both hardware and software prices would have to remain proportional over time in both scenarios.

Regarding platform royalties for third-party titles, the most common estimate I've seen cited is $7 for Xbox & PlayStation titles. It's unclear if that's an average and that the royalty fees are variable amounts negotiated separately on a publisher by publisher or game by game basis, but so far I haven't seen anything claiming that a third of the cost of a $60 third-party game is the royalty fee paid to the platform holder. So, waiving platform royalties is not likely to knock $20 off of the price tag. And regardless of if they were waived or not, the savings to the publisher would almost certainly not get passed on to the consumer. The last time savings in the cost of making a major game were passed on to the consumer was in Gen 5, where the PS1's disc-based games cost less than the N64's cartridges, both in terms of manufacturing costs and costs to the consumer. Of course, PS1 games cost $60 when the system was still relatively new, so perhaps the only reason PS1 games started to cost less than N64 games was because of a strategic decision to undercut Nintendo's prices. It's worth pointing out that digital distribution, with its absence of manufacturing and distribution costs, hasn't resulted in cheaper games, as AAA titles still cost as much digitally as they do physically (and in the long run they arguably cost more, as physical software prices decline more "organically" than the planned, periodic, short-term sales issued for digital games).



i see what you saying but I am tired of broken games from day 1.

Id gladly pay $20 more a game to ensure I get it on a medium and in a complete state that doesn't require downloading a bit patch day 1.



 

 

Cobretti2 said:
i see what you saying but I am tired of broken games from day 1.

Id gladly pay $20 more a game to ensure I get it on a medium and in a complete state that doesn't require downloading a bit patch day 1.

Console makers get a cut usually around $20-$25 for each copy a game gets sold.  OP is suggesting that cut would get folded into the console's cost.  

Game developers would be making around the same amount they do now.  So not sure how games would get any more broken than they are right now.