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usa: "PS4 has already sold more units this week > the last several months combined"

Forums - Sales Discussion - usa: "PS4 has already sold more units this week > the last several months combined"

colafitte said:
JRPGfan said:

But then you have to factor in that the avg. PS4 owner has like 11 games bought for it.
And around 40% of PS4 users have PSplus.

Selling more Units = more profits (just not on the sale itself, but on the games+services).

Yeah, of course, but that user that buys this late a PS4, needs to spend at least 200$ in games (because Sony must get around half of that or even less) to get the same level as profits as the other way....and i don't think that is happening with PS5 launching in a year.

If we assume these consumers will act likes others, then yes 200$ in games should be doable.
If you go get 11 games + a PSplus sub (~1year?), Im sure you ll be spending that most of the time.

Imo Sony should have cut price to 200$ long ago, to keep sales numbers up.



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Not really all that surprising. PS4 is the market leader by a country mile with a stacked library of games and that's a pretty great deal.



drkohler said:
colafitte said:

One has to wonder how much profit do Sony really get with PS4 at 200$ instead of the usual price...

At $199, no current gen console is profitable on the hardware level. Like last year, Sony limits the number of units available at this price simply in order to limit the losses on hardware. The idea that "selling more units even at a loss is good because software" isn't really an argument anymore at this stage of the console cycle.

I agree. I already said the example was innacurate just to make things easier to understand. This proves my point even more if at 200$ you are not even profiting at all.

DonFerrari said:
colafitte said:

One has to wonder how much profit do Sony really get with PS4 at 200$ instead of the usual price...

Oversimplifying things to prove a point....If a PS4 costs, as an example, 190$ to produce, distribute and market it, that will give you 10$ profit per unit at 200$ instead of 110$ profit per unit if you sell it at 300$. You need to sell waaaaay more units at 200$ to reach the same profits than if you sold the console at 300$. In my opinion, those bundles at 200$ are more a marketing tactic than anything else and that's why the stock is always so small. And this is without counting the games you're putting in the bundle for free.

I know is a cheap and a innacurate example of how things really work but it's the easiest way to explain my point, and why Sony is not going to drop the price for PS4 if they still keep a comfortable pace of sales at 300$. Sony learned a lesson with PS2 and PS3 back in the day:

Profits > Sales.

they receive about 20USD per game sold and each console will make at least lets say 10 games sold on average that is 200USD.

They receive 60USD per year and 40% attach ratio for a 5 year period = 60*0,4*5 = 120USD.

So each PS4 sold gets then additional 320USD. Even if they forfeit 110USD with the promotion they would still make additional 220USD.

The question is how much sales would change with this cut.

Let's say they can sell 1M at 300USD and 1.5M at 200USD.

So it's 1M * 430 vs 1.5M*320, which means 430M vs 480M (or additional 50M revenue). So yes they would need much more sales to justify the cut.

Yup.

JRPGfan said:
colafitte said:

Yeah, of course, but that user that buys this late a PS4, needs to spend at least 200$ in games (because Sony must get around half of that or even less) to get the same level as profits as the other way....and i don't think that is happening with PS5 launching in a year.

If we assume these consumers will act likes others, then yes 200$ in games should be doable.
If you go get 11 games + a PSplus sub (~1year?), Im sure you ll be spending that most of the time.

Imo Sony should have cut price to 200$ long ago, to keep sales numbers up.

I think you are very optimistic with a new PS4 user at the end of 2019 spending so much....From my experience, the guy that buys a console this late..., yes it's possible he/she can spent 200-250$ in the future but it will take a lot of time, because the reason why he/she waited that long to buy a ps4 is basically for 2 reasons: a) Doesn't want to spent money in videogaming and always looks for the cheapest solution or b) already has another console and just buy the ps4 just for a few exclusives he/she really wants to play. And this kind of user is usually the 60% of PS4 consumers that do not buy ps plus either...

If Sony is doing things this way is because is the more profitable way for them, i'm pretty sure of that. Nintendo is going to do the same with Switch in the next few years.

PS4 is going to end this year around 14'5M sold to consumers..., the same numbers it did in 2014, and at 14'5M it will still be better than any PS3 year during all last gen. They're happy with this sales for a console ending its 6th year. They didn't need at all to cut the price to 200$. It would've cost them money....

Last edited by colafitte - on 29 November 2019

colafitte said:
JRPGfan said:

But then you have to factor in that the avg. PS4 owner has like 11 games bought for it.
And around 40% of PS4 users have PSplus.

Selling more Units = more profits (just not on the sale itself, but on the games+services).

Yeah, of course, but that user that buys this late a PS4, needs to spend at least 200$ in games (because Sony must get around half of that or even less) to get the same level as profits as the other way....and i don't think that is happening with PS5 launching in a year.

You also have to factor in that someone who buys a PS4 now is probably not buying a PS5 at launch. They'll probably but it cheap when the PS6 is looming on the horizon.



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TruckOSaurus said:
colafitte said:

Yeah, of course, but that user that buys this late a PS4, needs to spend at least 200$ in games (because Sony must get around half of that or even less) to get the same level as profits as the other way....and i don't think that is happening with PS5 launching in a year.

You also have to factor in that someone who buys a PS4 now is probably not buying a PS5 at launch. They'll probably but it cheap when the PS6 is looming on the horizon.

Of course. What i meant with that is, that consumer probably won't buy a PS5 at 400$, so you're getting a "cheaper" client at 200$, but who knows which % of those consumers wanting to buy just a "Playstation" would not buy a PS4 now at 200$ because he/she wants to start quickly this time the new gen with a PS5 even if it's more expensive. That's another reason why Sony do not want this kind of bundle to be too much succesful this late this gen either.

Another reason is that to spent 200-300$ on PS4 from 2020 into the future will cost much more time (if it happens at all) because "must play games" on PS4 are going to be already way cheapier and there won't be as much "new must buy" games at 60$ either once PS5 arrives.



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DonFerrari said:

they receive about 20USD per game sold and each console will make at least lets say 10 games sold on average that is 200USD.

They receive 60USD per year and 40% attach ratio for a 5 year period = 60*0,4*5 = 120USD.

So each PS4 sold gets then additional 320USD. Even if they forfeit 110USD with the promotion they would still make additional 220USD.

The question is how much sales would change with this cut.

Let's say they can sell 1M at 300USD and 1.5M at 200USD.

So it's 1M * 430 vs 1.5M*320, which means 430M vs 480M (or additional 50M revenue). So yes they would need much more sales to justify the cut.

Your maths is way off because of flawed assumptions. You assume that late adopters will buy $60 games and that they are still somewhat likely to subscribe to PS+; the attach rate of PS+ subscriptions has gone down throughout the life of the PS4, so new PS4 owners have been getting increasingly less likely to subscribe. You are also highballing the duration of subscription lengths because there's not much incentive to stay subscribed for years after a successor has been launched, unless PS4 late adopters turn into early PS5 adopters in large numbers. Ten games on average for late adopters is also a high value, because the PS4's tie ratio of roughly 10 already means that there are quite a lot of PS4 owners with fewer than 10 games because it's clear that there are PS4 owners who own dozens of games.

Sony gets 30% of a digital third party game and about 20% of a physical third party game. Since by now there's roughly a 50/50 split between physical and digital game sales on the PS4, you can average those values to 25%, so $15 for Sony when a $60 game is sold. However, late adopters are more likely to pick from Greatest Hits which go for $20, so Sony gets about $5 per game. Sony gets a higher cut on their first party titles, so occasionally they see a bit more money from game purchases of late adopters. Not included yet are digital-only games, but it's hard to imagine that late adopters buy a lot of such titles and at relatively high prices, so that factor is rather negligible in the big picture.

Once you take those things into account, it becomes a challenge for Sony to make back the $100 that were lost on a discounted PS4 and that explains why Sony has hesitated to issue another official permanent price cut after 2016. PS+ subscriptions bring in a boatload of money, but PS4 owners without a subscription are a lot less profitable.



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Ryng_Tolu said:
RolStoppable said:

Right, that's a topic that has already come up in various threads. The timing of Black Friday is different this year.

For NPD it means a worse November period and a better December period. Something to keep in mind for year over year comparisons, so no jumping the gun when November NPD results somehow get leaked. Better to wait until both November and December are in and make comparisons with both months combined.

for context, last year numbers:

Nov - 1.478.000
Dec - 796.000
Tot - 2.274.000

2017:

Nov - 1.690.000
Dec - 1.080.000
Tot - 2.770.000

Imo personally i expect a drop compared to last year, but i get your point, the drop definitively won't be as big as it was in the past months.

Thanks for these statistics.

PS: With this current offers in Usa / Europe makes Sony no + (no profit). Dont forget: the console alone costs in production(its not ps2 hardware xD), plus strong bundles with the new Death Stranding and other big games (which cost many millions in development) @all



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RolStoppable said:
DonFerrari said:

they receive about 20USD per game sold and each console will make at least lets say 10 games sold on average that is 200USD.

They receive 60USD per year and 40% attach ratio for a 5 year period = 60*0,4*5 = 120USD.

So each PS4 sold gets then additional 320USD. Even if they forfeit 110USD with the promotion they would still make additional 220USD.

The question is how much sales would change with this cut.

Let's say they can sell 1M at 300USD and 1.5M at 200USD.

So it's 1M * 430 vs 1.5M*320, which means 430M vs 480M (or additional 50M revenue). So yes they would need much more sales to justify the cut.

Your maths is way off because of flawed assumptions. You assume that late adopters will buy $60 games and that they are still somewhat likely to subscribe to PS+; the attach rate of PS+ subscriptions has gone down throughout the life of the PS4, so new PS4 owners have been getting increasingly less likely to subscribe. You are also highballing the duration of subscription lengths because there's not much incentive to stay subscribed for years after a successor has been launched, unless PS4 late adopters turn into early PS5 adopters in large numbers. Ten games on average for late adopters is also a high value, because the PS4's tie ratio of roughly 10 already means that there are quite a lot of PS4 owners with fewer than 10 games because it's clear that there are PS4 owners who own dozens of games.

Sony gets 30% of a digital third party game and about 20% of a physical third party game. Since by now there's roughly a 50/50 split between physical and digital game sales on the PS4, you can average those values to 25%, so $15 for Sony when a $60 game is sold. However, late adopters are more likely to pick from Greatest Hits which go for $20, so Sony gets about $5 per game. Sony gets a higher cut on their first party titles, so occasionally they see a bit more money from game purchases of late adopters. Not included yet are digital-only games, but it's hard to imagine that late adopters buy a lot of such titles and at relatively high prices, so that factor is rather negligible in the big picture.

Once you take those things into account, it becomes a challenge for Sony to make back the $100 that were lost on a discounted PS4 and that explains why Sony has hesitated to issue another official permanent price cut after 2016. PS+ subscriptions bring in a boatload of money, but PS4 owners without a subscription are a lot less profitable.

1) Yes I used full numbers to make it very clear that even like that they would need a very big increase in the sale of HW to justify the cut.

2) They may not buy full priced games (but probably will buy 2 of the 2020 releases that Sony get even more money).

3) The fact that with more sales of PS4 the PS+ attach ratio diminished isn't full correlation that newer adopters are less likely to sign to PS+, there is also people that are buying secondary or backup consoles so won't sign to a second PS+ account plus people that didn't renew because they aren't playing a MP game in that timeframe. That number floats a lot, but yes I can concede that it could be less than 40% attach ratio, but you can't give any number more precise for both PS+ subs nor games purchase, so you calling my numbers inflated and not being able to give any better number with source is basically you just trying to highjack my argument.

4) Tie rate of PS4 is more likely 13 than 10, I kept round numbers (and smaller than the accurate one) both for the total of games bought and also for how much Sony make of them (because there is more money they make on their first party and also sold digital that is almost 50% of sales nowadays).

5) Go back to point 1. I'm basically saying that it would be hard to justify the cut, because perhaps we would go for a 2020 12M sales to 15M (with luck) and the 110 USD lost on the 15M customer (1.65B). If we used my estimative of the extra revenue of SW and PS+ that mean 320 USD on additional 3M customers or 960M in revenue. So they would still be making 700M less in profit (or even more if we consider that these people would buy less games and subs than I estimated). So Sony really doesn't have a reason to cut, they would only do it if they so much considered important to lock these people down to PS and protect from competitors, but I don't think there is much value in doing that to end tail customers.



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I hope, we see Black Friday Numbers in the next time :) Or the official sales figures for the month november ^^



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RolStoppable said:
Ryng_Tolu said:

Last November had the Cyber monday included, this year it won't. Because of that, general November sales should be weaker than last year, including PS4 sales.

I can see over 1 million but should be well under last year 1.48 million

Right, that's a topic that has already come up in various threads. The timing of Black Friday is different this year.

For NPD it means a worse November period and a better December period. Something to keep in mind for year over year comparisons, so no jumping the gun when November NPD results somehow get leaked. Better to wait until both November and December are in and make comparisons with both months combined.

Aside, but how useless is the NPD that they keep numbers behind their super secret paywall but you can't get figures for each month. Just this wonky time period that covers most of the month. How useful is the November information is it excludes the biggest sales holiday in the month of November. Any company around can tell you exactly how much money they made each month, each quarter, ect. 

NPD is suppose to getting information more directly if they are charging people so much. Why can't the "cut-Off" be Nov 1st to Nov 30th like everyone else (and yes, this includes banks and other companies). NPD isn't worth what they are charging.



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