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Darth Tigris on 17 May 2010
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binary solo said:
Darth Tigris said:
binary solo said:
None of the above. For my own sake I would like to see a PS4 in the next generation of consoles (though I guess in an absolute sense it doesn't matter because if Sony disappear from the HW market I'll go with whatever console grabs the Sony exclusive IP I like the most, unless it's an overpriced Apple console, in which case I'll go play with Zelda).

So my concern is overall console viability, which is both a mixture of market share and profitability. At this point in the game it's about maintaining sales momentum to increase market share (i.e. outselling 360 WoW on average, and being not too far behind Wii), as well as seeking profitability in the 2nd half of the generation.

We all know PS3 is going to be an unprofitable console for Sony. So it's all about market positioning and loss reduction at this point. If Sony focusses too much on one side at the expense of the other then the end result will be a less viable console leading into the next generation.

In the end we're talking about whether or not Sony should drop the price of PS3 this year, and if so by how much. A market share purist would say drop it by $100 again and watch those consoles fly out the door (but they better re-tool those PS2 factory lines for PS3 and stop making PS2s). A profitibility purist would say keep the price as it is and enjoy a period of good proximate profits to help offset the historical losses a bit. I think Sony's best course of action is a happy medium between the 2 extremes.

Hmm.  I kinda like this post more than most here, but I disagree with minimizing the importance of profitability in looking at the reality of the PS3 right now.

The PS3 has good momentum right now.  The sales are up, the library is improving, the price point is more friendly and the fanbase seems to be very satisfied.  So what's wrong?  The endeavor is still far from profitable.  That's the black mark.  This being Sony's 3rd console, to have the effect it has on the division that houses games that we've seen, especially in light of the success that the first two were, gives that black mark a definition that is not flattering at all.  And thought it may not seem likely, such losses at least will make the possibility of a PS4 a subject of serious discussion by tptb.

 

 

Not sure where you get the idea that I think the importance of profitability should be minimised. I just don't think beating Sony over the head with the multi-billion $ loss stick (or rather Sony beating itself over the head with it) is particularly constructive. In many ways the Slim launch (or in Sony's PR terms the PS3 re-launch) is a bit of a do over. Those billions lost on the phat are gone and no re-launch is going to put the whole PS3 endeavour into the Black. From a business perspective Sony is probably right to look at Slim launch as a day 1 and think about what the strategy should be from that launching pad. April to Oct 2010 appears to be a period in which PS3 will be selling at a per unit profit, and along with peripherals and games the PS3 has probably been profitable overall for slightly longer than that. From a business strategy perspective there's some rationale for putting the base console back into a small loss making situation provided Sony are confident that they can more than make up for it with game and peripheral sales (nett profitability).

The business case for PS4 will never be argued on the basis of PS3's economic performance, except to the extent that SCE can convince the Sony board of directors that they won't be repeating the PS3 economic performance / business model. So, in a very real sense profitability of PS3 from here on in doesn't really matter all that much, from a lifetime profits perspective PS3 is a lost cause. As long as it's not a nett drain on Sony's bottom line from now on it doesn't matter if PS3 has short periods of the base console selling at a small loss. 

The business case for PS4 will be on the basis that the PS brand is still in a good position with consumers, and PS4 will be profitable at, or soon after launch. All of those elements of the business case depend a lot more on PS3 achieving market share and maintaining sales momentum leading up to the PS4 launch than on PS3 profitability.  

Good points all around. 

The challenge that I believe Sony is going to have, though, is deciding what a hypothetical PS4 is going to BE.  Obviously, as you stated, if the PS3 is going to be a loss cause as far as recouping the overall investment, SCE will have to have a different business model for the PS4.  The direction that the market is going, though, seems to be a direction opposite of the strengths that Sony has shown in the past (high end graphics, powerful processers, strong 3rd party support).  Motion controllers have ... complicated things in bringing in the sometimes fickle casual market.  And the timing of when the next generation starts is conundrum for all 3 console makers, but maybe especially for Sony.  But next gen (whatever that is going to mean) is going to be the first gen that Sony goes into since the PS1 where there dominance will not be assumed.  It might even be questioned.

The Playstation brand is still very strong, though, as you stated.  A lot of my reasoning in this creating this poll was a response to seeing a lot of talk about Sony dropping the price again down to $200 and I started to question if people really want Sony to succeed or do they want Sony to win.  Did they see the same financials I saw released recently?  Last month, the 360 was up YoY based on NPD numbers and it had no price cut last year.  Why not just let this momentum carry for a while longer before cutting price again and thus risking more division losses?