Wii U vs PS4 vs Xbox One FULL SPECS (January 24, 2014)

[Andrespetmonkey]

HappySqurriel said:

Andrespetmonkey said:

Viper1 said:
And a $100 loss per console is far too much for them as a company now than it was back in 2006. In 2006, they were a financially sound comapny. That is not the case today. If they sold 10 million units at a $100 loss, that's a $1 billion loss to a company that can't handle taking on another billion dollar loss.

They won't make a $1 billion loss. They'll lose that much on consoles, but make it back within maybe a year through software sales and to a much lesser extent peripheral sales (if they make a profit), give it another 6 months oon top of that for R&D, manufacturing and what not.

Viper buys a PS4, Sony loses $100. Viper then buys 5 or 6 retail games over the next year, a few smaller downloadbles and maybe some Minis, subscribes to Netflix, maybe a new streaming service or PS4 or PS+, he makes some microtransactions on F2P games, possibly buys another controller or PS eye/Move 2 (or whatever they may have)... etc.

That money is definitely made back (unless it's PS3 scale money), it's just a matter of how long it takes. A year/year and a half due to $100? Not a problem. 

Except the average consumer doesn't spend nearly that much money on games ...

For every year they owned their system the average Wii owner bought 2.81 games, the average PS3 owner bought 3.01 games, and the average XBox 360 owner bought about 2.75 games; all very rough calculations. Being that you can really only associate the licensing fees to cover the costs of the hardware, if you assume $10 in licensing fees it would take (on average) about 3.5 years to cover that $100 loss for the average consumer.

Even then, if we say 2-3 retail games are bought in a year (though I notice it's the average for all years, do you think the first year average would be higher? I don't know, just wondering if you could get that data from wherever you got those averages) it's still more than possible to the money back through software because there will be more ways to do it. There will be F2P games where players will make microtransactions, there will be more cheaper, smaller titles or they'll be promoted more, that'll probably boost those averages. And look at all the extra services PS3 has like Netflix and PS+... I think it's fair to say they'll have even more subcription based services next gen, for streaming for example.

If your system is like the PS2 and launches before the competition, manufacturing costs are dramatically reduced prior to facing price cuts so the $100 loss on a system is a temporary thing, and you eventually build a massive userbase that buys games to cover your initial losses a $100 (or even $200) loss can probably be justified. In contrast, if you're like the XBox and you launch later than your competition who forces you to lose money on hardware throughout the system's life you will probably lose $4 billion in a generation off of a $100 loss per system.

I doubt we're going to see this with PS4 though, it's main competitor concerning the power of the system will be nextbox, and they're probably gonna release close to each other. Sony has said they don't want to be last again, the PS3 was so late largely because of delays that they'll probably try harder to avoid.  What you're saying is that the $100 loss won't be made back if the console doesn't sell well, because if the console doesn't sell well not much software will be sold right? That's what happened to Xbox though I don't know what loss it took.