October 2017 NPD Thread! Switch #1

[DonFerrari]

Shadow1980 said:

DonFerrari said:

I would say PS360 had their afterife leg while still on the gen, the gen were so lenghty that they didn't had much space to sell after (besides never getting that under 99USD price).

Do you keep on the impression that after sales of SW peak and start declining they prepare the schedule for the release of the new console and also shift development to transgen+new gen exclusive, or that they decide to start the new gen and move the development and that cause the decaying? I'm more towards first case.

Well, the console market is cyclical, and every console goes through a growth-peak-decline life cycle (rarely, some effectively peak right away, with no period of sales growth), which is why we have console generations in the first place. Typically, a system will reach a "sweet spot" price at which it sells at its best, but once that boost runs out of gas, terminal decline is largely irreversible, though depending on how much it sold LTD when it passed its peak the decline can be slowed down through price cuts and continued strong support. It's just a simple fact of the matter that there are only so many people that will buy a particular console, even a hugely popular one, and eventually you run out of new customers to sell them to. I think this happens naturally, and that once a system has passed its peak the parent company starts planning a replacement, rather than the shift to developing for next-gen causing the decline. Look at the Vita in Japan. It continues to get pretty solid support, and no replacement is on the horizon, yet sales continue to decline, with sales so far this year being down over 56% from last year. Sony is just running out of people to sell the thing to.

The decline every system faces is inevitable. However, that's not to say that the parent company (and third parties, for that matter) don't have any effect on the rate of decline and the strength of the legs. The speed of the decline appears to be determined by two main factors

1) Strong continued support. Sales legs are usually dependent on how well a system is supported late in life. The NES, SNES, PS1, and PS2 all had strong legs and strong late-life support, while the N64, GameCube, Wii, and most if not all handhelds all have had rapid declines and poor late-life support. The 360 & PS3 were the exceptions as they had weak legs but strong late-life support, but by time they passed their peaks, they had already sold a lot relative to their final lifetime tally. At the end of 2011, the 360 had sold 32.68M in the U.S., nearly double what the PS2 had sold when it passed its peak.

2) The release of a new next-gen system typically has an immediate impact on its predecessor's sales, the one exception being the PS3 (it didn't have an effect on PS2 sales until it was cut to $400). We usually see a bigger drop in sales percentage-wise the year a system gets replaced, but I've noticed that always seem to be because holiday sales take a huge drop. For example, the 360 had a YoY drop of 42.5% in 2013 in the U.S. However, the Jan.-Oct. period experienced a YoY drop of only 33.5%, vs. a drop of 51.5% for the Nov.+Dec. period. Likewise, the drops for the PS3 for the non-holiday and holiday periods in 2013 vs. 2012 were 28.3% and 48.3%.

 

Regarding the PS3 & 360 having late peaks, I think that was largely on purpose. Price cuts were spaced out more over time than in prior generations, and were relatively smaller. As a result, both systems were, when adjusted for inflation, more expensive than the PS2 at any given point in their lives. Even the PS4 and (post-Kinect removal) XBO, despite having initial prices about equal to the PS2's, had smaller initial price cuts (and the PS4's was much later in its life than the PS2's was), and even after two permanent price cuts, the PS4 & XBO still only saw a proportional drop of 25%, vs. the 33% cut the PS2 got from its first price cut. At this point in its life, the PS2 was only about $194 in current dollars. The PS4 & XBO had standard prices of $300 & $280 respectively this year. I believe that by spacing out price cuts and making them smaller, it generates more modest growth and later peaks, extending the generation, not only giving the system a longer life but also buying time for Sony & MS to produce a system that generates more gains that what we'd see if the gap was only five years.

Imagine if the PS4 & XBO came out two years earlier and retailed for $400. They wouldn't be nearly as powerful as they were (and consequently even less visual improvement, making gamers question if the jump was even worth it more than they already did), or if they were as powerful, they'd likely be significant loss leaders, or Sony & MS might have had to bump up the price. And, assuming the 5-year gen cycle continued apace after that, the PS5 & Xbox 4 would be out now, and would only be about on par with the Pro or X1X.

Longer gens do have clear benefits in this era where increases in computing power over time are proportionally not as large as they were 15, 20, 25+ years ago. The decade from the PS1 & N64 to the 360 & PS3 saw a lot more improvement than the decade from the 360 & PS3 to the Pro and X1X. Compared to the N64, the 360 had 128 times as much RAM (and far better and faster RAM) and a GPU with at least 1200 times the FLOPS. We haven't seen anything close to that amount of progress this past decade. Longer generations are arguably necessary for Sony & MS, and it appears that simple pricing is enough to keep the ball rolling on sales without having to worry about an early peak followed by relatively much lower sales by year five.

I appreciate your very through input (even if we are off-topic).

Just wanted to point out some details.

The next gen consoles are at work as soon as the current gen has finished development, but only in highlights and ball park... then I would suppose around 2 years before release (when the holder see the peak coming and the inevitable decline) they more or less define the specs and increase work on the design to have it finished 9-12m before release... then like 6m before release they will announce and shortly start producing based on pre-orders to have those 2-3M ready for launch.

On the reason for they to prolongue gen you are right it benefited then, but considering PS3 high manufacturing cost, to do more pricecuts and accelerate the buying even more would be more or less suicidal move. And even more than the slower progression of computational power is the results of that progression on the game design... making the system 8x more powerful and lets say for simplificity the games would also see equivalent pixel increase rate, with texture accompaning, and also poly count of models... the diminishing returns make the increase of the processing power seem even smaller.