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EricHiggin on 08 December 2017
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Lawlight said:
EricHiggin said:

Well If I continued my train of thought, then if cheap PS4's still aren't drawing enough attention away from Switch, then you either launch new hardware or you 'copy' the hardware giving your existing hardware a problem. Wouldn't be the first time.

What is talked about is selling consoles, games, and services. PSN service requires a PS device. No PS device, no service. The more PS devices you own, the more games and subscriptions you are likely to buy. If people like someone else's hardware better, and your sales drop, you don't just constantly jack up the price of your service. That works, but for only so long. Just look at XB1 and all the bundles and price drops and new hardware over the years.

Shareholders don't care all that much about how stable your existing customer base is. It matters, but it's not what they crave. They care more about how much your customer base is going to continue to grow. If Switch is getting in the way, PS needs to let the shareholders know they have an answer.

But he’s not talking about hardware sales dropping though. We know for a fact that hardware sales are not dropping, quite the contrary, but the strategy he mentioned has nothing to do with selling hardware.

And shareholders care about profit, not customer base. They wouldn’t mind customer base decreasing if profits are going up.

Takeda says "Our greatest risk now is losing our intensity". He is saying if PS4 sales start to slow, profits will most likely become less because simply jacking up the price of PSN isn't going to cut it, and can't last. There's lot's of other content they can sell like exclusive PS games, but those ever increasing console sales numbers are strong indicators of how the platform is doing overall.

With Switch potentially taking attention away from PS4, it makes it harder for PS to make money. Far from impossible, but harder. It also makes shareholders wonder how long PS4 can be 'milked' if it's user base growth is slowing. Sure PS5 is coming, but that's another gen and potentially a fresh start. We saw what that did to PS3, Wii U, and XB1. We also saw what it did for PS4 and Switch. It's anybody's best guess at this point in time.

While trying to sign more PS4 owners up to PSN, or get them to buy more games, exclusive games, etc, PS will surely want to keep consoles moving as much as possible. Not only does it allow for easier game and PSN sales, but the more people locked into the PS4 community, the less that will be tempted by Switch. The reason the PS2 was so successful, was due to it's early stranglehold of the market share, as well as overall unit sales.

Shareholders don't always care most about profit. There are many times where companies will announce record profits and even see their stock prices fall. Why? If the company is making money by milking a product, and doesn't have a bright, clear outlook for the future, it scares people off. Just look at AMD, the makers of the PS4 APU. Their stock increased an insane amount over a years time, all because Ryzen was on it's way. Meanwhile, AMD was still losing money during that entire year. The shareholders cared about the future, Ryzen, and the potential it would bring. Now Ryzen is on the market, AMD is making money, yet the stock price has basically flat lined. If PS4 sales slowed and Switch sales continued to increase, traders would sell their SNY stock and buy Nin stock.

With PS4 being as strong as it is, $199 was unnecessary, even against a $189 XB1S. I would almost bet the reason that PS4 was $199 for BF, was to give PS a good idea of what price range the PS4 needs to be at to make sure they aren't losing too many sales to Switch come next year. They know how PS4 sells at $299, and they now know how it sells at $199, so they can decide on what price is necessary to keep sales and momentum strong for the first six months of next year. They don't want to throw away money, but they also don't want to lose potential customers.