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

[DonFerrari]

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.