Pachter has a point: Sony blew it with the PS5 digital edition

[The_Liquid_Laser]

hinch said:

The_Liquid_Laser said:

I know you replied to me, but you didn't actually address anything I actually said.  I'll repeat the main points so that it's clear.

An all digital future benefits Microsoft and not Sony.  This is because console hardware prices will shoot up to near PC levels when retailers are not able to sell physical games.  Consoles will become like PCs for good and for bad.  They will be all digital, like PCs, and the hardware will be priced like a PC.  The PC market will grow and the console market will implode.  All of this helps Microsoft.

Consoles will never sell over $700. Reason being that most consumers won't pay that amount for console. Nobody wants a repeat for the $599 debacle of the PS3. Anything over $500 is pushing it. The rest is a bit well, nonsense, sorry no other way of putting it.

You do make a small point.  If consoles get too high in price, then customers will not buy it.  However if console prices stay low then retailers will not sell it, not in an all digital marketplace.  Retailers make no profit from console hardware.  Sony will be caught in a catch-22.  Regardless of what happens the console market will implode.  PC wins, and therefore Microsoft wins.  That is the natural result of an all digital future. 

Dallinor said:

The_Liquid_Laser said:

I know you replied to me, but you didn't actually address anything I actually said.  I'll repeat the main points so that it's clear.

An all digital future benefits Microsoft and not Sony.  This is because console hardware prices will shoot up to near PC levels when retailers are not able to sell physical games.  Consoles will become like PCs for good and for bad.  They will be all digital, like PCs, and the hardware will be priced like a PC.  The PC market will grow and the console market will implode.  All of this helps Microsoft.

You would not see a change in RRP. Which retailers are going to drop them anyway? A new console brings people into the store. The games can also still be sold as digital redeemable vouchers, gaming peripherals and cards. Everything (including retail) is shifting to digital. An all digital future clearly benefits Sony. It currently does. They're booming in it.

The shift has been taking place since 2015. Digital is now 51% of their revenue. 

First quarter 2020 saw 71% of their first party games sold as digital.

Now they're releasing an all digital console.

But they fear an all digital future?

All retailers are going to drop console hardware.  Either that or the price will have to rise.  Currently there is no profit in console hardware for retailers.  Retailers benefit from selling games.  Cards are a stopgap and not a permanent solution.  The money for retailers is in actual physical games.  If physical games go, then so do consoles.  Either that or the hardware has to reach PC prices so that retailers can make a profit.

Really, every champion of the "all digital future" has not really thought through the consequences.  It may sound great from a convenience perspective, but retailers do not benefit from an "all digital future".  They aren't going to just mindlessly do what Sony wants either.  Walmart and Amazon could eat Sony for breakfast.  They need to make a profit in order to sell hardware.  With physical games it's not an issue because retailers make money on the games.  But in the "all digital future" retailers aren't making money from the games anymore.  The whole reason Sony is seeing an increase in revenue from digital sales is that they are taking sales away from the retailers.  Sony is competing with their own partners.  Retailers are not going to accept this.  At a certain point, hardware will either need a price increase or the retailers just won't sell it. 

Of course, Microsoft will be just fine.  Even without consoles Microsoft can still deliver Gamepass through other platforms.  Or maybe people use Steam more.  That benefits Microsoft too, because people will buy more PCs.  Either way Microsoft wins.  Microsoft has been pushing hard for an all digital future for a long time now, and it should be clear why.  In an all digital future, Microsoft wins.