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Forums - Sony Discussion - SCEE: PSPGo was introduced to learn about consumers

superchunk on 09 June 2010
Squilliam said:

The apps may be a few dollars but on a revenue basis its almost double that of the PSP. Furthermore the margin on an iTouch is only marginal and as close to a home console as you can get for a similar device. I cannot comment on any kickbacks for the retailer any phones but at least 2/3 do not have these kickbacks if you also consider the iPad which is likely similar to the iTouch in margins for the retailer.

But you see, Apple doesn't have to sell their products at a loss for them to sell. They can make money on the devices themselves and the content delivered to those devices. They have a much stronger business model than Sony does for any of their own platforms.

However, you shouldn't talk about ALL apps in that context, just the game related ones and still buying a $4 game is a huge difference to a $40 one. I still don't think its directly comparable due to being drastically different markets.

As someone who worked for Circuit City for MANY years (way before it went out of businiess), I can assure you all phones give various kickbacks to their retailers (obviously its comparable to the price of the phone and the contract obtained). Also, the profits on iPods of all types and the iPad is good, higher than computers and many other digital products. You are right that Apple's business model is better, since it actually sells ALL of its hardware for profit.

This is part of PSPGo's issue, to sell at a profit it had to sell at a high pricepoint. That pricepoint is not acceptable to the mass market for a handheld game console. For a phone or a netbook it is ok, but not for a game console when you can buy a DS for 1/2 the price with tons more games.

I think we both agree though that the digital download is not the reason it failed and this was simply a poor test environment.



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Squilliam on 09 June 2010
superchunk said:
Squilliam said:
 

The apps may be a few dollars but on a revenue basis its almost double that of the PSP. Furthermore the margin on an iTouch is only marginal and as close to a home console as you can get for a similar device. I cannot comment on any kickbacks for the retailer any phones but at least 2/3 do not have these kickbacks if you also consider the iPad which is likely similar to the iTouch in margins for the retailer.

But you see, Apple doesn't have to sell their products at a loss for them to sell. They can make money on the devices themselves and the content delivered to those devices. They have a much stronger business model than Sony does for any of their own platforms.

However, you shouldn't talk about ALL apps in that context, just the game related ones and still buying a $4 game is a huge difference to a $40 one. I still don't think its directly comparable due to being drastically different markets.

As someone who worked for Circuit City for MANY years (way before it went out of businiess), I can assure you all phones give various kickbacks to their retailers (obviously its comparable to the price of the phone and the contract obtained). Also, the profits on iPods of all types and the iPad is good, higher than computers and many other digital products. You are right that Apple's business model is better, since it actually sells ALL of its hardware for profit.

This is part of PSPGo's issue, to sell at a profit it had to sell at a high pricepoint. That pricepoint is not acceptable to the mass market for a handheld game console. For a phone or a netbook it is ok, but not for a game console when you can buy a DS for 1/2 the price with tons more games.

I think we both agree though that the digital download is not the reason it failed and this was simply a poor test environment.

They aren't that drastically different after all. Consider the monetary difference for a third party with regards to say a PSP game and a direct download game. The PSP game costs $30 but the retailer and Sony both get 20% cuts, so shipped they get around $18 in the hand with around $3 in material shipping and cartridge costs. Effectively more than half the cost in a game bought at retail are the distribution costs. If EA then prices a game for $12.99 on the iPad they get $9.10 in the hand, Apple gets $3.90. However overall demand for games is higher and they are easier to sell at less than half the price so both Apple and the publishers benefit from this direct relationship.

I don't know anything about kickbacks so I have to take your word on it. Its certainly not something which happens here.

The real issue for the PSP Go! is the fact that you can't support an effective DD platform for mobile games at the same time as supporting a retail outlet. People will not want to play full price for DD games especially when they have a physical option and especially if they intend to sell/give away the title. Steam shows that the biggest draw for DD is the sales and lower price options which cannot be replicated at retail which is why sales go up so much whenever they have a sale.



Tease.