PS4 HW collapse will begin the next fiscal year, not the one after.

I expect a decline of around 50% for the next fiscal year.

Comparing Sony (to be more precise PlayStation) and Nintendo is very tricky.

Both are console manufacturer but how they operate to achieve success in the game business is totally different.

In the case of PlayStation, dominance is achieved by positioning the PlayStation consoles as the main platform where people can play third-party software (yes, there is Xbox which follow a similar strategy but Xbox is competitive only in US, UK and a few other smaller markets).

The main challenge for PlayStation future is the arise of new game delivery platforms that can successfully replace PlayStation as the preferable platform where people consume third-party software (on the behalf of being more convenient or cheaper and delivering the same hugely popular third-party games).

In the case of Nintendo, dominance is achieve by introducing out of the field concepts that needs to be attractive for a large audience and that are proved by Nintendo's first-party software.

The challenge for Nintendo future is to prove they can deliver new unique concepts that successfully attract people in the face of industry's trend of constant consolidation and commoditization.

This natural difference is reflected on the various achievements

For instance PlayStation will usually have the upper hand in term of total software sales (and software revenue) because their whole strategy is based on third-party software instead Nintendo will usually have the upper hand in term of total first-party software sales because their whole strategy is based on the strength of their in-house software.

Sony, with PlayStation, achieved Nintendo-like profits thanks to the rise of digital sales.

The rise of digital sales was THE game changer of the last decade and Nintendo will benefit from it too though more slowly than the competition (they are well behind Sony and Microsoft in that regard).

In fact digital sales are the reason why I think Nintendo might achieve DS/Wii like profits despite it's impossible for Switch to sell 58M in a year like it happened in fiscal year ending March 2010 when both Wii and DS peaked.

For the FY ending March 2019, you took Nintendo's Net Profit instead of the Operating Profit figure.

Nintendo's forecast for the current fiscal year Operating Profit is also wrong, same for Sony (Game division)'s forecast for the current fiscal year Operating Profit which is quite lower.

OPERATING PROFIT

FY 2019:

Playstation - 311 billion yen

Nintendo - 250 billion yen

FY 2020 forecast:

Playstation - 235 billion yen

Nintendo - 300 billion yen

We will see for certain who dominated who in the current fiscal year in term of Operating Profit next April/May.

Oh yeah, got it mixed up. 

Figured. Been trying to find a reliable source. Thanks for correcting.

Completely wrong.

The console business entails hardware sales, software sales, digital sales, subscription services and peripherals. Revenue has nearly always been the go to number to observe how much of a market a business captures, hence why we define markets by their gross worth. 

I've already mentioned the Uber, Netflix, Amazon comparison to which you have no answer. 

The only reason you don't want to admit this is because Nintendo gets absolutely destroyed by Playstation in revenue.

Even your claim about profit was wrong considering Playstation had considerably better profits than Nintendo last year, and presumably the years before that with the PS4. 

For the last decade you would be right most often than not (about 7 vs 3).

The cause is the presence of two contemporary and opposing trends:

1) During the last decade Nintendo lived through what was by far its worst hardware cycle in fact Nintendo incurred in losses for the first time ever since they entered the videogame business.

It was unprecedented for a company like Nintendo which was always profitable and often achieved what Nintendo management uses to calls "Nintendo like profits" (about 100Bn yen per year or more).

2) Roughly at the same time Sony had with PS4 what is by far its best hardware cycle ever, by a long shot!

To gives an idea how sharp was the improvement: the PS4 era was more profitable than the PS1 and PS2 era combined (for obvious reason I don't count the PS3 era since it was a big money loser for Sony).

This jump in profitability was possible because, contrary to the previous generation, Sony cornered the market from the beginning AND Sony pursued the expansion of digital sales which was the defining trend of the past decade.

Digital sales guarantee higher margin compared to physical goods, therefore Sony G&NS achieved an unprecedented profitability in its history.

The expansion of the digital business is so mature for Sony G&NS that in the last fiscal year more than 60% of its revenue was related to network service/digital sales.

However overall, historically, Nintendo out profited Sony's Game division by a big margin, for which I mean Nintendo was several times more profitable than Sony's Game division (approximately 3.5x).

Since the fiscal year ending March 1995 (when PS1 was launched in Japan) these are the cumulative operating profits earned by Nintendo and Sony's Game division:

Nintendo: 3.46 trillion yen

Sony's Game division: 0.99 trillion yen

Nintendo's cumulative operating profits since they released the Famicom in 1983 totaled about 4.33 trillion yen.

You completely overlook Sony's own studios and their first party offerings. And that, my friend, has made a key difference against Microsoft who have been heavily criticized for lack of exclusives(they are addressing it now by building up their own studios, as we know). Third party is the big bulk that brings the most money, but first party is the proposition of why this platform over the other similar one. Sony's exclusives might not pull Nintendo numbers, but they're nothing to scoff at, especially considering that they are up against practically every game out there, whereas Nintendo has a narrower library to offer.

Agree with both of you.

Sony has become the market leader with revenue bigger than both Nintendo and Xbox combined. This means a massive amount of third party game sales are made only on their platform.


Their first party has pretty much reached Nintendo levels:

TLoU, UC4 -> 17 million+
Spiderman -> 13.2 million+ (Spiderman is prob reaching 16-20 million)
GOW, HZD -> 10 million+ (GOW is prob reaching 15 million)
Would not be surprised if Sony ends the gen with two 20 million sellers (TLoU II, TLoU/Spiderman)

Combined with their margins increasing with digital rising, Sony's profitability has reached new highs. I don't think Nintendo or Xbox are at a position to overthrow Sony's lead at the moment. While the SW is doing great, its going to be peaking soon, and its software sales and digital storefront are dwarfed by Playstation. MS simply don't have the brand to compete with PS worldwide, their first party is considerably weaker and they've lost a massive part i third party sales due to hardware sales being so weak.

src said: Agree with both of you. Sony has become the market leader with revenue bigger than both Nintendo and Xbox combined. This means a massive amount of third party game sales are made only on their platform. Their first party has pretty much reached Nintendo levels: TLoU, UC4 -> 17 million+ Spiderman -> 13.2 million+ (Spiderman is prob reaching 16-20 million) GOW, HZD -> 10 million+ (GOW is prob reaching 15 million) Would not be surprised if Sony ends the gen with two 20 million sellers (TLoU II, TLoU/Spiderman) Combined with their margins increasing with digital rising, Sony's profitability has reached new highs. I don't think Nintendo or Xbox are at a position to overthrow Sony's lead at the moment. While the SW is doing great, its going to be peaking soon, and its software sales and digital storefront are dwarfed by Playstation. MS simply don't have the brand to compete with PS worldwide, their first party is considerably weaker and they've lost a massive part i third party sales due to hardware sales being so weak.

Yes, sure, Sony's 1st party games can reach Nintendo levels. As long as they continue literally giving them away!

peachbuggy said: src said: Agree with both of you. Sony has become the market leader with revenue bigger than both Nintendo and Xbox combined. This means a massive amount of third party game sales are made only on their platform. Their first party has pretty much reached Nintendo levels: TLoU, UC4 -> 17 million+ Spiderman -> 13.2 million+ (Spiderman is prob reaching 16-20 million) GOW, HZD -> 10 million+ (GOW is prob reaching 15 million) Would not be surprised if Sony ends the gen with two 20 million sellers (TLoU II, TLoU/Spiderman) Combined with their margins increasing with digital rising, Sony's profitability has reached new highs. I don't think Nintendo or Xbox are at a position to overthrow Sony's lead at the moment. While the SW is doing great, its going to be peaking soon, and its software sales and digital storefront are dwarfed by Playstation. MS simply don't have the brand to compete with PS worldwide, their first party is considerably weaker and they've lost a massive part i third party sales due to hardware sales being so weak. Yes, sure, Sony's 1st party games can reach Nintendo levels. As long as they continue literally giving them away!

Too bad for you, Nintendo also bundle so many of their games.

Completely wrong lmao

We've already been through the revenue thing with Amazon, Uber etc. Just because you aren't willing to accept doesn't invalidate it. MS gaming division prob includes all their PC and mobile stuff as well, and yeah they have a fair amount of the market because they sell a lot of third party software.