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Forums - Gaming Discussion - Next gen PS5/XB1SX sales ratio will look the same as this gen's. Huge changes in console marketshare require huge changes in the industry.

Intrinsic on 20 May 2020
IcaroRibeiro said:
Intrinsic said:

Its actually a very bad point. Because it's not taking all the associated costs of a subscription model into consideration.

Lets be generous here. Let's say Gamepass has a sub-base of 40M people today. And let's say those people are paying $9.99/month. Thats Thats a whopping $4.8B!!!

Where did you get this operational costs though?

About your rant... I wasn't even talking about any that, I was talking about profit margin. Subscription have a bigger profit margin because there is much less costs involved than in a retail market unless it's a fully digital market

I don't know where or how you guys seem to have got this notion that subscription models ost peanuts. That is simply not true.

And speaking of digital sales, you do realize that right now digital sales revenue on PS has overtaken physical sales right? And that is only likely to keep growing especially coming into next gen.

Truth be told I don't even know why streaming gets compared to direct sales. They are simply not the same business model at all. If you directly compare it to direct sales, then it becomes unviable and unsustainable. If you only look at its strengths then you ignore the draw of direct sales. So why even compare them?



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DonFerrari on 20 May 2020

Ludicrous how can you in one post say that the games Sony releases get a big discount and a lot of sales is on bundles and on another post talk about the sales being frontloaded and not see how both contradicts your try to put their revenue down?

A 10M seller from Sony is likely selling about 6M on 1st month at full price and no more than 100k bundles (just look at the HW spikes) and even full life it probably would have a 45 or more average price sold (discounted bundles already) and on that since it is 1st party we would need to discount only the retailer part on the 50% retail sales versus digital. So on 10M sold that would be 5M on retail for 15 bucks or 150M out of the 450M made, so we would be looking at least 300M made by Sony (I would bet it is even more) besides DLC, MTX, etc.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

Conina on 20 May 2020
IcaroRibeiro said:

Subscription for unlimited availability of games only makes sense when the annual subscription per person is over the average money spending buying

The prime example in music subscription. USA music yearly spending in 2005 (year of iTunes launch) was 47 dollars per person. A Spotify yearly premium membership is 120 USD, of course these numbers are inflated because many people uses student subscriptions or family subscriptions, but even a half of the full price still over 47 USD/year. That's how USA music market is starting to recover after over a decade of steady devaluation

I don't know how much money an average american pays for console gaming, not gaming in general including subscription and hardwares, I meant only retail market. If it's over 120 USD a year then Microsoft is either losing money or mitigating their bad software sales because their consumers don't even meet the average spending threshold

Edit: I found this and it's for console marketing only, not including PC or mobile. Using 91 million as the USA console user base (source) it means ~393 USD on average, even it's counting both subscriptions and purchases still way over 120 USD 

You really think that American console gamers buy games for ~393 USD on average each year?

As stated it the graphic, the $35.8 billion revenue already include in-game purchases and subscriptions.

And they also include PC and mobile revenue: https://www.marketingcharts.com/cross-media-and-traditional/videogames-traditional-and-cross-channel-107330

The total worldwide console game market only were $45.3 billion revenue and it included games, in-game purchases and subscriptions and even console hardware.

$45.3 billion / ~200 million consoles (PS4 + XBO + Switch) = $226.5 per console (in-game purchases and subscriptions and even console hardware.)

Oops... that revenue also includes 3DS hardware and software sales... so:

$45.3 billion / ~260 million consoles (PS4 + XBO + Switch + 3DS) = $174 per console/handheld (in-game purchases and subscriptions and even console hardware.)

Or look here:

https://www.tweaktown.com/news/69808/ps4-sold-over-1-billion-games-106-million-consoles/index.html

1150 million PS4 games and 106 PS4 consoles were sold in six years, that is a tie-ratio of 10.85 games in six years... so annually 1.8 games on average.

Even if all these 1.8 games were sold for full price (spoiler alert: they were not), that would be just $108 per year. The majority of the additional revenue is from in-game-purchases + subscriptions.

Last edited by Conina - on 20 May 2020

LudicrousSpeed on 20 May 2020
DonFerrari said:
Ludicrous how can you in one post say that the games Sony releases get a big discount and a lot of sales is on bundles and on another post talk about the sales being frontloaded and not see how both contradicts your try to put their revenue down?

Explain where the contradiction is, please. Fact: Games are typically front loaded in terms of sales. There are exceptions but they don't really apply to MicroSony. Fact: MicroSony games get cut in price soon after release. Remember the BOTW vs Horizon debates of whatever year that was? Interestingly, BOTW not only sold more but it still retails for $60 plus has a paid expansion. Horizon meanwhile has an MSRP of like $17 for the complete entire version of the game, expansion included, but you can find codes for the game for $5-10 on various key sites. God of War? Already $20 or less. GT Sport? Already $20 or less. Uncharted 4? Same thing. Days Gone? $30-40. By Christmas LoU2 and Ghost will have a lowered MSRP.

It's blatantly obvious that the $60 for 10,000,000 sales in one year is bogus because it's not $60 in revenue, and they don't sell 10,000,000 in one year. Also LOL @100k from bundles. Every BF PS4 bundle has sold millions. Also bear in mind I am not saying GamePass would have more revenue. There are problems with the math on that side too. For example MS has to pay these publishers for games like Streets of Rage 4 and Red Dead 2. I am just pointing out that the math that the user presented as so ironclad and irrefutable was actually nonsense.



DonFerrari said:
A 10M seller from Sony is likely selling about 6M on 1st month at full price and no more than 100k bundles (just look at the HW spikes) and even full life it probably would have a 45 or more average price sold (discounted bundles already) and on that since it is 1st party we would need to discount only the retailer part on the 50% retail sales versus digital. So on 10M sold that would be 5M on retail for 15 bucks or 150M out of the 450M made, so we would be looking at least 300M made by Sony (I would bet it is even more) besides DLC, MTX, etc.

That's great and all but I don't really care. You're just proving my point. It will sell huge at the start and then taper off and then get discounted and bring in even less revenue. Sony would bring in between $34-40 of those retail copies depending on retailer but then you factor in distribution, marketing etc so just like the GamePass subs aren't all profit, video game sales aren't either. And this is where we reach the point that debating it is a waste of time because we have zero concrete numbers on this for either side. But I'll reiterate again, the math done was doodoo.



DonFerrari on 20 May 2020
LudicrousSpeed said:
DonFerrari said:
Ludicrous how can you in one post say that the games Sony releases get a big discount and a lot of sales is on bundles and on another post talk about the sales being frontloaded and not see how both contradicts your try to put their revenue down?

Explain where the contradiction is, please. Fact: Games are typically front loaded in terms of sales. There are exceptions but they don't really apply to MicroSony. Fact: MicroSony games get cut in price soon after release. Remember the BOTW vs Horizon debates of whatever year that was? Interestingly, BOTW not only sold more but it still retails for $60 plus has a paid expansion. Horizon meanwhile has an MSRP of like $17 for the complete entire version of the game, expansion included, but you can find codes for the game for $5-10 on various key sites. God of War? Already $20 or less. GT Sport? Already $20 or less. Uncharted 4? Same thing. Days Gone? $30-40. By Christmas LoU2 and Ghost will have a lowered MSRP.

Sure I'm well aware that the games get discounted fast and are frontloaded, that is why I averaged the ticket at 45 USD.

It's blatantly obvious that the $60 for 10,000,000 sales in one year is bogus because it's not $60 in revenue, and they don't sell 10,000,000 in one year. Also LOL @100k from bundles. Every BF PS4 bundle has sold millions. Also bear in mind I am not saying GamePass would have more revenue. There are problems with the math on that side too. For example MS has to pay these publishers for games like Streets of Rage 4 and Red Dead 2. I am just pointing out that the math that the user presented as so ironclad and irrefutable was actually nonsense.

BF Bundles are done a lot later than launch of the games, which we already agreed is where the bulk of the games are sold. So again it is taken in consideration, and it isn't a single bundle and it isn't only bundles sold and "millions" are only if you sum every year, because on any given year it isn't over 1M really. So you could if you want discount 500k-1M sales if you wanted to be rigorous.

But yes just put 10M sales at 60USD profit is wrong (sure some games will do even more than average 60 because of DLC, MTX, Luxury editions, etc, but that certainly isn't the norm).

DonFerrari said:
A 10M seller from Sony is likely selling about 6M on 1st month at full price and no more than 100k bundles (just look at the HW spikes) and even full life it probably would have a 45 or more average price sold (discounted bundles already) and on that since it is 1st party we would need to discount only the retailer part on the 50% retail sales versus digital. So on 10M sold that would be 5M on retail for 15 bucks or 150M out of the 450M made, so we would be looking at least 300M made by Sony (I would bet it is even more) besides DLC, MTX, etc.

That's great and all but I don't really care. You're just proving my point. It will sell huge at the start and then taper off and then get discounted and bring in even less revenue. Sony would bring in between $34-40 of those retail copies depending on retailer but then you factor in distribution, marketing etc so just like the GamePass subs aren't all profit, video game sales aren't either. And this is where we reach the point that debating it is a waste of time because we have zero concrete numbers on this for either side. But I'll reiterate again, the math done was doodoo.

OK



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

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Cerebralbore101 on 20 May 2020

You guys realize that the $10 from Gamepass is split between ten to one hundred games right? MS has to pay to get all those 3rd party games onto Gamepass. I'd be shocked if Gamepass even made 10% profit margins after paying all those publishers to have their games on the service.

But once again MS doesn't provide concrete numbers, so we are left to speculate.



IcaroRibeiro on 20 May 2020
Conina said:

You really think that American console gamers buy games for ~393 USD on average each year?

As stated it the graphic, the $35.8 billion revenue already include in-game purchases and subscriptions.

And they also include PC and mobile revenue: https://www.marketingcharts.com/cross-media-and-traditional/videogames-traditional-and-cross-channel-107330

The total worldwide console game market only were $45.3 billion revenue and it included games, in-game purchases and subscriptions and even console hardware.

$45.3 billion / ~200 million consoles (PS4 + XBO + Switch) = $226.5 per console (in-game purchases and subscriptions and even console hardware.)

Oops... that revenue also includes 3DS hardware and software sales... so:

$45.3 billion / ~260 million consoles (PS4 + XBO + Switch + 3DS) = $174 per console/handheld (in-game purchases and subscriptions and even console hardware.)

Or look here:

https://www.tweaktown.com/news/69808/ps4-sold-over-1-billion-games-106-million-consoles/index.html

1150 million PS4 games and 106 PS4 consoles were sold in six years, that is a tie-ratio of 10.85 games in six years... so annually 1.8 games on average.

Even if all these 1.8 games were sold for full price (spoiler alert: they were not), that would be just $108 per year. The majority of the additional revenue is from in-game-purchases + subscriptions.

First, thanks for correcting my data. I was misled to believe the 35.5 billion were only about console market, though I've already stated it included subscription so I never meant it was all about sales only

In 2016 console market was 48% of USA game market. It means 16.6 billion if 2018 had the same market share of 2016 (can someone have a source so we can adjust the size of console market?) further meaning 182 USD on average a year and of course it's including hardware sales and subscriptions



derpysquirtle64 on 20 May 2020
IcaroRibeiro said:

Subscription for unlimited availability of games only makes sense when the annual subscription per person is over the average money spending buying

The prime example in music subscription. USA music yearly spending in 2005 (year of iTunes launch) was 47 dollars per person. A Spotify yearly premium membership is 120 USD, of course these numbers are inflated because many people uses student subscriptions or family subscriptions, but even a half of the full price still over 47 USD/year. That's how USA music market is starting to recover after over a decade of steady devaluation

I don't know how much money an average american pays for console gaming, not gaming in general including subscription and hardwares, I meant only retail market. If it's over 120 USD a year then Microsoft is either losing money or mitigating their bad software sales because their consumers don't even meet the average spending threshold

Edit: I found this and it's for console marketing only, not including PC or mobile. Using 91 million as the USA console user base (source) it means ~393 USD on average, even it's counting both subscriptions and purchases still way over 120 USD 

The problem here is that you assume that every GamePass subscriber (out of 10 million) only pays for GamePass. Of course there are such people among them, but I bet that 90% of them still buy some games as well which brings the average annual revenue to more than just 120$



 

DonFerrari on 20 May 2020
Cerebralbore101 said:
You guys realize that the $10 from Gamepass is split between ten to one hundred games right? MS has to pay to get all those 3rd party games onto Gamepass. I'd be shocked if Gamepass even made 10% profit margins after paying all those publishers to have their games on the service.

But once again MS doesn't provide concrete numbers, so we are left to speculate.

But since GP is great we have to believe it brings more money than selling one 10M seller a year (ignoring that Sony have been putting about 3 very big games per year).



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

LudicrousSpeed on 20 May 2020
DonFerrari said:
Cerebralbore101 said:
You guys realize that the $10 from Gamepass is split between ten to one hundred games right? MS has to pay to get all those 3rd party games onto Gamepass. I'd be shocked if Gamepass even made 10% profit margins after paying all those publishers to have their games on the service.

But once again MS doesn't provide concrete numbers, so we are left to speculate.

But since GP is great we have to believe it brings more money than selling one 10M seller a year (ignoring that Sony have been putting about 3 very big games per year).

No one in the thread has said anything like this. No need for the console warz nonsense.