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Forums - Gaming Discussion - Dear PlayStation Fans: Trickle-Down Economics Isn't Real!

IcaroRibeiro said:

Streaming remove the biggest constraint from consoles and PCs:

- High price entry: Buying a machine to then play is the reason why console+PC gaming is nowhere near as popular as music or cinema, even though is a bigger market when it comes to revenue

As much people here turn down on streaming is the only feasible way I see for companies to keep making their single player AAA games. The only reason why movies budget kept increasing is because enough people was going to theaters to make them financially viable. 

Those games will need to sell for more people and seems we already close to reach the limit number of people willing to spend over 400 USD on dedicated hardware 

Multiplayer games are a different animal, they are interactive, easier to monetize and keep on market indefinitely until you recover your investment and provide a good income baseline for as long the publisher find worth it. Plus the interactive nature of such games make them more feasible to reach wider audiences thanks to good word of mouth

Also those games has much bigger shelves life. When FF XIV launched I'm sure an entry level PC couldn't play it. Today almost any PC can run it effortlessly, meaning the game was designed for high specs, but the natural course of time will naturally make it feasible for casual gamers who don't buy dedicated hardware

Which leads for the second biggest constraint of PCs/Consoles:

- No more need for upgrades. The game will launch and can reach a big userbase right of the bat

I don't see consoles disappearing, but I see at best 2 more generations (roughly 20 years) with consoles being the focus of manufacturers. Xbox is likely to be the first one to give up, which will lead Sony and Nintendo profits to go up enough to keep more generations going and provide a much more smooth transition to streaming. Hopefully internet will be good enough to not compromise experience as much as they do it today. 

Except streaming didn't increase budget of movies in cinema and it is disputed that it damaged cinemas. The type of content that is viable for cinema is different than streaming as well as streaming services isn't exactly the market you would see SP as main choice for content provider (you don't see netflix buf costing the same to make as End Game).



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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DonFerrari said:

Except streaming didn't increase budget of movies in cinema and it is disputed that it damaged cinemas. The type of content that is viable for cinema is different than streaming as well as streaming services isn't exactly the market you would see SP as main choice for content provider (you don't see netflix buf costing the same to make as End Game).

Well, streaming increased the budget of many TV shows:

https://www.pricerunner.com/bo/most-expensive-tv-shows



DonFerrari said:
IcaroRibeiro said:

Streaming remove the biggest constraint from consoles and PCs:

- High price entry: Buying a machine to then play is the reason why console+PC gaming is nowhere near as popular as music or cinema, even though is a bigger market when it comes to revenue

As much people here turn down on streaming is the only feasible way I see for companies to keep making their single player AAA games. The only reason why movies budget kept increasing is because enough people was going to theaters to make them financially viable. 

Those games will need to sell for more people and seems we already close to reach the limit number of people willing to spend over 400 USD on dedicated hardware 

Multiplayer games are a different animal, they are interactive, easier to monetize and keep on market indefinitely until you recover your investment and provide a good income baseline for as long the publisher find worth it. Plus the interactive nature of such games make them more feasible to reach wider audiences thanks to good word of mouth

Also those games has much bigger shelves life. When FF XIV launched I'm sure an entry level PC couldn't play it. Today almost any PC can run it effortlessly, meaning the game was designed for high specs, but the natural course of time will naturally make it feasible for casual gamers who don't buy dedicated hardware

Which leads for the second biggest constraint of PCs/Consoles:

- No more need for upgrades. The game will launch and can reach a big userbase right of the bat

I don't see consoles disappearing, but I see at best 2 more generations (roughly 20 years) with consoles being the focus of manufacturers. Xbox is likely to be the first one to give up, which will lead Sony and Nintendo profits to go up enough to keep more generations going and provide a much more smooth transition to streaming. Hopefully internet will be good enough to not compromise experience as much as they do it today. 

Except streaming didn't increase budget of movies in cinema and it is disputed that it damaged cinemas. The type of content that is viable for cinema is different than streaming as well as streaming services isn't exactly the market you would see SP as main choice for content provider (you don't see netflix buf costing the same to make as End Game).

I didn't imply the budget for movies increased with streaming. What I meant is movies budget kept increasing because there was enough people to make them profitable. This was possible because cinema has no entry-cost besides the ticket price. It's also important to add that cinema and TV make fairly different experiences, so they aren't direct replacements for each other. Which streaming is increasing is the budget for TV shows, which can now be released worldwide instead of a limited amount of channels, very often paid and behind a limited amount of viewers 

While for gaming, there is no option for playing AAA games without consoles or fancy PCs meaning we need a entry cost for start playing, once we reach the absolutely limit of the market (and we are closer and closer to that) willing to pay for dedicated hardware the budget of games won't be able increase anymore unless more customers are reach in some way. Multiplayer games can rely on PCs becoming cheaper with time to accumulate mind-blowing numbers with time, that's why they are not in jeopardy. But single player games don't. The only way to increase the pool of customers for a single-player without compromising their AAA status is to allow more people playing them, here streaming can provide a opportunity to increase sales and keep the budgets growing. 



Conina said:
DonFerrari said:

Except streaming didn't increase budget of movies in cinema and it is disputed that it damaged cinemas. The type of content that is viable for cinema is different than streaming as well as streaming services isn't exactly the market you would see SP as main choice for content provider (you don't see netflix buf costing the same to make as End Game).

Well, streaming increased the budget of many TV shows:

https://www.pricerunner.com/bo/most-expensive-tv-shows

And TV shows would be more analogous to GAAS type of games, episodic, than self-contained SP games. From all we know the theater have skewed between the "Marvel" movies and few other AAA blockbuster but other movies have seem less success.

Would we correlate GP increase in subscription with Sony games increasing in revenue? Again from what we can infer looking at ranks GP have removed revenue from games that aren't on the GP.

IcaroRibeiro said:
DonFerrari said:

Except streaming didn't increase budget of movies in cinema and it is disputed that it damaged cinemas. The type of content that is viable for cinema is different than streaming as well as streaming services isn't exactly the market you would see SP as main choice for content provider (you don't see netflix buf costing the same to make as End Game).

I didn't imply the budget for movies increased with streaming. What I meant is movies budget kept increasing because there was enough people to make them profitable. This was possible because cinema has no entry-cost besides the ticket price. It's also important to add that cinema and TV make fairly different experiences, so they aren't direct replacements for each other. Which streaming is increasing is the budget for TV shows, which can now be released worldwide instead of a limited amount of channels, very often paid and behind a limited amount of viewers 

While for gaming, there is no option for playing AAA games without consoles or fancy PCs meaning we need a entry cost for start playing, once we reach the absolutely limit of the market (and we are closer and closer to that) willing to pay for dedicated hardware the budget of games won't be able increase anymore unless more customers are reach in some way. Multiplayer games can rely on PCs becoming cheaper with time to accumulate mind-blowing numbers with time, that's why they are not in jeopardy. But single player games don't. The only way to increase the pool of customers for a single-player without compromising their AAA status is to allow more people playing them, here streaming can provide a opportunity to increase sales and keep the budgets growing. 

Sure companies won't chose to invest more money for less profit, that isn't even under dispute.

But the economics of SP on streaming can be easily seem to not match unless gaming would become obscenely bigger.

Let's say Sony releases 3AAA per year that currently have a pricetag of 70USD and sell 10M at that price. That is 2.1B in revenue per year on these 3 titles. Considering what is currently the model that is about 60USD per year for the "streaming/rental portion" of PS and GP. That would demand more than 30M subs just to subside these 3 titles that would perhaps hold subs for like 3 months. If you wanted similar level content to hold the service it would need 4x more so about 120M subs at least.

More likely is that people would sub for the 1 month when there is a game they are interested so pay 5-10bucks to play that game, so you would need 7 to 14 times more people joining on that month to cover the same revenue of it selling.

This goes back to what is currently accepted that GAAS, Multiplayer, episodic games, etc is more aligned with streaming.

Going back to the example of streaming for movies/series, etc. The quality and investment of series may have increased with Netflix, but blockbuster movies funded by Netflix and the like isn't anywhere near the level of investment and quality compared to titles that go first to cinema and later go to streaming to complement the revenue. So in the case of movies where you have the option of launching first in one, then selling disc, then streaming you have a different situation than let's say console aren't able to sustain the model anymore and it is streaming, you won't have multiple tiers of revenue stream.



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."

IcaroRibeiro said:

Streaming remove the biggest constraint from consoles and PCs:

- High price entry: Buying a machine to then play is the reason why console+PC gaming is nowhere near as popular as music or cinema, even though is a bigger market when it comes to revenue

As much people here turn down on streaming is the only feasible way I see for companies to keep making their single player AAA games. The only reason why movies budget kept increasing is because enough people was going to theaters to make them financially viable. 

Those games will need to sell for more people and seems we already close to reach the limit number of people willing to spend over 400 USD on dedicated hardware 

Multiplayer games are a different animal, they are interactive, easier to monetize and keep on market indefinitely until you recover your investment and provide a good income baseline for as long the publisher find worth it. Plus the interactive nature of such games make them more feasible to reach wider audiences thanks to good word of mouth

Also those games has much bigger shelves life. When FF XIV launched I'm sure an entry level PC couldn't play it. Today almost any PC can run it effortlessly, meaning the game was designed for high specs, but the natural course of time will naturally make it feasible for casual gamers who don't buy dedicated hardware

Which leads for the second biggest constraint of PCs/Consoles:

- No more need for upgrades. The game will launch and can reach a big userbase right of the bat

I don't see consoles disappearing, but I see at best 2 more generations (roughly 20 years) with consoles being the focus of manufacturers. Xbox is likely to be the first one to give up, which will lead Sony and Nintendo profits to go up enough to keep more generations going and provide a much more smooth transition to streaming. Hopefully internet will be good enough to not compromise experience as much as they do it today. 

You're comparing apples and oranges though. You also need a TV / Stereo / Mobile Phone to enjoy Music and Movies.

Streaming games requires a good internet connection which isn't available everywhere and doesn't come cheap either. Plus we still don't know the realistic price of a game streaming service. For now it's great value, so was Netflix at the start. Everything I wanted at CAD 7.99 a month. Now Netflix is up to CAD 15.50 for standard, CAD 20.99 for 4K, while stuff I want to watch is now spread out over Disney+, Paramount+ and Prime Video...

I still prefer buying music and movies although it gets harder all the time.

The big dream for MS is that once streaming becomes good enough, part of the mobile gaming crowd will get into streaming bigger games. However why would they? It's a very different way to play games. It's not the hardware price that's the hurdle since phones cost over $1200.

And there's VR. Still in its infancy, but certainly has potential to become big. And one thing that VR is very sensitive to is lag. Streaming VR games simply can not work, the laws of physics prevent that.

There will certainly be a market for streaming games on TV, however it will be many decades before it takes over, if ever. I'm glad I still have cable / pvr / physical movies since there are still plenty days Netflix will not work :/



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zero129 said:
SvennoJ said:

True, A lot of PC games are 'subsidized' by console games. Without the better margins on console game sales, even if all console gamers continue gaming on PC, there will be less revenue and thus smaller budgets. Yet maybe PC can continue growing. Otherwise games will become dependent on streaming and more and more F2P. That will definitely impact how and what games are made.

But it's also possible consoles stick around. It's still the easiest way to play bigger games in good hassle free quality. The 'hangout with your friends online' setting isn't the same on mobile. The next generation is playing on console. My oldest kid is hanging out with his friends in Rust and other games on console. My youngest is more into PC, playing Roblox, Minecraft and Fortnite on Switch.

Handheld market was taken over by mobile, yet will streaming similarly take over console gaming? And actually the handheld market is still alive in the Switch. Part of that console revenue in that graph is from the Switch which is more handheld than console. Plus now we have Steamdeck as well.

How on earth do you come to that conclusion?. Smaller budgets for console makers maybe. But for the game makers how would it make any difference if every gamer switched to PC and was still buying their game?. If 10 million users brought a game on PC is no different then if 10 million done the same on console.

How on eartth did PC exclusives such as Quake etc survive without consoles to subsidize them?.. Why are console makers moving their games to PC?. I think your getting a few things backward here.

For the simple reason, PC has far more sales, generally cheaper games over all. Hence less revenue. It's a supply and demand equation. Much more competition on PC, lower prices.

Quake was last century... $50 in 1996 is now $94 ;)

Console makers are moving their games to PC to generate more revenue since console games revenue has been stagnating. Similarly PC games have been moving to console to generate more revenue. If the audience doesn't increase anymore in your own backyard while development costs and inflation still rise, then find another audience on a different platform and/or raise the prices, add more MTX etc.



zero129 said:
SvennoJ said:

For the simple reason, PC has far more sales, generally cheaper games over all. Hence less revenue. It's a supply and demand equation. Much more competition on PC, lower prices.

Quake was last century... $50 in 1996 is now $94 ;)

Console makers are moving their games to PC to generate more revenue since console games revenue has been stagnating. Similarly PC games have been moving to console to generate more revenue. If the audience doesn't increase anymore in your own backyard while development costs and inflation still rise, then find another audience on a different platform and/or raise the prices, add more MTX etc.

Wow, So Sony games never go down in price or on sale?. Think about what you are saying. If every Sony gamer woke up tomorrow and got a PC the would be no difference to their buying habits. The ones that buy games on sales and when they are lower in price would still do that the ones that buy day 1 would still do that too. Unless your trying to tell me every Sony gamer pays 70$ for their games your post makes no sense.

Also the is no such thing as used sales on PC thats an even worse problem on consoles then piracy..

And im happy you admit consoles makers need PC to make more money since they can no longer do it on their own platform. All us PC gamers made the right choice from the start .

Again with the black and white reasoning. Try to see the bigger picture.

First here's an example of what happens when joining two markets
https://www.statista.com/statistics/206881/nintendo-software-revenue-by-type/
The Switch basically combined Nintendo's separate Handheld and Console Games Revenue, no surprise it's going down over all.

PC has more sales, games go on sale earlier, more options to buy in other stores, CD keys etc. On console you have one store, no competition.
Used game sales are tiny nowadays and someone will need to have bought it at full price first... It was never a worse problem than piracy.

PC games need console revenue as well btw for big budgets.
https://www.cinemablend.com/games/Witcher-3-Wouldn-t-Exist-Consoles-72064.html

Also if no more consoles, no more double dipping between console and PC, no more high priced remasters, and so on.



zero129 said:

HAHAHA you make me weak with laughter. Talk about cherry picking news.

If PC wasnt important why would the big two MS and Sony be porting their games?. They need them PC sales clearly.

Like i said before and i will say again. PC is the future, One platfrom to own them all it makes great sense.

That's what I have been saying, Sony and MS need the PC sales to be able to keep funding their big budget games.
Exact same thing for PC developers... So without consoles, lower budgets for PC games as well. (or higher prices)

And now all need mobile as well to keep their revenues up, hence more and more mobile spin offs.

And no, that last statement makes no sense.



zero129 said:
SvennoJ said:

That's what I have been saying, Sony and MS need the PC sales to be able to keep funding their big budget games.
Exact same thing for PC developers... So without consoles, lower budgets for PC games as well. (or higher prices)

And now all need mobile as well to keep their revenues up, hence more and more mobile spin offs.

And no, that last statement makes no sense.

Thats the thing PC has never needed consoles. The devs that did need console and pc made them games weaker on PC and consoles compared to how they where when they where just on PC. So like i said PC never needed consoles but clearly console makers now need PC money no two ways around it.

Exact same situation on console... Consoles never needed PC, and still don't. But extra sales, means bigger budgets continue to be possible.

PC has needed console money for the same reason, bigger budgets to make bigger games. Do you really believe GTA would have the same size world if it was a PC only game? The Witcher 3 is not cherry picking an exception. There's a reason why the biggest games are multi platform or first party. Is the Witcher 3 weaker than the Witcher 2? (I haven't played the 3rd one on PC, the 2nd did have plenty issues, massive slowdown in places)



zero129 said:
SvennoJ said:

That's what I have been saying, Sony and MS need the PC sales to be able to keep funding their big budget games.
Exact same thing for PC developers... So without consoles, lower budgets for PC games as well. (or higher prices)

And now all need mobile as well to keep their revenues up, hence more and more mobile spin offs.

And no, that last statement makes no sense.

Thats the thing PC has never needed consoles. The devs that did need console and pc made them games weaker on PC and consoles compared to how they where when they where just on PC. So like i said PC never needed consoles but clearly console makers now need PC money no two ways around it.

If PC devs don’t need to make console games, why did franchises like Diablo come to consoles?

It’s the same situation both ways. Devs/publishers want to make more money to keep making high budget games while still making profit, so they’ll go anywhere there are people willing to buy their products.

Last edited by Hynad - on 13 September 2022