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

zero129 said:
SvennoJ said:

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)

Now your moving away from your original post something i wont allow you to do.

"

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."

That was your original comment and to me it seems like its PC that is subsidized by consoles sales dont you think?. And clearly consoles do need PC or just like the past their games wouldnt be releasing on it. once again you contradict your self..

I'm sorry, I don't understand the question or what you're trying to say. I don't see a contradiction, I read it over multiple times.

Maybe Hynad explains it better. Neither 'need' each other, yet to be able to make bigger more expensive games, also releasing them on other platforms will allow bigger budgets. PC games can be bigger thanks to also selling on consoles, and console games can be bigger thanks to also selling on PC. And there are people that buy on both platforms, people that double dip between console generations, people that buy remakes / remasters. (I do anyway)

So if no more consoles, all that extra revenue goes away. Same if no more PC, lower budgets. As I said before, the biggest games are multi platform or first party, ie money hatted to support the platform. That's another thing that goes away when consoles disappear, money hats to help development. Great not to have timed exclusivity anymore, but on the flip side, lower budgets.

It almost feels like you're celebrating the demise of consoles, not that it will happen any time soon if at all. However chances are, if that happens, most of those console gamers will switch to streaming or mobile gaming. That's not good for PC games either. Less choice is never good in the long run.



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I don't see consoles going anywhere, at least not anytime soon. MS, Sony and Nintendo are making too much on subscription services.



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Shadow1980 said:
SvennoJ said:

The console games market is stagnating, not growing.


The growth in console video game sales is gone. There was an uptick from the pandemic, but that didn't last and now inflation has gone from 3% a year to 10% in some places. Look at an inflation calculator and $60 in 2005 is $90 in 2022. MTX, DLC and better margins on digital don't cover that.

@Bolded. Are... are we allowed to say that now? Am I finally free?

But yeah. The console market is stagnant, but still strong. I don't see it going anywhere, either. In terms of hardware, total combined PS+Xbox sales have remained steady each generation at over 160M per gen, and Nintendo is still going strong with the Switch already at over 110M units. Even with their supply issues, the PS5 & XBS are doing quite well.

In the U.S., combined sales of the two this year are so far outpacing combined PS4+XBO sales from 2015, and last year the only thing that kept their combined sales from outpacing combined PS4+XBO sales from 2014 was the holiday season. Their combined LTD sales as of July in the U.S. were at about 15.3M or so, less than a million units behind where the PS4 & XBO were combined by July 2016. If supply issues weren't a concern, the PS5 & XBS might be doing even better than they currently are. They can easily make up their current deficit against last generation once supply issues subside.

Meanwhile, in Japan the PS5 is still managing to compare favorably to the PS4, and the XBS has already surpassed the XBO's lifetime total and is doing substantially better now than even the 360 was back in 2007.

As for Europe, if VGC's numbers are any indication, the 2021 vs. 2014 situation was about the same as the U.S. (rough holiday season causing YTD sales to fall behind last gen in the final quarter after outpacing them Q1-Q3). The situation this year has been rough for the PS5 (esp. in Q1), but the XBS is easily outpacing the XBO. Overall, combined PS5+XBS sales since April have compared quite favorably to those of the PS4+XBO in 2015. The overall deficit is worse than in the U.S., but by no means insurmountable.

The PS5 & XBS ought to end up selling at least 160M combined worldwide, with 60M+ in the U.S. alone, with the generation being perhaps a bit more back-loaded due to supply issues since launch. If Nintendo sticks with the hybrid model and just makes a Switch 2 (same form factor, just with far more power and various other improvements), that ought to easily sell over 100M units as well.

And we have to remind PS2 needed several years and even 100USD pricetag plus tiered late launch to emerging market to reach 160M, so the faster adoption rate of PS4 gen and this one coupled with higher attach ratio and subs have growed revenue in console gaming.



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."

Shadow1980 said:
SvennoJ said:

The console games market is stagnating, not growing.


The growth in console video game sales is gone. There was an uptick from the pandemic, but that didn't last and now inflation has gone from 3% a year to 10% in some places. Look at an inflation calculator and $60 in 2005 is $90 in 2022. MTX, DLC and better margins on digital don't cover that.

@Bolded. Are... are we allowed to say that now? Am I finally free?

But yeah. The console market is stagnant, but still strong. I don't see it going anywhere, either. In terms of hardware, total combined PS+Xbox sales have remained steady each generation at over 160M per gen, and Nintendo is still going strong with the Switch already at over 110M units. Even with their supply issues, the PS5 & XBS are doing quite well.

In the U.S., combined sales of the two this year are so far outpacing combined PS4+XBO sales from 2015, and last year the only thing that kept their combined sales from outpacing combined PS4+XBO sales from 2014 was the holiday season. Their combined LTD sales as of July in the U.S. were at about 15.3M or so, less than a million units behind where the PS4 & XBO were combined by July 2016. If supply issues weren't a concern, the PS5 & XBS might be doing even better than they currently are. They can easily make up their current deficit against last generation once supply issues subside.

Meanwhile, in Japan the PS5 is still managing to compare favorably to the PS4, and the XBS has already surpassed the XBO's lifetime total and is doing substantially better now than even the 360 was back in 2007.

As for Europe, if VGC's numbers are any indication, the 2021 vs. 2014 situation was about the same as the U.S. (rough holiday season causing YTD sales to fall behind last gen in the final quarter after outpacing them Q1-Q3). The situation this year has been rough for the PS5 (esp. in Q1), but the XBS is easily outpacing the XBO. Overall, combined PS5+XBS sales since April have compared quite favorably to those of the PS4+XBO in 2015. The overall deficit is worse than in the U.S., but by no means insurmountable.

The PS5 & XBS ought to end up selling at least 160M combined worldwide, with 60M+ in the U.S. alone, with the generation being perhaps a bit more back-loaded due to supply issues since launch. If Nintendo sticks with the hybrid model and just makes a Switch 2 (same form factor, just with far more power and various other improvements), that ought to easily sell over 100M units as well.

Hardware is still strong, however Nintendo has basically combined it's handheld market with its console market and has seen game sales revenue decline.

Add inflation on top and it's not a healthy market.

The rise of F2P, more and more sales and discounts, GAAS, subscription services are starting to take its toll on overall software revenue.



Shadow1980 said:

The charts I've seen on Statista are sometimes rather dubious. Assuming the figures for software revenue in this one are accurate, there's still a glaring issue with it: Every year after 2020 is a projection, not actual figures. Also, MS's fiscal years start in July instead of April like Nintendo and Sony, so they might not even be synced properly if the chart is using fiscal years instead of calendar years.

In any case, Nintendo's software and hardware sales were substantially higher during the past two fiscal years (the April 2020 to March 2022 period) than at any other point in the past decade, and that's with them unifying everything under a single platform. Is it as high as it was back when we had the Wii and DS both doing gangbusters at the same time? No, but that period was an anomaly, and we shouldn't expect Nintendo to stay at those highs. Now, as we inevitably transition from the Switch to the Switch 2 (assuming they stick with the hybrid form factor), there will be a bit of a cyclical dip, but it's unlikely to be anything unhealthy for Nintendo.

TL;DR: Nintendo, and the console market writ large, is doing fine.

True, it depends on what you consider a healthy market to be. It's still healthy in the sense that it has matured and will stick around like it currently is.

However the growth has gone and all the claims that publishers keep making bigger and bigger profits is what I have my doubts with. The main argument against raising prices seems to be "pure greed".



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SvennoJ said:
Shadow1980 said:

@Bolded. Are... are we allowed to say that now? Am I finally free?

But yeah. The console market is stagnant, but still strong. I don't see it going anywhere, either. In terms of hardware, total combined PS+Xbox sales have remained steady each generation at over 160M per gen, and Nintendo is still going strong with the Switch already at over 110M units. Even with their supply issues, the PS5 & XBS are doing quite well.

In the U.S., combined sales of the two this year are so far outpacing combined PS4+XBO sales from 2015, and last year the only thing that kept their combined sales from outpacing combined PS4+XBO sales from 2014 was the holiday season. Their combined LTD sales as of July in the U.S. were at about 15.3M or so, less than a million units behind where the PS4 & XBO were combined by July 2016. If supply issues weren't a concern, the PS5 & XBS might be doing even better than they currently are. They can easily make up their current deficit against last generation once supply issues subside.

Meanwhile, in Japan the PS5 is still managing to compare favorably to the PS4, and the XBS has already surpassed the XBO's lifetime total and is doing substantially better now than even the 360 was back in 2007.

As for Europe, if VGC's numbers are any indication, the 2021 vs. 2014 situation was about the same as the U.S. (rough holiday season causing YTD sales to fall behind last gen in the final quarter after outpacing them Q1-Q3). The situation this year has been rough for the PS5 (esp. in Q1), but the XBS is easily outpacing the XBO. Overall, combined PS5+XBS sales since April have compared quite favorably to those of the PS4+XBO in 2015. The overall deficit is worse than in the U.S., but by no means insurmountable.

The PS5 & XBS ought to end up selling at least 160M combined worldwide, with 60M+ in the U.S. alone, with the generation being perhaps a bit more back-loaded due to supply issues since launch. If Nintendo sticks with the hybrid model and just makes a Switch 2 (same form factor, just with far more power and various other improvements), that ought to easily sell over 100M units as well.

Hardware is still strong, however Nintendo has basically combined it's handheld market with its console market and has seen game sales revenue decline.

Add inflation on top and it's not a healthy market.

The rise of F2P, more and more sales and discounts, GAAS, subscription services are starting to take its toll on overall software revenue.

I've seen Statista charts with obvious big mistakes like this one here:

https://www.statista.com/statistics/687059/nintendo-switch-unit-sales-worldwide/

Look at 2019. The number went down in one month instead of up (which is literally impossible) which lead to all later months being 1mil to low. And years later nobody has fixed it.

I don't really trust that site.



Shadow1980 said:
SvennoJ said:

True, it depends on what you consider a healthy market to be. It's still healthy in the sense that it has matured and will stick around like it currently is.

However the growth has gone and all the claims that publishers keep making bigger and bigger profits is what I have my doubts with. The main argument against raising prices seems to be "pure greed".

Consoles are one of those markets that has essentially reached the steady state part of their existence. The only thing keeping hardware sales strong over time is the periodic release of new systems, but the percentage of people in the main three markets (NA/EU/JP) willing and able to buy one has essentially maxed out. The console market showed growth in the 80s & 90s, but there's just no more room for growth unless markets outside the main three start to adopt consoles en masse.

It's a common thing with consumer electronics. For example, TVs had a period of exponential sales growth in the U.S. in the 1950s, but the growth slackened as market penetration reached near-saturation levels and the vast majority of households had a TV. The advents of color TV and later HDTV reset the cycle, similar to console generations. Still, once everyone has a TV, people will only buy more to either A) replace broken units, B) upgrade to a better model, or C) have extra screens in the house. It's kept a steady revenue stream, but not a growing one in real terms, and the period of exponential growth in TV sales died in the 60s.

But if perpetual growth is what is needed for a business to be considered "healthy," then capitalism itself is terminally ill.

I guess the discussion is market growth being almost zero, still having steady revenue stream, but increasing cost. How long will that be healthy?



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."

DonFerrari said:
Shadow1980 said:

Consoles are one of those markets that has essentially reached the steady state part of their existence. The only thing keeping hardware sales strong over time is the periodic release of new systems, but the percentage of people in the main three markets (NA/EU/JP) willing and able to buy one has essentially maxed out. The console market showed growth in the 80s & 90s, but there's just no more room for growth unless markets outside the main three start to adopt consoles en masse.

It's a common thing with consumer electronics. For example, TVs had a period of exponential sales growth in the U.S. in the 1950s, but the growth slackened as market penetration reached near-saturation levels and the vast majority of households had a TV. The advents of color TV and later HDTV reset the cycle, similar to console generations. Still, once everyone has a TV, people will only buy more to either A) replace broken units, B) upgrade to a better model, or C) have extra screens in the house. It's kept a steady revenue stream, but not a growing one in real terms, and the period of exponential growth in TV sales died in the 60s.

But if perpetual growth is what is needed for a business to be considered "healthy," then capitalism itself is terminally ill.

I guess the discussion is market growth being almost zero, still having steady revenue stream, but increasing cost. How long will that be healthy?

Thanks for stating what I was trying to say. You don't need perpetual growth in absolute unit sales, but revenue has to keep up with inflation to stay healthy. Video game prices haven't been doing that for a long time, while the growth in sales has stopped.

Meanwhile people still expect bigger and bigger games, development costs keep rising. Which is fine when the market keeps growing, yet now we still have increasing costs with decreasing revenues due to inflation -> unhealthy market.

@Shadow1980 I'm talking about software revenues. The hardware cycle will still reset, yet gaming revenues is where the real money comes from. The hardware doesn't make much profit, especially not with the R&D costs that need to be payed back.



Shadow1980 said:
DonFerrari said:

I guess the discussion is market growth being almost zero, still having steady revenue stream, but increasing cost. How long will that be healthy?

Nothing can grow forever. Real development costs are slowing in growth and will plateau. The current average appears to be around $60-80M, only three or four times of what the nominal average was just two generations ago. Meanwhile, from what I've read, the average nominal development costs grew upwards of 10- to 20-fold from Gen 5 to Gen 7. If budgets kept ballooning at the same pace they did prior to Gen 7, we'd be staring down the barrel of a billion dollars per game on average by next generation. To break even on just the development costs (to say nothing about marketing, etc.), a billion-dollar game would have to sell over 14M copies at $70 per copy. Clearly, developers and publishers are not going to throw that much money at the average AAA game.

There are some obvious limiting factors. The biggest contributors to the increase in production budgets over time appear to be A) the increase in the size of development teams, and B) games taking longer to make. In the 8-bit era, a team of a dozen or less people could create a quality title in just a few months. Now it takes teams of several hundred people working on a title for around 2-4 years. But team sizes and development times can't grow forever. It's unrealistic to think that a next-gen game would have to have a dev team 5000 strong working six years just to make the average AAA game. At some point, things will have to stop growing. A steady-state industry like the console market isn't just going to keep letting expenditures grow at an unsustainable rate.

SvennoJ said:

@Shadow1980 I'm talking about software revenues. The hardware cycle will still reset, yet gaming revenues is where the real money comes from. The hardware doesn't make much profit, especially not with the R&D costs that need to be payed back.

Yeah. I know I've been going back and forth between software and hardware. But software sales are doing fine.

On Nintendo's end, I mentioned that they are posting some of their best figures ever. Sure, they're not where they were back in 2007-2010 when combined Wii & DS software sales were at their peak, but those years were clearly anomalies, and the past two fiscal years still ranked 5th & 6th places for Nintendo software shipments for all years going back to at least 1992. While I still doubt the Switch will become the new #1 system ever, it is still on track to sell more software than any single Nintendo system ever and has an absolutely outstanding software tie ratio, one that stands a good shot at beating the GameCube's tie ratio, which is the highest of any Nintendo system to date. Clearly, the unification of their handheld and home console efforts into a single unified hybrid system has not hurt them any.

As for Sony, the PS4 has sold over 1.4B software units as of last count, more than any other system besides the PS2, and their own first-party software sales were better on the PS4 than on any prior PlayStation console. So, they're clearly doing fine for now.

And on MS's end, apparently Xbox software revenues have been highest over the past few years than ever before. Not sure if that includes XBL and GP subs or not.

Yes, newer revenue streams like premium DLC and subscriptions have helped a lot, and the increased popularity of digital has increased the per-copy profitability of specific titles, but it's clear that the console industry is not struggling or otherwise showing signs of being unhealthy, either in terms of hardware or software sales. Just because the market isn't growing doesn't mean it's dying.

It was more than 1.5 Billion units at the end of 2021, so it's pretty much guaranteed the number now is over 1.6 Billion units.



Were there any significant number of people flexing about paying more for games? Seems like OP was just looking for something to be outraged about.