Sony caught off guard?
Sony caught off guard?
Why last week's announcement may have thrown off Sony and Playstation
Scarcity, hiding in plain sight, and why last week’s announcement has Sony scrambling.
Read time: 8 minutes
Quick Tidbits
Here are small and developing stories you should keep your eye on.
Hiding in plain sight: last week was a big week for Microsoft and Xbox. Along with officially announcing the Xbox Series S, they also revealed its costs and a unique payment structure that makes affording the console easier. The first look of the Series S was particularly exciting, and it led to some hilarious memes from the gaming community. But it turns out we got a chance to see the Series S earlier this year…we just didn’t catch it. Head of Xbox, Phil Spencer, actually had the Series S in the background during his interviews. Where was it? In his bookshelf, the most obvious place to put it. Spencer said that the next-gen console appeared in his interviews three separate times. In hindsight, it isn’t too surprising, as Xbox does enjoy hiding secrets in its videos for fans to find. Nevertheless, it’s funny and a bit ironic Xbox decided to do this, as they’ve already had issues with leaks regarding their next-gen console.
Gamestop closing more stores: the long-time video game store is struggling, and they’re closing 400+ more stores to compensate. Last Wednesday, the company reported plans to close between 400 to 450 stores nationwide. It’s been a tough two years for Gamestop, as they also saw struggles in 2019 with more gamers opting for digital copies instead of buying physical copies. They’ll need to right the ship soon or risk more stores closing and more employees losing their jobs. It is worth wondering if the company is in its final years though. With all major consoles having thriving online stores, more gamers purchasing digital copies, and the growing popularity of cloud gaming, we may see Gamestop following in the footsteps of other stores that have suffered from this trend, similar to what Netflix, Hulu, and co. did to Blockbuster.
Apple making enemies: if Apple is hoping to break into gaming, they’re making their path extremely difficult. In what was considered an “olive branch,” the tech giant “opened” up their rules to allow Microsoft’s xCloud and Google’s Stadia to stream games directly from their phones. The only problem with this is that every game submitted must be a standalone app. This is ridiculous, considering other streaming apps like Netflix and Hulu can stream hundreds of shows and movies directly from the app. Asking these gaming services to submit each game in their library one-by-one and as a standalone app defeats the purpose of cloud gaming. Oh, and why exactly am I covering mobile gaming in a console only newsletter? Well, the landscape of gaming is slowly changing, and we’re approaching a new era where console gaming and mobile gaming are becoming more intertwined. As of this writing, they have clear and distinct differences, but that could change in the coming months and years.
Sony caught off guard?
Credit: Sony
Despite the risk of undercutting from its competitor, Microsoft moved forward with officially announcing the Xbox Series S, its costs, and the costs of the Xbox Series X after another leak gave consumers an early look at the Series S and its price point. It worked out well for Microsoft and Xbox, as not only was the announcement well received, but their social media campaign and responses to the public were top notch.
It left many people and companies surprised, as the technology installed into the Series X, in particular, had many experts and fans thinking that the console would be selling around the $600 range. In fact, the tech inside the Series X is much similar to what you’d see in higher-end PCs, something that hasn’t really been seen in console gaming. Xbox is betting big that their game passes, particularly the Ultimate Game Pass, will be a hit with consumers, and they’re ok with taking the price hit as a result.
Surprisingly enough, one of the surprised companies was Microsoft’s primary competitor in the gaming space — Sony.
Reports from GameReactor and other sources have suggested Sony was “stunned” the Xbox Series X came in at a $499 price point. They had hopes of the console selling at $600 so they could match the price for the PS5 and undercut it with the PS5 Digital. It’s now said that Sony will be adjusting their pricing to match both next-gen Xbox consoles, with the PS5 rumored to be $499 and the PS5 Digital to be $399.
With this said, it’s all speculation and nothing has been confirmed. We should expect a full announcement this Wednesday, so we won’t have to wait long to see how Sony responds.
My Thoughts
Talk about a momentum shift.
Since this newsletter’s inception, I’ve been very pro-Sony and PS5.
I’ve lauded their ability to keep their console information a secret (something that is, apparently, very hard to do) and their launch title lineup. I’ve also praised their ability to learn from past mistakes (ala the PS3 launch) and adjust their marketing and distribution strategy.
So to hear Sony was “banking on $600” is a bit odd to me. It doesn’t sound like the company that has three of the top five consoles sales all time.
Why would a company rely on a decision that’s completely out of their control? And if so, why wouldn’t they have a back-up plan?
For the first time since the days of the Xbox 360 and PS3, it appears as if Microsoft has Sony on the ropes, and the latter is working hard to adjust.
First, let’s address the rumors currently being circulated.
For much of this year, Sony has been wonderful at keeping news about the PS5 quiet. While Microsoft was stumbling left and right (which part of me thinks may have been on purpose), Sony has been methodical about news comes out…until recently. Having reports come out stating Sony was surprised, followed by news that they are slashing their costs, is a bad look for them. It shows a bit of desperation and, in a certain lense, ignorance, as they didn’t take Xbox and its offerings serious enough. Now with multiple leaks leading up to their event on Wednesday, will they be able to keep all information in-house? Or will something else be leaked?
Next, let’s look at the rumors themselves.
If it's true that Sony plans on slashing and matching the costs of the Xbox Series X and S, they could be in trouble.
Back in February, Bloomberg reported the costs for making a PS5 is $450. Had Sony been able to sell the PS5 at a $600 price point (something they were hoping to do), they would’ve generated a $150 profit. But because Xbox came in at a $499 price point, Sony was at risk of making the same mistake they made with the PS3 and pricing their console $100 more. It’s already known that the Xbox Series X is the more powerful console (despite hilarious screenshots saying otherwise), so why would Sony want to make a “weaker” model more expensive?
Credit: Microsoft/Halo Infinite
With the news of Sony slashing and matching their next-gen console costs, it shows that they won’t be making the same mistake twice, but it does present a new problem.
Profit.
If the reports are true and the PS5 is now $499, Sony will only make around $50 per console sold. If they’re able to sell the same amount of units they sold when the PS4 launched (2.1 million), they’ll only make a profit of around $105 million. Now under the same circumstances but with a $600 price point, they would’ve made around $315 million.
That’s a huge drop in profits, and it’s uncertain if they’ll even reach the same amount of units sold during launch day, as they also have the PS5 Digital releasing with the PS5 this time around.
Now, Xbox would be in the same boat, but they have something available to them that the PS5 is still fleshing out — their Game Pass and xCloud.
As I mentioned, Xbox is betting big that their new subscription service and cloud-based system will be a hit, and they’re happy to eat the costs of console development because of it (but how much is unknown, as there are no confirmed reports on Series X production costs).
If all goes well for them, the hope is that sales from Game Pass and xCloud will offset production costs. It’s something they’ve routinely advertised and stated in the past, as it’s no secret Microsoft is transitioning to cloud gaming.
As of this writing, Sony has no back-up plan like this available. Yes, they do have the Playstation Now, but it currently does not have the ability to transition to other devices like laptops, phones, or tablets. They’ll need to lean into their more robust gaming library and launch titles to offset what Xbox is doing with their Game Pass subscription service and xCloud system.
With all this said, things could swing back in favor of Sony, but it all depends on what they announce on Wednesday. Some insiders have been “foaming at the mouth” to share what the console manufacturer has in store, and early reaction videos only back-up this claim.
At this point, all we can do is sit and wait, but I’m looking forward to what Sony and the PS5 have planned.
Mario’s Anniversary
Yesterday marked the 35th anniversary of the original Super Mario Bros release.
On September 13, 1985, the aforementioned title made its way to the NES, and it was the beginning of one of the most beloved video game characters in existence.
Mario has come a long way since then, as he’s been on adventures that include Super Mario 64, Super Mario Sunshine, Super Mari Galaxy, and most recently, Super Mario Odyssey (he really has an obsession with his name, doesn’t he?).
It’s been a great journey with numerous amazing titles and spin-offs, and it’s something that will be celebrated this Friday with the release of Super Mario 3D All-Stars.
What’s your favorite Mario title, and why is it Super Mario Sunshine (joking)? Do you plan on getting Super Mario 3D All-Stars? Let me know by replying to this email, I’d love to hear from you.