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EA CFO:Digital margins over x2 physical; DD is 20% on PS4\XB1,expects 40% in 4 years
- Thread starter Saty
- Start date
He's eating the crows he tried to serve a few days ago.
You guys think XB1 is as low as 13 million?
I'd thought they are at 15-16 million which would mean EA expects only 8 million consoles sold this winter.
Vanillalite
Ask me about the GAF Notebook
It'd not regulations that's the problem.
It's the catch 22 of needing to sell the device itself as a physical product, but then wanting to sell everything else as a digital product. Walmart likes pedaling say PS4s cause they also get a cut on all of the games. It's not just more console sales for Sony, but more people with PS4s buying games at Walmart.
If Walmart or Target or whomever can't sell all or as many of the games cause people have moved to digital then why are they still gonna hawk the console for say Sony?
They do it for Apple because the markup is fucking redonkulous on product + accessories so they are making cash up front even if the customer is then buying everything else digital. The margins on consoles have never been great.
Hamster Plugin
Member
No, it will not. Steam prices in EU regions are worse than ever (60 on Steam, 40-45 for physical PC game), and the only reason I still buy digital PC games is because of key resellers and other stores like Green Man Gaming. With consoles you only have one store selling digital games, so we would have to just suck up the shitty prices.
Steam's price difference with retail is even worse than the one on consoles. So that's what happens when people stop buying physical games.
LiquidMetal14
hide your water-based mammals
When the expectation and norm in the past (in a less thriving PC market!) was to have parity pricing on PC, then that's when people like me get upset. The PC market is growing yet parity pricing convinently goes. If I pay for a good box with fancy crap then I'd swallow the full price but not when I'm not getting the same value with the easy and no distribution DD.
The problem is game companies taking away something we had while the market is growing more viable. It feels like wanting your cake and eating it too. I'm not asking for a lot. Gaming is an expensive hobby and I'm an enthusiast. Take care of me.
When was the last time Microsoft gave us a firm #?
Being at 16 seems generous, if they were at 16 they would probably be console leaders in the US
Hip Hop
Member
Yeah. pretty much the reason why nobody cares about PC digital games and trading in.
digital games there are cheap enough that trade ins never cross your mind.
If i remember correct the last number was 10 million last november (not sure if shipped or sold). That would mean only 3-5 million this year if 15 is correct.
Hamster Plugin
Member
That's only if you buy from alternative stores. Steam is a gigantic ripoff in Euro countries.
Canis lupus
Member
This puts 2 group of people in their place
1. people who only look at raw number of consoles sold
2. people who think PS5/Xbox 4 might be digital only
1. people who only look at raw number of consoles sold
2. people who think PS5/Xbox 4 might be digital only
NekoFever
Member
They're doing what they do in the US, which is charging the RRP/MSRP for the digital version. Only they haven't taken into account the different retail environment in the UK, where shops undercut each other rather than all charging the same price, and no one ever pays the RRP.
A $60 new game in the US on day one is $60 in Best Buy, $60 in Gamestop, $60 in Wal-Mart, etc. A £55 new game here is £50 in Game, £45 in Tesco, £42 from ShopTo, etc.
TBiddy
Member
Would be silly not to. Companies exist to make money to the shareholders, basically.
Also, what's up with the tone in this thread?
I don't know if my math is right, but doesn't this mean that at just 20% of unit sales digital downloads could account for over 1/3 of revenues?
Holy shit, 1 digital game is worth 2 physical sales... Brings a new perspective when we wanna talk about the health of an IP.
As long as publishers find keep finding ways to ecourage existing customers to buy digital games and content, an IP can retain or even increase its value with far fewer customers.
I folks need to reconsider how we interpret sales numbers from here on out. That series that you thought was in decline might actually be making more money than ever.
Holy shit, 1 digital game is worth 2 physical sales... Brings a new perspective when we wanna talk about the health of an IP.
As long as publishers find keep finding ways to ecourage existing customers to buy digital games and content, an IP can retain or even increase its value with far fewer customers.
I folks need to reconsider how we interpret sales numbers from here on out. That series that you thought was in decline might actually be making more money than ever.
Ever wonder why that is?
Walk into a store in Germany and look at the PC gaming section. Walk into a store in the us and look at the pc software section maybe with world of Warcraft and a copy of regular edition sky rim that's been sitting there since launch day that still has a 50$ tag on it.
Publishers (!) can get away with it in the us because there is no retail games presence anymore.
A lot can change in 6 or 7 years
Hell, Microsoft can flip the switch and return to their original vision 4 years from now, they should have kept that decision and been the driving force for change, they had they money to take that hit....but no
They probably lost even more money because they are too busy trying to be number one instead of thinking long term big picture
Maybe 13 mil. sold trough for now. But 15 mil. shipped highly possible.
LiquidMetal14
hide your water-based mammals
Parity existed in a less viable market years ago. Now it's been taken away because they can simply do it. Am I the only one who grew up with PC being cheaper digitally than physical? The expectation and convenience was there. I only played by the rules and now that's changed because "screw you give me money"? And in a growing market in the PC gaming sector.
They might as well mark up physical and DD to 69.99USD since they can do what they want anyways.
Gipsy Danger
Member
Why would you buy off Steam if you have all the options that PC digital gives you though?
Vanillalite
Ask me about the GAF Notebook
The problem is we are stuck in this awkward in between period.
EU and NA pricing isn't in the same spot. PC already got shitted on first so they moved to digital cause retail already gave no fucks. Console manufacturers still haven't figured out how to get around the conundrum of needing to sell the physical hardware itself in brick and mortar. Oh and this gen everything needs to be installed and patched so it's sorta like going digital.
The fact is nobody has any easy answers for any of these pressing questions coming for the next decade of gaming.
TBiddy
Member
Hey, I don't disagree per se.
But the notion that the game companies should lower the prices, because they have higher margins is a bit naive. We all want cheaper games, but as long as people continuously pay 60$ for a digital copy and an additional 60$ for a season pass with all the content, the main game should've had, the prices will stick right where they are.
With regards to the tone I meant the usual suspects enjoying themselves and being dicks about someone else being wrong.
I think prices will drop, but only on paper, when console games go full digital. As inflation continues to rise games prices will too, but the price people are willing to pay for games has pretty much kept still at 50-60$. To counteract this and avoid sticker shock, the move to digital solves both problems up front. Increased revenue while buying time and keeping a nice cushion to protect against inflation screwing up what people think they are spending vs what they actually are, buying an extra gen or two before the enevitable rise to 70$ comes.
Win/win for the pubs, really. Especially in the days of mobile gaming screwing up perceived value of software all over the map in the industry for everyone, but that's another can of worms entirely.
Glad consumers are benefiting from lower cost base of digital. Oh wait... we're actually allowing ourselves to be fleeced with digital prices and signing up to be nickel/dimed at same time.
Hopefully that 20% will kill the endless and frankly stupid trend of people arguing for 50% plus digital for their favourite under performing game.
Hopefully that 20% will kill the endless and frankly stupid trend of people arguing for 50% plus digital for their favourite under performing game.
Yep, is appalling really. As someone who's gone digital only with all media, is the reason why I hardly buy anything outside of Steam sales and key resellers these days.
LiquidMetal14
hide your water-based mammals
I'm not entirely disagreeing with you but the current 60/60 pricing for base game and SP is another decent but ultimately naive way for companies to make more money from us. And then you have micro-transactions and DLC for cosmetics.
All I'm getting at is that companies are taking gamers to the cleaners more so than ever and we still can't catch a small break for buying digital.
On console, were paying to play online. All be it PS+ is good for the games the point still stands.
So in 2015, EA have PS4/XB1 digital sales at 20%.
I honestly hope this shuts up the insane "my 9 friends bought digital so its at 40%" posts that have been flooding Gaf lately.
Shame that digital prices in the EU will largely stay at their ridiculous price points for the foreseeable future.
.
All good points. One wonders how the XB1 would have done as an all digital console.
No ordinary brick and mortar store would want to stock such a non value adding product, its sales would have been abysmal.
I honestly hope this shuts up the insane "my 9 friends bought digital so its at 40%" posts that have been flooding Gaf lately.
Shame that digital prices in the EU will largely stay at their ridiculous price points for the foreseeable future.
.
All good points. One wonders how the XB1 would have done as an all digital console.
No ordinary brick and mortar store would want to stock such a non value adding product, its sales would have been abysmal.
Vanillalite
Ask me about the GAF Notebook
If consoles go all digital who's gonna sell the hardware? Shelf space is at a premium in big box retailers, and console hardware margins aren't exactly baller for the stores.
LiquidMetal14
hide your water-based mammals
If we are going on a DD future path then game makers should figure out a way for us to be able to still go to brick and mortar and take out HDD's or big pen drives and flash copy a game to the drive in a matter of minutes.
If retail is going to continue to coexist with the quickly trending digital future then these companies need to figure out how to make our lives easier, not harder. That means no fancy box, no premium overhead of 10 or more.
If retail is going to continue to coexist with the quickly trending digital future then these companies need to figure out how to make our lives easier, not harder. That means no fancy box, no premium overhead of 10 or more.
huntingzibod
Member
With Sony likely to have sold 36m* by the end of the year, that leaves between 14-15m for the Xbone.Does that tally with GAF estimates?
Surely it's got to be approaching 20 m by now?
Math: (bare with me!)
* Sonys hipped 29.3m by the end of September.
They predict sales of 17m or so by end of FY15
They had shipped 22.3m by end of FY14
They sold 2.4 m during Q4 (Jan-March 2015)..
22 + 17m = ~39
Deduct the 29.3 they already shipped at the end of Q2.
39 - 29.3 = 9.7
That's 9.7 m sales for Q3 and Q4.
Deduct Q4 likely sales, around ~3 (they sold 2.4m Q4 2014, with Uncharted 4 it's going to see a boost in march)
9.7 - 3 = 6.7
They sold 6.4 m during Q3 last year so this is achievable..
Finally,
29.3+6.7 = 36m
MS said it was 'due to have shipped' 10 million at some undisclosed point from the start of november last year. That could have included all pre-holiday stock orders, or could have meant imminent sales to consumers.
They have released virtually no information since.
GAF estimates put it at less than 1 million behind the PS4 in the US,where the PS4 has sold 9 million.
Therefore the Xbone is likely to be around 8 million in the US.
In the UK, the PS4 has 2 million sold as of May this year. Microsoft have not announced anything yet, but typically games are split 60:40 in favour of the PS4 in the Chart-track sales charts.
That would put it ~1.5 million
Add the two together, that leaves 9.5 million sold XBOX Ones.
We know that this represents the vast majority of Xbones WW, and it is anybody's guess what they could be.
It's inconceivable that the Xbone will sell less than 5 million during the holiday period, though. MS shipped 6.6 'Combined' xbox consoles during Q4 last year.
No breakdown on what that split was, but it could conceivably be majority Xbox Ones, with a couple of million 360s. Pure conjecture on my part.
Therefore, that'd mean ROW is around 1.5-2 million for Xbone. Realistic?
That brings us to the 14-15 million in the above estimate..
Am I off?
Citation:
http://www.kitguru.net/gaming/anton-shilov/microsoft-sold-6-6-million-xbox-consoles-in-q4-2014/
http://ps4daily.com/2015/10/ps4-sales-reach-9-million-in-the-us/
http://www.gamespot.com/articles/ps4-ships-22-3-million-units-worldwide/1100-6427007/
http://www.eurogamer.net/articles/2015-10-29-huge-ps4-sales-continue
http://metro.co.uk/2015/05/05/ps4-passes-2-million-milestone-in-uk-sales-outpace-ps2-5182060/
This is a joke post right? Do you even business?
Seriously though once these companies become addicted to these higher margins they won't go anywhere. Once they start having an even more significant impact on EPS Wall Street won't let them go anywhere either.
The only thing the higher margins will allow for are more steam like sales but even then those have slowly been pulled back.
High prices for digital content is here to stay. No one is going to give a better price on a digital product to consumers unless the sales go away.
If consoles last that long at all (which is up for debate), I for see them going the way of phones with subsidized pricing and contracts to tether you to the device while keeping retailers happy selling on huge margins.
Vanillalite
Ask me about the GAF Notebook
Not that I'm privy nor have I done the numbers, but this isn't always the case. People for years have said maybe if you decreased the price you'd make it up in volume. They use to talk about this all the time back in the 1up Yours days.
Not saying if that's really true nor do I pretend to know the #.
Randomizer123454444
Member
I was about to say "not that more expensive", but then, while price-checking, I found MGS5 for 44,90e from retail, while on Steam it's 59,99e. To compare, Fallout 4 is 52,90e right now, on Steam 59,99e. Well, at least Steam has frequent sales with significant price drops. Lately I haven't been feeling it with AAA-games, high prices might in future be the thing stopping me from buying them. If I can get more enjoyment from 9,99e Undertale, than 59,99e "AAA"-game, then the choice is clear to me.
But personally digital was never about the price being lower, I wouldn't go to a store to buy that 7e cheaper Fallout 4. It was about convenience. I'm not sure if that convenience exists on consoles, with limited hard-drive space and all.
Welfare
Member
Dude it's passed 15m shipped by now. Should also be past 15m sold through by now.
I think EA are talking about sold through, and not shipped with the 50 million number. PS4 will not sell through 36 million by the end of the year, but yeah they will certainly ship that much.
wanderjahr
Banned
Don't you mean price parity is hear to stay? I'm ok with digital costing the same (for new games) if they don't cost any more than physical. Massively discounted sales have proven popular with Steam and also with PSN to a lesser extentsomething unique with a digital marketplace.
Active live users?
Vanillalite
Ask me about the GAF Notebook
What kind of contract? Console pricing going where? Margins are slim on devices. You saying Sony, Nintendo, and MS are gonna raise pricing to give retailers more margins to sell on subsidies?
Who's gonna subsidize this? The stores? The console manufacturers?
What would the contract be? What would it be for? How much more would the price have to be raised just to make up for not getting all of the cash up front let alone increasing the actual margin?
I'm beginning to think XB1 numbers really fell of a cliff this year.
I hope we get some new numbers this year
Gen.Grievous
Member
No shit selling at RRP will give you a lot more margin. It makes it even sillier that in large parts of Europe you pay 10-20% more when you buy digital even though it should actually be less because the publisher earns a lot more money from every sale.
which is why they should be cheaper
I think it would be smarter to cut down that margin per-unit and see a 10x increase in sales.
TBiddy
Member
Do you think sales would increase ten-fold, if the prices were cut by.. say 50%?
Klart
Member
And here I was thinking good business meant reducing costs! Silly me!
Vanillalite
Ask me about the GAF Notebook
Nobody really knows cause nobody has tried it before, and we aren't privy to all of the sales metrics major pubs like EA and Actiblizz have.
It's really a wild card. I'm not sure anyone could honestly know either way.
Those are all questions for the hardware designers to answer for themselves, I'm merely pointing out where it could lead.
It really isn't that much of a leap considering Microsoft has subsidized the cost of their hardware for three straight generations via Xbox live, and now Sony's on that gravy train too.
What's to stop them from one or two gens from now offering a locked version of their next system at 200$ down with mandatory payments each month to gain access to the online ecosystem to both download and access your games? The infrastructure is already there, really.
huntingzibod
Member
Likely, but how close to stock shipped to stock sold are Sony likely to be?
It cant be more than 1-2 million at worst.
And in previous years, MS has been anecdotally reported to stuff channels in the US at least during the christmas period. They over shipped last december for sure, as there wer e Ass Creed bundles bleeding out of warehouses everywhere according to GAF posters in the know,.
So what are your personal guestimates?
Of course they are not going to lower them. That's why everyone with half a brain was saying it was ridiculous for Xbox One to go all digital. Some people seriously suggested by going completely digital the prices would lower. Fools.
The U.K. Numbers are out of date for both consoles. It's hard to know how much they sell per month, but 6 months have passed so the 2/1.5 numbers should be higher
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