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Daniel Loeb: Streaming isn’t Netflix of Games; Sony’s Physical Console Still “Winning Model”

DanielsM

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I feel like this is some solid analysis on a portion of the gaming console market and streaming, of course, I'm bias as he is saying what I have been saying. (Japan stocks are tough though, meaning not sure I agree with his valuation of its stock)


Here is the actual report. (pdf)


This isn’t the first time the mainstream media has predicted the “death of the console
What consumer problem are the cloud gaming platforms trying to solve?If the answer is “experience”, then latency needs to be lowe
What consumer problem are the cloud gaming platforms trying to solve?If the answer is “cost”, then the service needs to be priced very cheap
I will note he doesn't even mention Netlfix continues to burn cash at roughly a $2-4b burn rate.
Comparisons between game streaming and Netflix are flawed
 
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DanielsM

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I would read the report as you get to why he believes Sony's hardware model will do better than the others.
 

DanielsM

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No. Its looks long and boring. This is your thread. You explain it.
Haha, oh its my thread but that doesn't mean I have to explain it to my cat either. LOL

Look at pages 60+

Short answer, doesn't really believe in cloud, Sony will retain customers and physical consoles will do well.
 
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Miku Miku

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The headline is misleading. He argues that the winning formula is physical console + streaming capability.

Sony and MS will both be using Azure cloud tech from Microsoft. They think Sony is in a better position than MS on content since they are tied in physical and streaming capability.

Nintendo is physical, and has great content, but no streaming capability at the moment. Google has streaming capability, but no physical, no content, no developer relations, no previous install customer base.
 
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Miku Miku

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There is no deal between Sony/MS as to anything, Sony went out way to explain that at investor day. The state actually said they will will try and collorate on game streaming technology, which Sony already had.
Interesting. I don't know anything about it. That's just what the article says.
 
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DanielsM

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Interesting. I don't know anything about it. That's just what the article says.
MS and Sony have an understanding to maybe work together on technology and a partnership which may or may not involve game streaming.

Update: I put what I think are good quotes that I agree with and its almost like I wrote this, so I'm bias as hell on this.
 
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nikolino840

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There is no deal between Sony/MS as to anything, Sony went out way to explain that at investor day. The state actually said they will will try and collorate on game streaming technology, which Sony already had.
What do you mean with there Is no dial?
Look at Page 45
 

DanielsM

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What do you mean with there Is no dial?
Look at Page 45
He's wrong there, Sony clarified they only have an understanding to maybe work with Microsoft on some technologies. I believe the assumption is, they could work towards a deal, of course, if there are no customers than what's the point?

(i'll try to find for you, 1 sec)

At Sony’s Investor Relations Day 2019, Ryan put emphasis on the fact that the deal itself doesn’t have a lot of official status as of yet. Sony and Microsoft have signed “broad memorandum of understanding” to explore potential partnerships, but not a major contract or anything of that nature. As it stands, there’s no “official” partnership between the two companies- yet.

 
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mckmas8808

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The answer to his question (what problem is game streaming trying to solve) is.....

- Lack of mobility
- High upfront cost
- Limited access (i.e. to get to your content you have to go to the original box to play it)


Now the question is how much are those 3 things worth to the average gamer?
 

LordRaptor

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Hard to put much stock in someones 'expert analysis' when they get basic indisputable facts wrong.
  • Next gen is not the first gen where backwards compatibility is possible
  • The current gen console market is smaller than he claims, and the PC market is vastly bigger (he claims 200m for consoles and 100m for PC, when there are ~150m console owners out there, while Tencent alone has a 300m userbase. And if you want to argue he is talking about 'core gamers' not 'all pc gamers', as in only people who buy $60 games, then why is he also comparing both markets to mobile?)
  • He claims netflix was successful because it was dramatically cheaper, but then says stadia cannot be successful because it won't be dramatically cheaper compared to console gaming, when stadia if it meets its promise will offer a brioadly similar gameplay and graphics experience, but for no monthly fee and no hardware purchase cost
  • cites fucking vgchartz
 

DanielsM

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So he's wrong at Page 60 😄😂🤔
Anything that says they have a deal, they just have an understanding to work together, Sony has said they are exploring uses of Azure but to be honest, unless they can get those PS1/2/3/4/5s working in a VM than its just a normal datacenter setup with custom racks.
 

DanielsM

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Hard to put much stock in someones 'expert analysis' when they get basic indisputable facts wrong.
  • Next gen is not the first gen where backwards compatibility is possible
  • The current gen console market is smaller than he claims, and the PC market is vastly bigger (he claims 200m for consoles and 100m for PC, when there are ~150m console owners out there, while Tencent alone has a 300m userbase. And if you want to argue he is talking about 'core gamers' not 'all pc gamers', as in only people who buy $60 games, then why is he also comparing both markets to mobile?)
  • He claims netflix was successful because it was dramatically cheaper, but then says stadia cannot be successful because it won't be dramatically cheaper compared to console gaming, when stadia if it meets its promise will offer a brioadly similar gameplay and graphics experience, but for no monthly fee and no hardware purchase cost
  • cites fucking vgchartz
1.) appears correct to me, this is not the first gen where backwards compatibility is possible
2.) that's a tough one to measure, seems low to me, Steam has like 1 billion accounts but how many of those are active? I mean, Valve isn't making $20-40b of revenue in a year, its like $5-7b estimates by people
3.) Stadia won't be drastically cheaper imo, and thats just the instructional offer, imo... yes you do have to buy hardware, and you're renting it on their end... not sure where you're getting that..
4.) yeah, I get that

I would say 150-250m consoles are somewhat active (43m Xbones, 96m PS4, 30m Switch.... carry over X360/PS3)... assuming we're not talking handhelds, although Switch is kind of hybrid.
 
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nikolino840

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Anything that says they have a deal, they just have an understanding to work together, Sony has said they are exploring uses of Azure but to be honest, unless they can get those PS1/2/3/4/5s working in a VM than its just a normal datacenter setup with custom racks.
The PDF Is dated After the interview you posted...so the PDF Is more new and i think him Is more precise of a PR interview for journalists
 

LordRaptor

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1.) appears correct to me, this is not the first gen where backwards compatibility is possible
No, that is the claim that he is making; that everything will be different now because next gen is the first time backwards compatibility will exist.

2.) that's a tough one to measure, seems low to me, Steam has like 1 billion accounts but how many of those are active? I mean, Valve isn't making $20-40b of revenue in a year, its like $5-7b estimates by people
Doesn't matter.
The number is vastly larger than the 100m he claims.
As I say; just the users of the Tencent client account for 300m people.
LoL alone has 67 million monthly players.

3.) Stadia won't be drastically cheaper imo, and thats just the instructional offer, imo... yes you do have to buy hardware, and you're renting it on their end... not sure where you're getting that.
Stadia will use any hardware you already own. Its been demoed using a chromebook. Its planned to use any controllers you might already have.
 

DanielsM

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No, that is the claim that he is making; that everything will be different now because next gen is the first time backwards compatibility will exist.



Doesn't matter.
The number is vastly larger than the 100m he claims.
As I say; just the users of the Tencent client account for 300m people.
LoL alone has 67 million monthly players.

Stadia will use any hardware you already own. Its been demoed using a chromebook. Its planned to use any controllers you might already have.
The first 1 is saying this isn't the first generation that BC is available, that is the way I read it and he is correct. The original PS3 sku you could actually play PS2 games, the Xbox 360 had BC after a bit.... this gen will have BC right out of the gate, but maybe I am reading it wrong.

The PC numbers seem a little low but accounts doesn't equal PCs, I don't think Valve has 1 billion active PCs visiting, again, I think that is pretty low myself - I would probably say the number could probably be much more. idk myself.

There are only like a billion+ windows machines and most of them aren't being used for gaming, I agree 100m seems low and it might be low by a good degree.

Stadia will use any hardware you already own. Its been demoed using a chromebook. Its planned to use any controllers you might already have.
What happens if I don't already own any? It requires hardware, generally speaking whether you can us existing ones is beside the point, you do need it.... and you are going to have to pay for the hardware in the data center through subscription fees, and purchase game fees. What he is saying to me is its not cheap like Netflix... he's right.... meaning Netflix is burning cash to get those customers. You have to generally pay for the games in Stadia, although for $10 a month they will let you pay for a few.

You guys have a good weekend, I'm out.... beer Friday.
 
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LordRaptor

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What happens if I don't already own any? It requires hardware, generally speaking whether you can us existing ones is beside the point, you do need it....
Its not really 'besides the point' when any internet enabled TV will be able to run it if you're not also factoring in "and buy a TV" to the TCO of owning a console.

and you are going to have to pay for the hardware in the data center through subscription fees, and purchase game fees. What he is saying to me is its not cheap like Netflix... he's right.... meaning Netflix is burning cash to get those customers. You have to generally pay for the games in Stadia, although for $10 a month they will let you pay for a few.
The $10 a month is only for 4K gaming. 1080p gaming is covered solely by game purchases, or as is quite likely, by MTX purchases within games.
Its not an invisible cost to Google, but it is to an end user whose value proposition is
$500 new console + $10/m online fees + $60 game purchase
vs
$60 game purchase
 

Mass Shift

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This report is not a full analysis of the game industry. It is in fact a motivational proffer to potential Sony investors.

Now I wouldn't accuse Alex Gibson of outright cherry picking Loeb's report (which is lengthy) but he has most certainly misrepresented the report to support his own suppositions about Sony's position going forward to 2020. Suppositions that are reasonably safe I might add.

There is console industry analysis, but overall the document is designed to entice capital investment to Sony.
 
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mckmas8808

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Its not really 'besides the point' when any internet enabled TV will be able to run it if you're not also factoring in "and buy a TV" to the TCO of owning a console.



The $10 a month is only for 4K gaming. 1080p gaming is covered solely by game purchases, or as is quite likely, by MTX purchases within games.
Its not an invisible cost to Google, but it is to an end user whose value proposition is
$500 new console + $10/m online fees + $60 game purchase
vs
$60 game purchase
Is that free option going to have Ads?
 

brian0057

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Of course they're not even remotely the same.
On Netflix I don't have to pay for Friends on top of paying the monthly fee.
 

mckmas8808

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They haven't said it will, and there's no reason to expect them to.
You don't get ads in your music, TV or movies when you buy music TV or movies from the Play store.
So you don't think Google will be showing you Ads before or after a game streaming session (for the free 1080p option)?
 

LordRaptor

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So you don't think Google will be showing you Ads before or after a game streaming session (for the free 1080p option)?
Maybe some developers will experiemnt with ad-supported F2P, but no, why would they?
again, for the exact same reasons if you buy any other product on the Play store it does not contain adverts; your purchase is a purchase.

If you buy a movie from the Play store, you get to watch a streamed movie whenever you want. They don't fill it full of adverts because you didn't also buy a BluRay player.
 
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DunDunDunpachi

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They'll lose me as a customer if everything goes digital/streaming, but who specifically do they think they're gaining by switching over to this model?

Businesses don't usually discard loyal customer bases.
 
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Joshmyersbv

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I'm not going to stream games anytime soon. I play mostly multiplayer games so if I have to stream the game in high resolution on top of playing multiplayer I just don't see how it Stadia can hold up. Especially if you're running multiple devices on the same internet. Am I going to tell my old lady to get off fucking Facebook so I can shoot punks in rainbow six? How am I supposed to watch porn in the shower if she's playing OverWatch? Somebody's stuff is going to buffer and if it's in the middle of my jerk off session I'm going to be fucking pissed.
 
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