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[potatohead]

Again, they don't need frequent hardware upgrade to achieve full backward compatible. They can do that as long as they stay within same architecture.

I agree with that too. They don't have to do PS4K at all. There is nothing to say they "must" do this, absolutely.

At the same time, to maintain a good sales momentum, and the concept or salesmanship of "this is a new console"... they can release a refresh halfway between. So they can do both. Stay within the architecture while maintaining backwards compatibility for the eventual PS5, but also offer a "new" product between the release schedule of the PS4 and PS5.

Right now I'm finally seeing the inspiration of the iPhone generation here. It's not in yearly hardware refreshes, but maintaining a software ecosystem and backwards (and occasionally forwards) compatibility to keep users tied to the PlayStation brand.

And given that Sony is "on top" this generation, this is the best time to do it.... plus add in the advent of 4K..... now I'm finally thinking why this wasn't obvious? Doing a whole hardware reset at PS5 with the possibility of losing a ton of marketshare (e.g. like from PS2 to PS3) is a great, great capital risk from a perspective of their business and profit margins later on.

Crazy times, crazy times...

 

[wtd2009]

I don't expect this to happen for Sony or Microsoft moving forward. Now that they've moved away from super exotic builds for consoles, being able to maintain compatibility will change the way consoles are brought to market and when they are.

That's pretty much it right there. The only difference is that now Sony needs to make damn sure they have an ecosystem and set of exclusives that are worth the price on day one of their next gen system. Otherwise, people are just going to wait around for the upgrade.

 

[The God]

For gaming, no they don't. UC4 still runs the same as it always would on a PS4 if the Neo never existed. So the only way gaming actually changes for you is if you actually buy a Neo. That's the irony there. It's business as usual if you stick to an original PS4.

Yeah, they do. Because for a long time, you wouldn't even have to consider an upgrade in home consoles.

 

[Abdiel]

Thanks abdiel... Your perspective is appreciated. I'm interested to see how this will be marketed. Do you know when we should expect to see marketing for the PS4k/XB1.5?

No idea, at this point. Until they actually formally announce the products, we don't have that info. We'll start hearing stuff at the store level shortly after release dates are shown so we can prep our staff and educate.

Also get end caps, the reps come in, etc.

That stuff isn't even on the horizon yet.

 

[Serpens007]

4K will be an exclusive feature... you can't patch that shit in. Point being it's going to have exclusive features. Gaming wise, well Sony are apparently keeping exclusive games away.

I meant it personally. Honestly, I don't care enough about 4K. but I still don't know what the PS4K will offer outside of a higher graphical fidelity. That doesn't really add too much for me. But maybe the next Battlefield game will offer 64 player only on PS4K. If that happen, I'd probably feel unhappy about buying the PS4 earlier, but if, say, the next Gran Turismo has exclusive features in the Neo, I wouldn't care. It's totally subjective what I'm talking about.

For gaming, no they don't. UC4 still runs the same as it always would on a PS4 if the Neo never existed. So the only way gaming actually changes for you is if you actually buy a Neo. That's the irony there. It's business as usual if you stick to an original PS4.

Outside of gaming is the thing here. Up until now, buying a console, specally early in the gen, and specially the one with the better specs, meant having years of "the best" console experience. Now there is nothing that will assure you that, so obviously that changes.

Maybe not for you, but for a lot of people do. I don't like it, but I'm the consumer, so I vote with my wallet. I'd probably buy the NX over the PS4K.

But as a consumer, I'm all ears too. At the moment, my stance is "I don't want it, I already bought a PS4".

 

[Oersted]

I agree with that too. They don't have to do PS4K at all. There is nothing to say they "must" do this, absolutely.

At the same time, to maintain a good sales momentum, and the concept or salesmanship of "this is a new console"... they can release a refresh halfway between. So they can do both. Stay within the architecture while maintaining backwards compatibility for the eventual PS5, but also offer a "new" product between the release schedule of the PS4 and PS5.

Right now I'm finally seeing the inspiration of the iPhone generation here. It's not in yearly hardware refreshes, but maintaining a software ecosystem and backwards (and occasionally forwards) compatibility to keep users tied to the PlayStation brand.

And given that Sony is "on top" this generation, this is the best time to do it.... plus add in the advent of 4K..... now I'm finally thinking why this wasn't obvious? Doing a whole hardware reset at PS5 with the possibility of losing a ton of marketshare (e.g. like from PS2 to PS3) is a great, great capital risk from a perspective of their business and profit margins later on.

Crazy times, crazy times...

Noone buys gaming consoles on contracts. And IPhones aren't really the target plattform for 200 million dollar productions.

 

[potatohead]

Noone buys gaming consoles on contracts. And IPhones aren't really the target plattform for 200 million dollar productions.

But that's why it's not 1 year, it's 3 years, or 4 years.

As I said in the comparison.... the inspiration from phones is not the yearly hardware refresh. It's the constant ecosystem and backwards/forwards compatibility.

Bringing the 35+ million userbase with forward compatibility as PS4.5 is launched, and then bringing the even larger PS4 + PS4K into the hopefully backwards compatible PS5 I think is the goal here.

It's not about getting everyone to upgrade at year 3 or 4. It's the constant ecosystem that end-users are invested in, whether it's from PS4 or PS4K, same ecosystem.

 

[CosmicQueso]

Abidel, was there notable confusion or negativity regarding the New 3DS (both for hardware and exclusives)? It's still the closest comparison point we have to this, and I haven't heard of any actual issues regarding it.

You're right, this is the only real comp, but it's still not a great one, if Sony is attempting to go more mass market with the PS4K and attract new buyers.

By not including the power cable in the box, Nintendo implicitly communicated that this new version of the 3DS was targeted at existing 3DS owners.

Now perhaps this might actually be the exact same situation with the PS4K. Perhaps Sony is intending to target existing PS4 owners, particularly the core user base (the type of people that post here, for example) in which case it would be a great comp. Tough to know for certain.

In any case, the N3DS was very successful at limiting the decline in platform HW sales.

In 2014, 3DS HW sales in the US declined by a quite significant percentage. In 2015, that rate of year on year decline dropped by 80% (yeah, a percentage decline in percentage decline is kinda nuts, but I don't know how else to communicate it without using actual numbers).

Basically, in 2015 the year on year decline of 3DS HW was far lower than the rate of decline the hardware saw the year previous.

Additionally, the average selling price of 3DS HW in the US actually increased in 2015, after declining the prior year.

Of course, we can't read from the data whether or not consumers were confused. We can, however, see that HW sales and pricing trends of 3DS were markedly improved following the launch of the New 3DS hardware line. By all accounts, it appears as though the N3DS was quite successful at improving the position of 3DS in the market.

Even if they didn't include the power cable.

 

[wapplew]

But that's why it's not 1 year, it's 3 years, or 4 years.

That can be shorten if the plan sucess.
It's 3 years now, because it's new to us, by the time we get used to the idea, it might be 2 years, in addition, the competition might start arm race against it force them to upgrade yearly.

 

[shoreu]

I haven't been following the threads that much but were there really people who thought this would be bad from a retail perspective? If so lol.

This it's honestly genius.


You get you sell your console for $400 again.

Many people who talk big against it are gonna end up converting because they want the best thing


And even if you don't they already have your money from your last purchase.

 

[Boke1879]

This it's honestly genius.


You get you sell your console for $400 again.

Many people who talk big against it are gonna end up converting because they want the best thing


And even if you don't they already have your money from your last purchase.

Yup I'm upgrading because I want it. But the OG model will still sell well at a cheaper price but $400 for the NEO isn't a bad deal either

 

[Oersted]

Abidel, was there notable confusion or negativity regarding the New 3DS (both for hardware and exclusives)? It's still the closest comparison point we have to this, and I haven't heard of any actual issues regarding it.

As long as Sony doesn't do something stupid, and all PS4 games are automatically playable on the Neo, I don't see the issue from a consumer perspective. If you want something cheap just to play games, the standard model will be available and relevant for awhile still. If you want something new or powerful, well now you have another option to suit your tastes.

They are vastly different ecosystems. Like the IPhone, 3DS is not the main target plattform for 200 million dollar productions. The improved 3D, the mainselling point, is something devs have not to take into consideration, no additional programming needed. The spec upgrade was needed to run the ports of Hyrule Warriors and Xenoblade and to run Unity more flawless. PS4 does not have these issues.


Regarding negativity... Oh yeah, there was. Most recently, when SNES VC was announced as New 3DS exclusive. We had a thread about the SNES New 3DS VC and one about hammering home the point of exclusivity. Guess which thread got more replies.

 

[DieH@rd]

Retail story will became much clearer after Sony starts their advertising, and word of mouth about games start spreading.

We all got into this storm of comments because of incomplete leaks. We see good part of a picture, but not everything.

 

[Audible Phonetics]

It's just bad as a long term strategy. You are poisoning the well with your userbase, which is a terrible idea for a product line that essentially has a complete reset every 5-7 years.

Why should I buy a Playstation 5 if I suspect that Sony will just release a better model a couple years down the line? These incremental upgrades will prevent early adopters from signing on, and thus prevent/slow the userbase from reaching the critical mass necessary to support AAA development.

You do realize this is normal strategy among major hardware retailers.

apple does it with their flagship phones, and other hardware. It literally does not stop anyone from upgrading yearly.

 

[potatohead]

That can be shorten if the plan sucess.
It's 3 years now, because it's new to us, by the time we get used to the idea, it might be 2 years, in addition, the competition might start arm race against it force them to upgrade yearly.

Could be could be. I'm not expecting it, but neither did I expect PS4K

It's the type of thing that could go super well or explode in everyone's faces... so getting the optimal delivery that fits between the two extremes, both extremes of which will lead to failure of this new paradigm, is the key.

They have to be very smart, and very responsible, with how they shift gears here. And in the future, definitely.

 

[RedSwirl]

People worried about the "why by a new console when a better model is gonna come out in three years" need to realize the same thing happens for pretty much all other computer systems. "Why buy a new iPhone when a better model is gonna come out in 18 months?" People realize that if they're going to buy into the platform, they have to buy into it somewhere. It's just a matter of determining where the best point is in terms of time, price, and performance for you personally.

And if Sony isn't dumb, it's gotta realize that all or even most people won't upgrade every single model. Most people should probably only upgrade every other model or something. When you think about it, it's not that different from how a lot of people buy consoles today. Regardless of the starting point they still end up getting several years of software out of it.

According to GB there will be no PS4.5-exclusive games. If PS5 is just another upgrade though, how much of an upgrade will it be over the PS4 and PS4.5 assuming it comes out another three years after the PS4.5 with the same architecture? I'm guessing with further die shrinks and new CPUs and whatnot it might be more significant than the upgrade to PS4.5, but will Sony allow developers to make PS5-only games at that point? I imagine it will but a ton of them will choose to make cross-compatible games that scale, just like cross-gen games except they'll be sold as one SKU. How will that make someone feel whose first PS4 was a PS4.5? Will that system feel outdated after only three years? In my opinion that's gonna feel no different than someone who bought into older platforms after mid-gen refreshes. You have to remember most people don't buy consoles at launch anyway. My first Genesis was a model-2 in 1995, the first PlayStation I bought was a PS2 Slim in 2005, I didn't get a 360 until 2010, I just got a Wii U last month. I still got value out of each of those consoles by digging into their back catalogs while also enjoying the new games coming out. To this day I still buy and play Genesis games I hadn't played before.

 

[Abdiel]

I'd like to respond to folks, but I'm on the floor at work on my phone. Makes it hard to reply to posts.

Really enjoying the discussion though, I'm glad I made the thread.

The new 3ds was interesting because it first sold to existing customers heavily, but then basically supplanted the entire platform sales aspect for 3ds in general. It's the only model that sells consistently.

Stupid charging cable non withstanding. Mine has no power at home because I don't own a cable. Wah wah.

But with the ps4, it depends on how they market this, since it could be presented very differently depending on their angle. I think the most successful slant is targeting those that we'll see it as the premium option, not a necessity, for those that want to invest. Parents won't see a reason to snag it, but the tech savvy bleeding edge types will typically be all over something like this.

 

[TGO]

AC Unity won't even run at constant 30 fps with an overclocked Jaguar.

This game is coded in DX11/GNMX and this causes bottlenecks with too many draw calls/NPCs. It needs DX12/GNM for proper multi core utilization and decent framerates.

This is a prime example of why we don't need iterative consoles to get shitty games. We already have them!

Still though, I would prefer Zen or even Puma+ instead of Jaguar.

Exactly, so where the actual upgrade here?

 

[shoreu]

Yup I'm upgrading because I want it. But the OG model will still sell well at a cheaper price but $400 for the NEO isn't a bad deal either

I see og model going to like 200, and game stop /sony offering good ass deals for trade it's too make people upgrade.

 

[OhNoDangerItsaPentagonRun]

It's just bad as a long term strategy. You are poisoning the well with your userbase, which is a terrible idea for a product line that essentially has a complete reset every 5-7 years.

Why should I buy a Playstation 5 if I suspect that Sony will just release a better model a couple years down the line? These incremental upgrades will prevent early adopters from signing on, and thus prevent/slow the userbase from reaching the critical mass necessary to support AAA development.

Bingo, and not just tha,t but the content providers, Sony and devs themselves, also would have to proritize.

It's funny OP talks about not comparing the Cell Phone industry yet treats consoles like they are part of the cell phone industry. I also like how he implies having a crystal ball and saying this is not how stuff will turn out when we have zero clue how it will turn out and it's not been done with consoles before and the console market is different.

 

[CosmicQueso]

It's funny OP talks about not comparing the Cell Phone industry yet treats consoles like they are part of the cell phone industry. I also like how he implies having a crystal ball and saying this is not how stuff will turn out when we have zero clue how it will turn out and it's not been done with consoles before and the console market is different.

I... did... hmm. That's not at all what I take away from the OP. Are you sure you're not misreading something?

 

[Abdiel]

Bingo, and not just tha,t but the content providers, Sony and devs themselves, also would have to proritize.

It's funny OP talks about not comparing the Cell Phone industry yet treats consoles like they are part of the cell phone industry. I also like how he implies having a crystal ball and saying this is not how stuff will turn out when we have zero clue how it will turn out and it's not been done with consoles before and the console market is different.

This was addressed on the first page, but you've chosen to cherry pick an opinion that suits your stance.

I do not look at this as part of the cell phone industry. Cell phones, especially here in the US, are usually accompanied by two things, two year agreements/cycles, and yearly updates on a specific level. This is not that. Three years later, offering a single premium option to those interested, while sharing the exact same library of software, and not allowing for exclusive features, games, and the like, totally disarms your analogy.

This is being positioned in a way to leverage new strengths, but still keep the existing product just as viable. Acting like it is being removed from the market entirely is silly.

Please don't try to use my statements against me if you're not even going to use them correctly.

 

[slavesnyder]

Late to the party. Thank you, Abdiel. That's a great tread. Also, very good ideas and infos from others.
I think it would also be wise to add 1TB harddisc to the PS4k. It doesn't cost so much more for Sony compared to 500GB and it would be a good-looking additional bullet point.

 

[Bitch Pudding]

But with the ps4, it depends on how they market this, since it could be presented very differently depending on their angle. I think the most successful slant is targeting those that we'll see it as the premium option, not a necessity, for those that want to invest. Parents won't see a reason to snag it, but the tech savvy bleeding edge types will typically be all over something like this.

I suppose they market both at the same time, like Samsung's currently advertising its newest Smartphone:

http://www.samsung.com/de/consumer/mobile-devices/smartphones/galaxy-s/galaxy-s7/

As both SKUs will most likely be sold at cost, all that matters for Sony is selling as many consoles as possible. With those two SKUs, they now have one they can easily sell via price (especially useful during holiday season!), and the other one as a more expensive premium device.

 

[_machine]

Great starting post Abdiel; I would definitely agree with you up to the point that a lot of it stands in how Sony handles the visible marketing (not just what the product is) and how much potential new pull that could generate.

It also really annoys me how this thread has turned to the usual hyperbole of people with little clue of how development works, and what are the potential implications (not directly knowing anything, but of course it's hard to not hear about some potentials) on developers' side. The truth is that, even we do not know until we actually have shit compiling on the platform, have the full dev environment specs, and Sony's market strategy. It's just pains to see actual contribution turned down into a storm of hyperboles.

 

[OhNoDangerItsaPentagonRun]

I... did... hmm. That's not at all what I take away from the OP. Are you sure you're not misreading something?

I'm about to find out,

This was addressed on the first page, but you've chosen to cherry pick an opinion that suits your stance.

I do not look at this as part of the cell phone industry. Cell phones, especially here in the US, are usually accompanied by two things, two year agreements/cycles, and yearly updates on a specific level. This is not that. Three years later, offering a single premium option to those interested, while sharing the exact same library of software, and not allowing for exclusive features, games, and the like, totally disarms your analogy.

This is being positioned in a way to leverage new strengths, but still keep the existing product just as viable. Acting like it is being removed from the market entirely is silly.

Please don't try to use my statements against me if you're not even going to use them correctly.

You stated in your OP

First off, anyone assuming that the release of a premium model of the PS4k and so on, will suddenly lead to the normal model PS4 or XB1 going away, should never, ever talk about business/products again, because that's not how this works.

I have nothing against you and I am not trying to come off as attacking or rude, I looked into you and you provide great info but this statement is questionable. The fact is we do NOT know how this will work. This imo, reads as if you are telling people concerned they are crazy and that they don't know much about anything because they are not sure about the future. Basically saying that such a thing won't happen 100% guarantee.

It's possibly I read this the wrong way, and if that was not your intention I apologize, but that just seemed like an odd thing to write.

 

[The Lamp]

Thanks for your insight.

This stuff is common sense to anybody who works in consumer products.

My only concern with this platform is developers trying to max out graphics on the newer model that the base version of the game suffers (20 fps on base, stable 30 fps on premium, for example). Sony and MS will need to implement guardrails on the quality that developers can force the base version of the game to be.

The success of this product completely rides on marketing.

 

[Abdiel]

I'm about to find out,



You stated in your OP



I have nothing against you and I am not trying to come off as attacking or rude, I looked into you and you provide great info but this statement is questionable. The fact is we do NOT know how this will work. This imo, reads as if you are telling people concerned they are crazy and that they don't know much about anything because they are not sure about the future. Basically saying that such a thing won't happen 100% guarantee.

It's possibly I read this the wrong way, and if that was not your intention I apologize, but that just seemed like an odd thing to write.

It's okay to expect Sony to explain themselves and justify this product, that's exactly what I myself say throughout this thread, as I'm not trying to endorse this as some great thing, some savior product.

However, Sony simply removing their other, baseline model and trying to force people to only buy the new model, is just not how these sort of things work for any intelligent product planning. So unless you think that they are planning on actively destroying their division and don't want to gain more sales, then no, I do think it's not worth considering that situation.

Sony has demonstrated meticulous planning associated with the way this is meant to coexist with the existing SKU, which demonstrates more to it being something they'd like to see find a niche or successful trend. Crushing itself by killing the primary sku is poor, poor planning, and I would be utterly shocked if they reversed all their good business sense of this gen.

 

[OhNoDangerItsaPentagonRun]

It's okay to expect Sony to explain themselves and justify this product, that's exactly what I myself say throughout this thread, as I'm not trying to endorse this as some great thing, some savior product.

However, Sony simply removing their other, baseline model and trying to force people to only buy the new model, is just not how these sort of things work for any intelligent product planning. So unless you think that they are planning on actively destroying their division and don't want to gain more sales, then no, I do think it's not worth considering that situation.

Sony has demonstrated meticulous planning associated with the way this is meant to coexist with the existing SKU, which demonstrates more to it being something they'd like to see find a niche or successful trend. Crushing itself by killing the primary sku is poor, poor planning, and I would be utterly shocked if they reversed all their good business sense of this gen.

I was thinking more gradual removal than an actually outright removal of the original product, especially since retail shelf space WILL be a factor.

But I can see your other point.

 

[CosmicQueso]

Regarding the retail experience, there are a number of potential pitfalls that will have to be overcome.

Some are minor, some are more significant, and some will force more than 1 course correction if history tells us anything.



Assumptions for what follows:

• Points below reflect US market only
• Assuming E3 announce / Q4 release, not because I know but because if this is a Q1 launch the target market is different than if it released at holiday. The below assumes a more mass market target approach which would infer a natural holiday release. A core release (targeting existing PS4 owners to upgrade) would be a Q1 play in my opinion, and a whole different set of strategies.
• Assumes that Sony has done enough to get a consumer in a retailer and that this consumer has some purchase interest or knowledge of the new system. If Sony can't do this, nothing else matters.
• My personal viewpoints only, I do not claim any insider knowledge

We have a few key areas of potential risk at retail. These include:

• Placement within the store and associated merchandising
• Pricing - Both base and promotional
• Point of Purchase marketing support
• Feature ad and other CRM marketing support

Some of the below present challenges to all new (and in a lot of cases existing) platforms, but this is a slightly different thing that what we've seen in the past.



But First, My Takeaways - Retailers will be excited and enthusiastic to carry the new versions of Consoles. Specialty retail as it will bring opportunity to attach software, accessory, subscription and merchandise purchases to the new hardware purchase, mass retail as they attempt to drive 4k and UHD adoption, as well as the associated gaming purchases. By all accounts, PS4 inventory in the retail channel has been managed very effectively, so there do not appear to be any overloaded inventory concerns.

However, there are significant challenges to successfully execute this launch, and they are different challenges than retail has seen previously. How they navigate the following will determine how successfully they can gain or lose share in this evolution in the console market.

Finally, I have no bias or concern if anyone does or doesn't buy anything, and I'm not trying to say it sucks or is great. In fact, we would all be better off spending less time worrying and thinking about video games and more time outside, with family, pets or friends, traveling, learning to cook, reading, hiking.. anything other than this. Seriously, we should all go do something else for a while.

Anyways. Here we go. Looking forward to reading more thoughts.



Potential Risks at Retail



Placement - Basically, where does this product live in the retail environment.

Key challenges:

• Hardware - How does the retailer differentiate the new PS4 from the base PS4? Are they set side by side or does the new PS4 have its own section?
• Software - Do all PS4 titles remain in-line, as they do today, or are Neo enabled products somehow featured differently?

Hardware - Separating and featuring the Neo will be a very tempting thought for retailers as store managers look to push the higher priced, new products. Additionally, customers with lower price sensitivity, the kind that will initially purchase the Neo, as well as 4K, also have a higher software and accessory tie ratio than more price sensitive consumers. The launch of the Neo also allows for in-store soft bundling with TV or video content for applicable retailers.

However, by separating and featuring the Neo, will that just lead to more consumer confusion? Will doing so make customers wonder if they did buy the normal PS4, would they be missing out on games or features? Would pushing the incremental sales of video or electronics take away from additional games or accessory purchases?

Software - Retail will want to push additional software sales of both New as well as Catalog titles. One way to do this would be to feature Neo enhanced titles, particularly on catalog titles that have been patched. The initial impulse will be to somehow separate these titles, or feature them in a special section or endcap. However, by doing so, do we have another potential area of consumer confusion? Will Mom know which game to buy for little Johnny? How will she navigate the PS4 games section and know what she's buying?



Pricing - How much it costs.

Key challenges:

• Hardware - Given limited retail margin on HW, will retailers choose to promote both PS4 SKUs, one or the other PS4 SKU, or none at all?
• Software - Do Neo enhanced titles see different promotional pricing strategies than non-enhanced titles? Does the lack of Neo enhancements force prices lower faster than they normally would have previously?

Hardware - Retail margins on HW are notoriously low. How will retailers react if the launch of Neo results in a far slower sales velocity of the OG PS4? And, if the Neo versions are selling well at the higher price, does that artificially then inflate the price of the normal PS4 (keeping the price of the old model higher shows that the new model is a "better deal" - it's called Price Anchoring. You should all learn about that, because this is a key way gamers tend to get screwed).
Software - Will the release of the Neo and Neo patched catalog titles significantly change the way software is price promoted at retail? Will patched titles get more or fewer promotions? Will non-patched titles receive no price promotion at all? How will the two types of titles, both unenhanced and Neo enhanced, be featured at retail when promoted? Lots of room for pricing to either go up, stay the same, or fall.



Point of Purchase Marketing - Signage, videos, corrugate displays, cash wraps, banners, associate/blue shirt/manager training, window stickers... how messaging is communicated at a retailer.

Key challenges:

• Hardware - This is a big one. How does the retailer communicate the key differences between the PS4 and the Neo in a way that allows the consumer to make an educated purchase decision while not completely confusing them.
• Software - What, if any, things are done on shelf (shelf callouts, shelf tags, floor displays) that communicate what it means for a title to be Neo enhanced. When videos are shown, how is it communicated on which PS4 version that game is being displayed?

Hardware - This is a significant, and maybe the biggest, retail challenge for this concept. Most people will walk into the store knowing something cursory about the system. They saw a facebook post or little Johnny said he wanted a Neo for Christmas. What happens when Mom walks in to communicate to her which box she needs to get, what features it has, the price differences, etc. Additionally, how much and what type of training will retail associates have in order to help Mom with her purchase decision? So many landmines here, and balancing this will be a key challenge for retail and first parties.
Software - Will Neo enhanced games get stickered, called out via a shelf talker, have some kind of buyer's guide, or some other communication device? How will retailers communicate which games, particularly from the deep catalog, have been patched to take advantage of Neo features? How will the retailer show games on in-store video kiosks? Will the videos note which system on which the game is running?



Feature Ad and CRM Support - Communication via in-store or newspaper flyers, as well as direct, targeted email and social media support.
Key challenges:

• Hardware - Which models will be featured? If a store sells TVs, and wants to push 4K TVs, will base model PS4s not be included in feature ads? What kinds of upgrade programs or trade in offers will be constructed and sent to known owners of PS4s?
• Software - Will feature ads and email communication separate un-enhanced and Neo enhanced titles? Will retailers devise trade in programs, for example, to move people from unenhanced to enhanced titles?

Hardware - If a retailer sells 4K TVs, I'm guessing we can pretty much guarantee heavy placement of Neo units in feature ads... and I think it's fairly easy to see many social media placements regarding bundling opporunities (Buy a 4K TV, a Neo and get these 4 UHD Blu-Rays for ONLY $X!). Will this lead to an unintentional move of base PS4s to a "lower class" placement?
Software - If unenhanced and Neo enhanced titles are featured will that somehow change consumer perception of those titles? Will some titles be less desirable because they are not Neo enhanced (even if the potential consumer only has a base PS4 model, because "someday I may upgrade")?



If you read all that, wow. Would love to read your thoughts.

 

[RedSwirl]

People aren't saying consoles are cell phones. What people are saying is that cell phones, tablets, PCs, and game consoles are all just computers, and what we're seeing here is just how computers generally are marketed and sold. In that space, game consoles have just about always been the exception.

Computers are generally part of a platform, a platform that might include an operating system or a common library of software. With consoles traditionally, the singular piece of hardware was seen as the entire platform in itself. It was seen as more of a toy than a computer. Now we may reach a point where the platform is "PlayStation" in general and it just includes a bunch of different pieces of hardware. Sony has been trying to incorporate Vita into that platform with cross-buy games and remote play, but the connection isn't all there. I think the shift really started to happen with the PSP, when it started to share elements with the PS3 like the user interface and some of the same data. The PSP was also the first modern game machine to have an OS that operated more like a computer OS than a simple settings menu.

When you get down to the bottom of it, there's not that much difference from what an iOS device is. iOS and consoles are both closed platforms where all the software goes through the platform holder in order to be signed. The only noticeable differences are iOS's input method and how much software Apple lets through its gate.

The last major line to cross here would be someone turning a console into an open platform like Windows or Android. Personally I think it would be best if we had at least one open console competing with a least one closed console. In the mobile market you pretty much have a closed platform (iOS) competing with an open one (Android). With PCs Windows and MacOS are both technically open, but Windows is more open and MacOS has more locked down so that difference to customers is still apparently. Where things might get dangerous if both Microsoft and Sony start doing iterative consoles is that both are equally locked-down, so there's less to distinguish them.

 

[Abdiel]

I was thinking more gradual removal than an actually outright removal of the original product, especially since retail shelf space WILL be a factor.

But I can see your other point.

Retail shelf space is a consideration, sure, but also consider that Sony has been very lean about how many bundles they have in retailers at any given time. Currently, the only official bundle we receive stock of is the cod bundle. We're taking preorders on the limited edition uncharted bundle, and that's it. So if we get this new system, and it becomes a permanent sku, that would mean two distinct bundles, at distinct price points.

I also find it likely that they'll try to differentiate the packaging, to make them visually stand out, not just pricing wise. That way dealers like ours will only split two ways, most of the time other than special limited bundles or holiday specials, etc.

They've been very good about not having too many options. As long as they market well and control their stock levels in how much they ship (Which if you look at my posts through the years, they've been awesome about), they will handle this fine.

 

[slavesnyder]

I was thinking more gradual removal than an actually outright removal of the original product, especially since retail shelf space WILL be a factor.

But I can see your other point.

Isn't the opposite also true? If both PS4 versions meet consumer demand, retailers will increase their shelf space and push other products aside that are not selling so well.
It's what Microsoft tried with the huge amount of bundles, it's what every successful brand tries, be it for chcolate bars, yoghurts or sports shoes. Add new flavours, new designs, new variations.
Especially in markets where Playstation is very successful they could very well take over parts of the competition's territory.

 

[CosmicQueso]

I was thinking more gradual removal than an actually outright removal of the original product, especially since retail shelf space WILL be a factor.

But I can see your other point.

We're also going to start seeing the Toys to Life sections get smaller and the Rock Band reboot was a miss, so retail space isn't a concern this holiday, and likely not a concern next holiday.

 

[Abdiel]

Regarding the retail experience, there are a number of potential pitfalls that will have to be overcome.

Some are minor, some are more significant, and some will force more than 1 course correction if history tells us anything.



Assumptions for what follows:

• Points below reflect US market only
• Assuming E3 announce / Q4 release, not because I know but because if this is a Q1 launch the target market is different than if it released at holiday. The below assumes a more mass market target approach which would infer a natural holiday release. A core release (targeting existing PS4 owners to upgrade) would be a Q1 play in my opinion, and a whole different set of strategies.
• Assumes that Sony has done enough to get a consumer in a retailer and that this consumer has some purchase interest or knowledge of the new system. If Sony can't do this, nothing else matters.
• My personal viewpoints only, I do not claim any insider knowledge

We have a few key areas of potential risk at retail. These include:

• Placement within the store and associated merchandising
• Pricing - Both base and promotional
• Point of Purchase marketing support
• Feature ad and other CRM marketing support

Some of the below present challenges to all new (and in a lot of cases existing) platforms, but this is a slightly different thing that what we've seen in the past.



But First, My Takeaways - Retailers will be excited and enthusiastic to carry the new versions of Consoles. Specialty retail as it will bring opportunity to attach software, accessory, subscription and merchandise purchases to the new hardware purchase, mass retail as they attempt to drive 4k and UHD adoption, as well as the associated gaming purchases. By all accounts, PS4 inventory in the retail channel has been managed very effectively, so there do not appear to be any overloaded inventory concerns.

However, there are significant challenges to successfully execute this launch, and they are different challenges than retail has seen previously. How they navigate the following will determine how successfully they can gain or lose share in this evolution in the console market.

Finally, I have no bias or concern if anyone does or doesn't buy anything, and I'm not trying to say it sucks or is great. In fact, we would all be better off spending less time worrying and thinking about video games and more time outside, with family, pets or friends, traveling, learning to cook, reading, hiking.. anything other than this. Seriously, we should all go do something else for a while.

Anyways. Here we go. Looking forward to reading more thoughts.



Potential Risks at Retail



Placement - Basically, where does this product live in the retail environment.

Key challenges:

• Hardware - How does the retailer differentiate the new PS4 from the base PS4? Are they set side by side or does the new PS4 have its own section?
• Software - Do all PS4 titles remain in-line, as they do today, or are Neo enabled products somehow featured differently?

Hardware - Separating and featuring the Neo will be a very tempting thought for retailers as store managers look to push the higher priced, new products. Additionally, customers with lower price sensitivity, the kind that will initially purchase the Neo, as well as 4K, also have a higher software and accessory tie ratio than more price sensitive consumers. The launch of the Neo also allows for in-store soft bundling with TV or video content for applicable retailers.

However, by separating and featuring the Neo, will that just lead to more consumer confusion? Will doing so make customers wonder if they did buy the normal PS4, would they be missing out on games or features? Would pushing the incremental sales of video or electronics take away from additional games or accessory purchases?

Software - Retail will want to push additional software sales of both New as well as Catalog titles. One way to do this would be to feature Neo enhanced titles, particularly on catalog titles that have been patched. The initial impulse will be to somehow separate these titles, or feature them in a special section or endcap. However, by doing so, do we have another potential area of consumer confusion? Will Mom know which game to buy for little Johnny? How will she navigate the PS4 games section and know what she's buying?



Pricing - How much it costs.

Key challenges:

• Hardware - Given limited retail margin on HW, will retailers choose to promote both PS4 SKUs, one or the other PS4 SKU, or none at all?
• Software - Do Neo enhanced titles see different promotional pricing strategies than non-enhanced titles? Does the lack of Neo enhancements force prices lower faster than they normally would have previously?

Hardware - Retail margins on HW are notoriously low. How will retailers react if the launch of Neo results in a far slower sales velocity of the OG PS4? And, if the Neo versions are selling well at the higher price, does that artificially then inflate the price of the normal PS4 (keeping the price of the old model higher shows that the new model is a "better deal" - it's called Price Anchoring. You should all learn about that, because this is a key way gamers tend to get screwed).
Software - Will the release of the Neo and Neo patched catalog titles significantly change the way software is price promoted at retail? Will patched titles get more or fewer promotions? Will non-patched titles receive no price promotion at all? How will the two types of titles, both unenhanced and Neo enhanced, be featured at retail when promoted? Lots of room for pricing to either go up, stay the same, or fall.



Point of Purchase Marketing - Signage, videos, corrugate displays, cash wraps, banners, associate/blue shirt/manager training, window stickers... how messaging is communicated at a retailer.

Key challenges:

• Hardware - This is a big one. How does the retailer communicate the key differences between the PS4 and the Neo in a way that allows the consumer to make an educated purchase decision while not completely confusing them.
• Software - What, if any, things are done on shelf (shelf callouts, shelf tags, floor displays) that communicate what it means for a title to be Neo enhanced. When videos are shown, how is it communicated on which PS4 version that game is being displayed?

Hardware - This is a significant, and maybe the biggest, retail challenge for this concept. Most people will walk into the store knowing something cursory about the system. They saw a facebook post or little Johnny said he wanted a Neo for Christmas. What happens when Mom walks in to communicate to her which box she needs to get, what features it has, the price differences, etc. Additionally, how much and what type of training will retail associates have in order to help Mom with her purchase decision? So many landmines here, and balancing this will be a key challenge for retail and first parties.
Software - Will Neo enhanced games get stickered, called out via a shelf talker, have some kind of buyer's guide, or some other communication device? How will retailers communicate which games, particularly from the deep catalog, have been patched to take advantage of Neo features? How will the retailer show games on in-store video kiosks? Will the videos note which system on which the game is running?



Feature Ad and CRM Support - Communication via in-store or newspaper flyers, as well as direct, targeted email and social media support.
Key challenges:

• Hardware - Which models will be featured? If a store sells TVs, and wants to push 4K TVs, will base model PS4s not be included in feature ads? What kinds of upgrade programs or trade in offers will be constructed and sent to known owners of PS4s?
• Software - Will feature ads and email communication separate un-enhanced and Neo enhanced titles? Will retailers devise trade in programs, for example, to move people from unenhanced to enhanced titles?

Hardware - If a retailer sells 4K TVs, I'm guessing we can pretty much guarantee heavy placement of Neo units in feature ads... and I think it's fairly easy to see many social media placements regarding bundling opporunities (Buy a 4K TV, a Neo and get these 4 UHD Blu-Rays for ONLY $X!). Will this lead to an unintentional move of base PS4s to a "lower class" placement?
Software - If unenhanced and Neo enhanced titles are featured will that somehow change consumer perception of those titles? Will some titles be less desirable because they are not Neo enhanced (even if the potential consumer only has a base PS4 model, because "someday I may upgrade")?



If you read all that, wow. Would love to read your thoughts.

Dude!

Awesome. I will definitely respond to this later. Thanks for the thorough response.

 

[slavesnyder]

snip

Amazing. Thank you a lot for this post and the time and grey matter you invest here and whenever you create these monuments of letters.

Just want to add a thing about the packaging.
Sony should make shure the PS4Neo box looks very different from the ordinary PS4. if they paint the box black, golden or sell it in a steel case doesn't matter. It just has to stand out. They have to develop a catchy logo for whatever the thing is finally called. That's very important.

But the Neo software/game boxes should not look much different from the "normal" ones. Otherwise this would lead to great confusion. For example: Sony decides to make the hardware box golden. That's fine.
First conclusion would be to make the game boxes golden, too, and maybe even seperate them on shelves to make clear to everyone that these are the games that have the Neo mode. But that would be a bad idea, as it confuses/scares off the much bigger amount of old PS4-owners (40 million and rising). It would lead to thinking that these games don't run on old PS4.

As far as I understood PS4Neo games also run on old PS4, only without the extra power. And this is what should be communicated through the package. Keep the boxes as they are now and just put a label on it as they did with PSmove or XboxKinect.
Move support
Better with Kinect
something like that. Use the catchy logo, put it on the box and that's it. Neo owners will look out for it, old PS4 customers won't be irritated.

 

[CosmicQueso]

But the Neo software/game boxes should not look much different from the "normal" ones. Otherwise this would lead to great confusion. For example: Sony decides to make the hardware box golden. That's fine.
First conclusion would be to make the game boxes golden, too, and maybe even seperate them on shelves to make clear to everyone that these are the games that have the Neo mode. But that would be a bad idea, as it confuses/scares off the much bigger amount of old PS4-owners (40 million and rising). It would lead to thinking that these games don't run on old PS4.

Absolutely agree!

We are way in the weeds and detail here but getting my head around how to tell people which titles in the catalog are Neo enhanced is a big challenge for retail.

Content is king, and to push the Neo boxes at a higher price, communicating to people which titles will benefit is a tough problem I think.

But making different boxes would be a huge mistake, I agree. Confusion would be massive.

Thanks for the compliment btw... Much appreciated!

 

[1er tigre]

I don't think it's all that naive. Especially with the architecture remaining effectively the same, with improvements in performance alone, we've already had devs that clearly know actual information about the hardware voice that this shouldn't be an issue.

And until it does start being an issue, I simply refuse to assume that they're going to fuck it up. I'm not going to assume it's going to be perfect 100% of the time, because we already have issues with some games as it is, but I didn't expect that to stop, either. Just that the PS4K version might be better off, while the PS4 version has the existing issues as it would have regardless.

That's just the nature of game development as we've seen this gen. Shit like AC Unity happened without this hardware being on the market. We also saw the Witcher 3 go through a gamut of issues with its patches and come through pretty great... eventually. It's a shame it took awhile, but alas.

What I'm really saying on the dev side of things is that the PS4K shouldn't be assumed to suddenly cause the PS4 to suddenly suck. That makes no sense. It'll still have it's own quirks and issues as it was going to anyway. If it goes horribly awry, you can bet I'll be the first person to call them out on it, because I'm in stores, selling products to people and I don't abide selling shit openly.

I think we can talk again about this when we start getting games in 1080p 30FPS on the PS4k and 1080p 20FPS with fewer effects on standard ps4.
By the way, your witcher 3 example is quite good. It took around ten patches and 5 months to the devs to make it run properly on ps4. Do you really think they will bother to do that now that there will be two SKUs ? Or will they just forget about it as soon as the PS4k version runs well ?

 

[NoctisVsStar]

I think Sony will succeed in this. Which makes me sad, because I don't like the idea of upgrading every two years. It doesn't appeal to a consumer like me, but oh well, I'll wait more next time before jumping into a Sony console.

I think I will skip PS4K (with the exeption of the case of my current PS4 dying). If the NX is really more powerful than the current PS4, then I'll just better jump into that console, and if not, well, welcome PC gaming again I guess.

We don't know if upgrading will done frequently or if it's just one time thing. At the moment there's a lot assumptions and panic. Let's just wait and see.

 

[kyser73]

Absolutely agree!

We are way in the weeds and detail here but getting my head around how to tell people which titles in the catalog are Neo enhanced is a big challenge for retail.

Content is king, and to push the Neo boxes at a higher price, communicating to people which titles will benefit is a tough problem I think.

But making different boxes would be a huge mistake, I agree. Confusion would be massive.

Thanks for the compliment btw... Much appreciated!

If Sony make devs stick to the 'must have a Neo mode' mandate this isn't an issue - all games run on base, all games after Octobrr '16 have a Neo mode.

Will pretty much fix the issue itself, and for older games they could always use stickers...

 

[Abdiel]

SNIP

Placement- First off, I think that if this launches in the midst of the holiday season, that it would see dual placement... That is, primarily, with palettes of special advertised bundles for the unveiled area in the main gaming section, showing off as the hot new thing. However, I also see some placement in the TV's section, and perhaps even in our Magnolia areas, as an add on for the higher end customers, looking to tack on something as way to get an extra oomph out of their higher end purchases. These are already customers potentially using Best Buy cards and the like. I can only speak for our stores, as we have a lot more space, a lot more floor area to work with. Game stops are much more limited in where to display, so to speak. However, doing so allows it to share the floor with the existing PS4 bundles/models, but still get shown off as new hardware, new items, and with big end caps/palettes, we can properly advertise pricing too, so there's little risk of incorrectly grabbing the wrong items during holiday rushes. (Helps when they display the boxes uniquely, as well).

As far as software, I don't think it does them any good to actually differentiate the 'software' as something different in the games location. I think that adding something to the cases as a "PS4K" extra notation, or maybe something along those lines would be fine, just to make sure it has the labelling extra on there as a point for it, but making sure to emphasize that the games are all a shared library is important. And also, making game cases even more cramped and messy is just... unnecessary.

Pricing- I think the pricing thing is largely a wash, for us as the retailer. We're going to see no margins for us directly. We see offers from Sony and MS for gift cards and so on, so they foot the bills for those kinds of things most of the time, to help encourage extra promos, but with new hardware, that's not likely. Instead, I think the idea of the new hardware's capabilities will be more enticing for our stores to find unique ways to pair it, the 4k capacity stuff will be a selling point if that's how they're trying to drive it, so aligning with 4k TV sales, and so on, and then we have protection plans and the like to get deals on for margin. Hardware sales are already a crapshoot.

Point of Purchase Marketing- Sony is pretty good about sending reps and providing good advertising materials to explain key differences, and I know I educate my staff really well, but this is definitely important.

In the end, it comes down to effective balance. Making sure to make use of the tools at our disposal to effectively educate both staff and customers to avoid simple mistakes and misunderstandings. I feel like a lot of what this system will present is going to be fundamental, and so making sure to make that clear early on, will help avoid needless complications. Also, avoiding having both models right next to each other during rush periods so that people aren't grabbing models by mistake will avoid that issue as well, so that people can make sure they see the right price by the right model. This way they can clarify with questions if they're not sure, with any of the staff nearby. It makes a difference, seriously. Don't put similar models right next to each other where people just discard boxes onto another pile! Sigh.

Feature Ad and CRM Support- Flyers are harder, because it's just kind of meant to advertise a product and get attention, and that's done for one of two things. The Hottest new thing, or the cheapest best deal. So in this case, it's going to be up to Sony's advertisements to really market this to show it as awesome and really worthwhile, to sell the new features and awesomeness in ads, otherwise, it's purely going to be up to us to get that attention in store, because a flyer with a higher price point and a flashy "OOh, 4k" isn't going to mean jack shit to most people.

I don't think that the games side of things will change very much on the desirability. It's just going to remain accessible across the board, and for those that do invest in the PS4k/Neo models, when a dev kills it with the Neo support stuff, it will be celebrated even more, but that will largely be in places like this, not seen in fliers or ads. Maybe with splashes of reviews?

OKAY! Finished. Finally. Hope that is satisfactory Cosmic, haha.

 

[jroc74]

So I have learned today that the n3DS, Hyrule Warriors comparisons are not good. I had no idea they took a Wii U game and got it to work on their handheld...amazing accomplishment on its own but bad comparison when using it as what might happen with the PS4, Neo.

Especially when spec wise the 3DS isnt anything to write home about.

My mind is even more at ease now.

Amazing. Thank you a lot for this post and the time and grey matter you invest here and whenever you create these monuments of letters.

Just want to add a thing about the packaging.
Sony should make shure the PS4Neo box looks very different from the ordinary PS4. if they paint the box black, golden or sell it in a steel case doesn't matter. It just has to stand out. They have to develop a catchy logo for whatever the thing is finally called. That's very important.

But the Neo software/game boxes should not look much different from the "normal" ones. Otherwise this would lead to great confusion. For example: Sony decides to make the hardware box golden. That's fine.
First conclusion would be to make the game boxes golden, too, and maybe even seperate them on shelves to make clear to everyone that these are the games that have the Neo mode. But that would be a bad idea, as it confuses/scares off the much bigger amount of old PS4-owners (40 million and rising). It would lead to thinking that these games don't run on old PS4.

As far as I understood PS4Neo games also run on old PS4, only without the extra power. And this is what should be communicated through the package. Keep the boxes as they are now and just put a label on it as they did with PSmove or XboxKinect.
Move support
Better with Kinect
something like that. Use the catchy logo, put it on the box and that's it. Neo owners will look out for it, old PS4 customers won't be irritated.

This sound like a great idea. This and Abdiel n Cosmic posts....great posts.

 

[nitekrawlwer]

Increased development time and other costs(cert and qa costs are effectively doubled) will lead to less packaged games at retail. Retail makes money on the games not the consoles themselves.

 

[Jon Carter]

By not including the power cable in the box, Nintendo implicitly communicated that this new version of the 3DS was targeted at existing 3DS owners.

The charger was already not included with European and Japanese 3DS XLs all the way back in 2012. Iwata stated it was because they expected most buyers to already own a DS model and therefore a compatible charger.

I never owned a DS personally, but considering it sold over 150 million units, I would assume Iwata was right.

 

[Gamezone]

I think the whole idea is stupid. The problem with these console is that you have to buy a brand new console in order to get one. All you have to do on a PC is to upgrade certain parts, and then you can sell or use your old parts for something else. I can't buy a new console that often.

 

[Negotiator]

I think the whole idea is stupid. The problem with these console is that you have to buy a brand new console in order to get one. All you have to do on a PC is to upgrade certain parts, and then you can sell or use your old parts for something else. I can't buy a new console that often.

You can sell your old console.

 

[Bitch Pudding]

Hardware - If a retailer sells 4K TVs, I'm guessing we can pretty much guarantee heavy placement of Neo units in feature ads... and I think it's fairly easy to see many social media placements regarding bundling opporunities (Buy a 4K TV, a Neo and get these 4 UHD Blu-Rays for ONLY $X!). Will this lead to an unintentional move of base PS4s to a "lower class" placement?

Thanks a lot for your thoughts.

I snipped that part because I think it's quite important: PS4 Neo needs an USP. Neo-enhanced games may offer an overall better quality, but without exclusive games or content that's a kinda weak one. And some will still fail to see any difference of course .

What might work is promoting the console's 4k capabilities - both games- and video-wise. That's what everyone understands. There's a new generation of TVs out there and you need a PS4 Neo to exploit them.

Hence, I really hope the final PS4 neo will support UHD Blu-Rays. It will be a lot harder for retailers to sell PS4 Neo without that.

 

[wapplew]

I think the whole idea is stupid. The problem with these console is that you have to buy a brand new console in order to get one. All you have to do on a PC is to upgrade certain parts, and then you can sell or use your old parts for something else. I can't buy a new console that often.

It could be stupid, it could be genius, the market will decide.
I hate the idea, but I can't help myself to day 1 it, maybe that's what they are counting on.
Their market age average is over 30, they can afford it. This could secure their leading position for long long time if the plan works.

I just sad that they choose this route, a very save, boring, uninspired route.

 

[Lemondish]

I think the whole idea is stupid. The problem with these console is that you have to buy a brand new console in order to get one. All you have to do on a PC is to upgrade certain parts, and then you can sell or use your old parts for something else. I can't buy a new console that often.

I don't see a fundamental differences between buying a $400 graphics card to get the latest hotness and buying a $400 premium console to do the same. Whether it's an all in one box or a single component, there's no difference.

 

[Birgitte2004]

Pay a bit more, get more out of it, but you have the exact same library, play the same games as your friends. There's nothing lost for the existing market.

And most of those customers won't even care that there's a premium model *on* the market! They will see that a more costly model came out and ask why people would bother to pay more, even if it gives slightly prettier graphics. It's not going to matter, because the primary justification for most customers in the market, is the core balance of price and the fact that the games are coming to both.

If they are playing a way higher quality game than I am, in a large sense I'm not playing the same game they are. I accept this when it comes to PC vs. console, I refuse to accept it console vs. console.

And saying "there's nothing lost for the existing market"?. If the quality of the PS4-regular version drops significantly, that's a huge thing "lost for the existing market". I think it's naïve at best to assume that the PS4 version of games will not be compromised. Pretty much all of them. Even Sony's own studios are frequently the techie types who want to see their product be insanely over the top, and they can only do that by focusing on the 4K version, because the regular version simply won't stand up. It can't.