Support NeoGAF

[gokurho]

Nintendo and Sony head into ‘grim’ holiday season with old consoles and no big releases

Video game industry fears its most important quarter will fall flat with few new mass-market offerings

www.ft.com

Japanese gaming giants Nintendo and Sony are heading into this year's crucial holiday season with little to offer mass-market consumers — one relying on sales of a seven-year-old console and the other appealing only to hardcore players with a new premium offering that critics say is overpriced.

As Sony released the $700 PlayStation 5 Pro last week to mixed reviews, Nintendo put a damper on the industry's biggest quarter, lowering its guidance on sales of its ageing Switch console from 13.5mn to 12.5mn for its fiscal year ending in March. Traditionally, Nintendo roughly doubles its revenues in the December quarter compared with its September one.

"It's fairly grim this year," said Gareth Sutcliffe, head of gaming at Enders Analysis. "It would be difficult to imagine a holiday season that is less exciting than this one when it comes to gaming hardware."

The picture is also stark for video game releases, with no new blockbusters expected this year and many developers holding fire for a next-generation console from Nintendo, with details expected to be announced in the new year. "For a host of reasons, notably the PlayStation and Switch console cycles, the sector has been in a bit of a lull," said Bernstein analyst Robin Zhu.

"The new-game launch slate looks set to remain light into year-end. The holiday heavy hitters for PlayStation will mainly include games launched in the last six months, like Black Myth: Wukong."

Bets are increasing that the future will be "post-hardware", with the industry shifting to the cloud, games becoming platform-agnostic and the only mass-market dedicated gaming machines being those that have a portable component built in.

Microsoft is looking to sell more of its own games on rival consoles and promote its subscription service, Game Pass, which gives access to hundreds of games that can be played on its own Xbox, a PC or streamed over the internet to other devices for a monthly fee. Consoles such as a PlayStation 6 or new Xbox may come to occupy a niche as higher-margin, premium products that are not a core part of the business.

The problem for console makers is that traditional gaming machines are becoming increasingly expensive to produce and the overall installed base has been flat for years.

"Consoles seem to have hit this very, very hard ceiling of demand and they cannot get past it," said Sutcliffe at Enders Analysis. "The only model that has exceeded that is in the mobile space, and that is where Switch comes in."

While no game-changer for earnings, the Pro could be a clear signal of where the industry is headed. It offers better graphics and performance and is $200 more than the vanilla PlayStation 5, putting it within striking distance of some gaming PCs, even before the extra cost of add-ons such as a disc drive or a stand are factored in.

Thus, Sony's strategy appears to be to keep margins high for a niche product, knowing avid gamers will be willing to pay for a 67 per cent increase in compute capacity, which Sony says will provide 45 per cent faster rendering of gameplay action.

"The $700 price tag of the PS5 Pro strikes us as a similar sort of price discrimination strategy as the GTI version of a Volkswagen Golf — the 'hot' version of an otherwise mainstream product that's aimed at enthusiasts," said Zhu.

However, the Bernstein analyst added, a social media storm over the price at the recent Tokyo Game Show and reviewers questioning whether the upgrade was worth the money could open up an opportunity for Nintendo. "Public sentiment-wise the internet outrage surrounding PS5 Pro pricing should provide air cover for Nintendo to sell the Switch 2 at $400 or even perhaps $450 without provoking a backlash," he said.

 

[Tiago Rodrigues]

"Old consoles". They really just boxed PS5 (that just released a new Pro version) with 2017 Switch and didn't even mention Xbox in there lmao.

Bets are increasing that the future will be "post-hardware", with the industry shifting to the cloud, games becoming platform-agnostic and the only mass-market dedicated gaming machines being those that have a portable component built in.

Alright who wrote this. It's kind of hilarious.

 

[Parazels]

When I read "cloud gaming is the future",

for me it's always an indicator,
that the author has never held a gamepad.

 

[lh032]

timed discount on ps5 and ps5 pro and watch the sales fly.

 

[lh032]

"Old consoles". They really just boxed PS5 (that just released a new Pro version) with 2017 Switch and didn't even mention Xbox in there lmao.


Alright who wrote this. It's kind of hilarious.

someone that hates home consoles i guess.

 

[od-chan]

that the author has never held a gamepad.

Maybe it's time to upgrade from whatever third world internet connection you're still using.

 

[Dr. Wilkinson]

This is so completely stupid. Sony’s console is only just now four years old. That’s about halfway through its lifespan. And they literally just put out the Pro. How silly and disingenuous to argue they have old consoles.

I agree release slate is lighter than normal across both. Nintendo actually has a good excuse, they’re on the cusp of a console transition.

 

[Wastelander92]

“Price discrimination “
LOL

 

[SweetTooth]

Did he just lump Sony with Nintendo with the "old consoles" narrative? Also its crazy how irrelevant Xbox has become!

 

[Skifi28]

Doomed, again!

 

[winjer]

FT's take on the hardware is non-sense. The person that wrote this article, probably has very little knowledge of the industry and how it works.
The only thing they got right is that new and exciting games are scarce.
Nintendo is probably getting ready for the Switch 2, making games for it's launch.
Sony had a bunch of failed GaaS games, and that meant several studios wasting time and money. So now the result is a lack of new games.

 

[RoboFu]

Zelda and Mario are not big enough games?

 

[Parazels]

Maybe it's time to upgrade from whatever third world internet connection you're still using.

Look at the
author of the article!
Ha-ha-ha!

 

[Dr. Wilkinson]

timed discount on ps5 and ps5 pro and watch the sales fly.

Hard to do that when you already subsidize your consoles by selling them at a loss.

 

[Robb]

Summary for anyone who don’t have time to read the article:

 

[Dr. Wilkinson]

Zelda and Mario are not big enough games?

Context is key. One is an RPG from a dormant series that has previously always been on a handheld, and sold single digit millions. The other is yet another spin-off that stars Zelda instead of Link, and is clearly not the “next big Zelda” that most people imagine when you say “new Zelda”. Again, low single digit millions.

It’s not one of their better holidays lineups, even by modern standards. But hey, they’re in the middle of a console transition. That they even have this many games is impressive.

 

[Draugoth]

Squeezing the last of the Switch i see

 

[Tiago Rodrigues]

Hard to do that when you already subsidize your consoles by selling them at a loss.

PS5 is not sold at a loss. And the Pro even less. From their quarter numbers seem like they are actually making money from these units. They seem to be favoring less units sold and more money earned tbh.

 

[Cyberpunkd]

timed discount on ps5 and ps5 pro and watch the sales fly.

Don't even need that. By now Nintendo is making a killing on the Switch margins. Even if they sell 12.5mln consoles the margins (and profits to go with them) are insane. There is a reason Nintendo is the company with the highest margins in the industry.

 

[Cyberpunkd]

PS5 is not sold at a loss. And the Pro even less. From their quarter numbers seem like they are actually making money from these units. They seem to be favoring less units sold and more money earned tbh.

Which is exactly what you would do if you didn't think the market will expand significantly in the future. You squeeze your user base, this is where extra money comes from.

 

[Dr. Wilkinson]

PS5 is not sold at a loss. And the Pro even less. From their quarter numbers seem like they are actually making money from these units. They seem to be favoring less units sold and more money earned tbh.

If that’s true it’s recently changed. They were certainly sold at a loss at and after launch, just like Series X. But more to the point, they want these consoles to be profitable. So dipping into what is likely a very thin margin would be counter-productive, unless sales get so bad they have no other choice.

 

[Dr. Wilkinson]

Don't even need that. By now Nintendo is making a killing on the Switch margins. Even if they sell 12.5mln consoles the margins (and profits to go with them) are insane. There is a reason Nintendo is the company with the highest margins in the industry.

Nintendo still is making a much smaller margin on OLEDs than the other models. A “killing” is definitely overstating it, at least for the model that is far outselling the other two. They just mentioned it again last week at the investor meeting. And keep in mind they sell the OLED at $50 more, and they still have a thin margin on it.

 

[kaizenkko]

Will be funny when people realise that Switch 2 will be $500 or even more.

 

[Dr. Wilkinson]

Will be funny when people realise that Switch 2 will be $500 or even more.

It would be a mistake to launch it that high. Would likely be a 3DS-level disaster. Switch is a secondary console for most users, even Nintendo fans.

 

[RoboFu]

If that’s true it’s recently changed. They were certainly sold at a loss at and after launch, just like Series X. But more to the point, they want these consoles to be profitable. So dipping into what is likely a very thin margin would be counter-productive, unless sales get so bad they have no other choice.

Sony did just put out a press report that they are cutting costs. Seems like hard times over at Sony. had to sell off death stranding and put their coveted horizon ip on switch.


Nintendo is still selling switches at full price lol they are not going to have a " grim " anything. If they thought they would they could easily slash the switches price for its last main holiday.

 

[hemo memo]

Will be funny when people realise that Switch 2 will be $500 or even more.

Nah. No way the Switch 2 is going over $399.

 

[DenchDeckard]

There was someone else that was saying that the console market has hit a hard ceiling. Seems like others are now sharing that sentiment and backing up those statements.

 

[Cyberpunkd]

Will be funny when people realise that Switch 2 will be $500 or even more.

It will be 399€, whatever that is in Freedom bucks.

 

[Dr. Wilkinson]

Nah. No way the Switch 2 is going over $399.

I think there will be a basic SKU that is $399

 

[Aurelius]

My two boys just finished their Sinterklaas wishlists. I don't think Nintendo has to worry...

 

[kazuyamishima]

I dunno, the digital slim will be $375 and disc slim $425.

First time since launch that they’ll do a proper discount for BF.

 

[cormack12]

Oh its paywalled.

Thank God. Keep that shit private homie.

 

[Horseganador]

A console that's 5 days old like the PS5 pro is already old? xD, they don't even remember Xbox in the headline.

 

[Gryllis]

Sony releases new hardware and less than a week later print media calls it an old console.

 

[hemo memo]

Oh its paywalled.

Thank God. Keep that shit private home.

$39 a month is ridiculous when you can pay $5 for GAF Gold and be more informed.

 

[Punished Miku]

When I read "cloud gaming is the future",

for me it's always an indicator,
that the author has never held a gamepad.

They're saying it's the future of growth. Console sales hit a ceiling every time. From the perspective of an investor, that makes sense. We still have yet to see that market materialize, but it's about the only logical path to betting money on growth.

 

[ikbalCO]

He is right. Console manufacturer should release new generation of consoles every year. And these consoles shouldnt be more expensive than a adidas samba. There shouldnt be a lifespan existance for any tech product let alone gaming consoles. Every year there has to be ground breaking genre defining exclusive 1st party games and great collection of 3rd and 2nd party games can eat shit. Noone is supposed to be happy with what they have nor they should try new type of entertainment. All mankind have to be in constant consuming state and companies regardless of their scale and size should supply it.

I whole heartedly agree. Amazing article. Should win pulitzer or p-body or something.

 

[Tiago Rodrigues]

Which is exactly what you would do if you didn't think the market will expand significantly in the future. You squeeze your user base, this is where extra money comes from.

Except over 30% of all PS5 users in early 2023 were new PS users and just this year Playstation broke its record of MAU at 123 million.

That doesn't sound like a market that doesn't want to expand.

It sounds like a market that wants to expand but Sony can't do much to decrease its hardware price like in the old days to bring new people in.

 

[thismeinteil]

Sony Too TM

 

[Go_Ly_Dow]

This year has been filled with big releases and great games, I'm sure many have a huge backlog of already released bangers to pick up this holiday season

Infinite Wealth, FF7 Rebirth, Metaphor, Silent Hill 2, Elden Ring DLC and others to name some.

 

[Punished Miku]

Sony TooTM

What's a tootm?

 

[Sooner]

Maybe it's time to upgrade from whatever third world internet connection you're still using.

Cloud gaming will NEVER be the best way to game. I don't care what Internet you have.

It has a purpose, but not for your main way to game, if you take gaming seriously, at all.

 

[diffusionx]

Nintendo should have launched the Switch 2 by now. The game releases of the Switch this year are pretty sad, mostly odds and ends, and the hardware sales have slowed down quite a lot.

 

[od-chan]

Cloud gaming will NEVER be the best way to game

I haven't claimed anything as preposterous as this in the first place, you're just (poorly) trying to move the goal post, so that you can at least appear to have reasonable grounds for a response to me. Why this is something you want I have no idea, but you do you.

 

[lh032]

Don't even need that. By now Nintendo is making a killing on the Switch margins. Even if they sell 12.5mln consoles the margins (and profits to go with them) are insane. There is a reason Nintendo is the company with the highest margins in the industry.

i dont really care how switch performs.
My switch is collecting dust now. It runs games like its on life support.

If you take away the portability, it has weak third party support

 

[tamago84]

Even big IPs cant withhold test of time forever..maybe just me but i just wanted to speedrun through echoes of wisdom

 

[SaintALia]

Yeah, not too surprising coming from the Financial Times. There are no big blockbuster sellers coming this holiday season from Nintendo or Sony that will move hardware on a significant level. And rhe current crop of hardware on stores now for the Christmas season isn't likely to be flying off the shelves. PS5 and Switch are gonna sell fine, but expectations need to be tempered.


Not sure why anyone outside the FT audience and stockmarket/shareholder audience in general would be taking this article to heart though.

 

[DaleinCalgary]

Nov/Dec used to have tons of releases. I remember the old days when we had E3 and they would announce all these new games coming in the fall and then Best Buy would have E3 pre order sales and you could pre order games at 1/3 off and then decide later if you wanted them.

 

[SHA]

They're not doomed, if you said that you clearly don't understand how they make money. It's not a bad holiday, look at 3rd party releases, if you just look at exclusives then your opinion is irrelevant.

 

[midnightAI]

If that’s true it’s recently changed. They were certainly sold at a loss at and after launch, just like Series X. But more to the point, they want these consoles to be profitable. So dipping into what is likely a very thin margin would be counter-productive, unless sales get so bad they have no other choice.

They only took a loss on the PS5 for the first 12 months unlike XBox Series X which is still taking a loss I believe. Pro isnt taking a loss at all (same with PS4 Pro)