Is Sony's generosity harming its future profitability?

Digitally Downloaded writes: "I do have to wonder whether Sony's merely making a short term play to keep customer numbers up, or it has a plan to introduce margin back into the software side of its business in the long term. I hope it's the latter, because the former doesn't suggest good things about Sony's future."

[JoGam]

Give up the doom and gloom already. Its getting played out. Smh.

[MattS]

It's always easy to tell who has, and hasn't, read an article before commenting.

[JoGam]

Maybe if people take the "Dooom" out of the title i would read. I can speak for half of the people here, we're tired of those reads. Seen one, seen them all.

[Silly gameAr]

Yeah, but it's getting harder to tell the flamebait from the articles that are actually pretty well written.

[classic200]

Doom title is not needed these days.

[BitbyDeath]

Doom headlines are meant to attract people to the article but it comes off as attention seeking so i just read the comments.

[mandf]

It's called giving back to gamers instead of a $500million marketing campaign. Instead of wasting money on ad campaigns they invest it into their own company and into games. People don't use their heads today. Sony gave gamers respect while some companies exploited gamers. No amount of doom and gloom titles can change that.

[miyamoto]

Let the light shine in the darkness for a positive change, shall we? Not the other way around.

Why not title it ....

" 'Free' is the PlayStation's Magic Word for Gamers"?

That sure will attract attention.

[360ICE]

Don't reduce every article that asks serious questions to a doom and gloom article. There's some discussion in there, you know.

It's not like it's just "Is Sony's generosity harming its future profitability" and then "yup."

Btw, no one here should be tired of reading anything. Nearly all the article on N4G are really short, and even so people really just discuss the title.

[3-4-5]

Yea evil dark and gloomy is ignorant and we are beyond that as gamers now.

If they give back to the fans, the fans will give back with their money.

They are setting themselves up for a 20 mile run not a 100 meter sprint.

[AngelicIceDiamond]

Explain how this is Doom And Gloom? Is it possible to debate on something that views Sony on a different perspective?

Sony needs to continue the free trend while at the same time enforce a little more in their products. I think with PS4 Sony will start to reinforce a little with SOE. Charge for Gaikai, PSN+ maybe some of the social features while keeping basic MP free. Sony is currently talking about a silver, gold or platinum memberships. https://www.google.com/url?... It's clear Sony wants to profit off of PS4's SOE next gen. It's just a matter of how they'll do it.

[lovegames718]

Has anyone ever thought that maybe ppl dont read the articles or click the sites anymore because the trash that is posted on most of these sites? I don't click articles anymore unless i know the site and know how they get down. So whatever i comment on just like the guy above me is based off the sensationalist titles! The titles shouldn't be so misleading if that is the case and doesn't mirror the article.

[Clarence]

Well said. Sony giving away free games make me as a consumer feel my money is well spent for PSN plus. I know that I don't have to pay to play online. I like having that choice to choose.

At e3 M$ gave away free 360 slims to all that attended their conference. I didn't see any articles asking would this harm their profitability. What about the 360s that were giving away for purchasing a PC or laptop?
http://www.pcworld.com/arti...

These negative articles are really getting out of hand. I guess it's cool for M$ to giveaway free consoles.

[dcbronco]

Everyone give stuff away at conferences. That's different. They actually came up with a word for it. Conferences that have absolutely nothing to do with gaming give stuff away.

[rainslacker]

When I participated in the Global Game Jam here a couple years ago, MS gave everyone a free Windows phone, a nice Samsung one at that ($400 MSRP at the time).

Being that everyone there was interested in development, it was pretty nice since now we all had a nice place to work on testing anything that we would make. I even ported a game I was working on to it and may have released it, except I got sidetracked by PS Mobile.

Sometimes giving stuff away for free is better for business in the long term than having a sale, or finding other ways to market. Almost every game given away was to raise interest in the game. Borderlands came out on PS+ a month before Borderlands 2. It was an obvious advertising strategy for BL2, and likely the original BL game wasn't selling enough any more to make much of a difference. The Vita IGC is obviously a way to entice PS+ subscribers to pick up a Vita, as now they have an instant library of games worth about $120, much cheaper than making and marketing a new bundle package.

The free games lately, such as the 4 free PSP games, is a way to build brand loyalty to Sony, and the wording of it was done in such a way to entice PSP owners to purchase a Vita. Pretty cheap way to market, since none of those games cost them anything to give away for free...they just didn't make any money on it. That's the distinction that this website is really ignoring. Was a decent article overall though.

[dcbronco]

Yeah. If you have confidence in your product and it's actually good giving some away is better than just about any other type of advertising. The right people will spread the word. A lot of places give things to TV stations hoping for a mention on the air. It's like Oprah light.

[Hicken]

No, people don't think that. They expect us to read every article on Kotaku before coming to the conclusion that it was complete and utter crap.

[first1NFANTRY]

Down voted and disliked the website.

I'm sure if Sony's generosity was harming them they wouldn't be giving out free games and $10 gift vouchers.

Not every company is greedy like M$.

Sometimes a little generosity proves effect in the long run.

[joab777]

Money is Money. This may be ainy's allocated adverstisement money to shore up the next gen base or to prepare everyone for a subscription fee.

U also have to remember that to get these deals, u have to constantly pay for ps+, a constant revenue stream that theymay need right now. Many of the games may not have been purchased otherwise, so where is the loss? Tjey know what they are doing.

I do agree though that most articles are here to fill thevtime until we get actual info. And sites want to get noticed. Others love video games and live to blog about them regardless of the topic.

[EffectO]

Generosity has nothing to do with this,Sony is giving stuff away because they want to increase customer base.They are taking short term loss in hope for long term gain.
Plenty of others do that...see Amazon,Steam,UK supermarkets,etc

[Alcohog]

The model is obviously profitable or they wouldn't do it. Dummy.

[MrBeatdown]

Nobody is going to give up buying the games they want because of games they get free. If someone was looking forward to Crysis 3 or Dead Space 3, getting Spec Ops from PS+ isn't going to stop them.

Hell, $20 games being widely available aren't stopping anyone from dropping $60 on new releases. Dirt cheap games offered during Steam sales aren't hurting sales of new releases. All those Greatest Hits and Platinum Hits games don't seem to be hurting everyone.

Just because there are cheaper options out there, or "free" options in the case of PS+, it's not going to stop anyone from getting the games they really want.

The higher priced games have always performed well, even though there have always been cheaper options out there. Things like Plus aren't going to change that.

[OC_MurphysLaw]

From a business point of view (NOT a gamer point of view) it is a very difficult route they have gone.

It is always easiest to offer something at a high price and then lower it if initially you are priced to high. The risk / reward of this approach is the high price on initial offering could turn off customers to the point that even lowering of price isn't enough. The upside is you can get initial buyers at the high price and then lower it to attract other buyers who were on the fence or waited for a lower cost.

It is far harder to offer something free or at a very low cost and then try at a later time to ask consumers to pay more. The risk / reward is you run the risk of having to offer too much (added costs) in order to get a consumer to pay. There aslo is a difficulty with percieved value. If you offer something as free day one, it will most certainly always be viewed as a lower value offering vs something that was asked to be paid for day one. The reward is free / lower cost entry should translate into greater adoption rate of said offering assuming there is something worthwhile in the offering.

Sony offered up all their online services free of charge because they feared their high cost of console at launch would put people off if they also had to shell out more money for the service. Sony quickly realized their initial PSN offering was not enough to compete, even at a free cost, so they began adding to it and making it more robust. They knew they had to recoup some of their costs for online so they came up with PSN+ but initially nobody cared about the cloud storage options they added or the automatic updates that were being offered as part of PSN+. Sony then had to add in giving away free games (which make no mistake costs them money on the back end) in order to make PSN+ a proposition that carried enough value for consumers to really buy into it.

We as gamers like PSN+ no doubt, but from a business point of view Sony I am sure wished they had approached this whole model differently.

[dcbronco]

I disagree with some of what you said. Really only the cost part. I believe this is a win-win for Sony. They definitely made a mistake offering online for free. Games sitting on a server don't cost much. Paying a set fee to the developer in order to get 10 million to pay $50 is still much cheaper than losing millions by not charging for online.

[OC_MurphysLaw]

I think Sony has gotten themselves into a much better position with their online vs when it started out. But it has been a difficult long road to get there. That was my point. PSN+ in its current state is a solid offering. I think Sony wishes they had it all in place day 1 vs at the end of the PS3 life cycle.

Also you are right the set fee they pay to the publishers to put games on PSN+ most likely pales in comparison to what they are pulling in.

[Nathaniel_Drake]

This article should be more telling of MS and how they decreased their generosity by increasing live payments and after seeing Sony and Nintendo give free online play they won't change their stance

It seems to me they won't stop with live payments as most of their money is coming from there and a tell sign that they are not devoted to gaming more than social connectivity

Sometimes these kind of articles shed light on the opposition more than the company they are talking about

[fsfsxii]

Sony ofcourse makes profit from their services
For an example, PS+, if it wasn't making them profit, the program would stop, and if PSN wasn't making profit, they'll charge for the service.
People still complain when there is free stuff, lol wtf???

[memots]

Its a rental system. And its profitable.

I have a friend who works at EA and they are in the work for something similar. You would pay a certain amount each month to have access to all their whole library/title from all the way back.

Now of course we are talking on PC, but who knows they might be able to implement it to PSN if they pay an infrastructure usage fee.

[Roper316]

consumers like it when they feel a company is giving back to them for their support/business. Companies like Capcom & MS should be more worried about how consumers see them a greedy money mongering company that gives nothing back without a fee attached.

MS has pretty much lost me as a customer next gen after owning their 1st 2 consoles. They will really have to blow me away with their next consoles offering for me to even consider it.

I know all companies are it business to make money blah bah but my money will always go to a company that I at least feel like they appreciate the business. MS & Capcom don't come across that way to me so both have lost my business.

So no Sony is not hurting themselves by giving back to the people who spend money on their product if anything they are buying/building brand loyalty imho. Which in return leads to more future business from that customer and word of mouth sales when that customer tells people about getting free things/rebates/promotional credits.

[Xer0_SiN]

actually, no, its not. if anything its drawing in a new fanbase, newc
customers. its just further emphasizing the great value sony is willing to reward its customers with.

[grassyknoll]

No, it generates good will amongst PSN users. I got a Vita because of the content on PSN Plus. If they continue to do the same with the Playstation 4, I'll be buying that too!

[dafegamer]

another daily doom gloom topic

[worldwidegaming]

Think netflix. Its a smart plan.
Playstation Plus made me change my main system from 360 to ps3.

[dcbronco]

The problem harming profitability isn't giving away free games. The return is getting people to pay for online. If you gave away ten games that barely sell anymore and it gives you enough money to cover the cost of the free on-line you have saved yourself money. You have lost nothing giving the games away. Keep up on a free online system for 10s of millions of gamers is expensive though.

[DFresh]

Not really because the games Sony are giving away for free are games that have already sold a lot or have had their launch window to make all the money that those games can make.

I don't see Sony giving any price cuts on new releases only the older games do you see the big deals.
Sony is doing a smart tactic continuing to get more people into paying for PS Plus and bringing in more people to more variety of games that they wouldn't of played had their not been a major price drop or been given away for free.
It's no different when what Valve does with Steam.
Offer deals to attract more buyers to a game franchise and in return there's a bigger chance the sequel to that series could make more money and thus more games can be made of that franchise.

ex.)
Do you think an awesome game like Journey (PSN) would of been as successful as it is now had it not been for the awards and the PS Plus deals?
(Even as a fan I didn't expect Journey to do this well.)

What about games that have gone the optional free 2 play like DC Universe, Uncharted 3 or Killzone 3?
(Once again attract more people to a product to purchase it when in return there's a greater chance those people will buy the next sequel in those franchises.)

Food for thought.
:)