Avoiding the console death spiral

One way to fend off the death spiral for a console is to develop a exclusive killer app. If you have a game that will be a blockbuster, you can go to one of the console makers and say, "We will only put this out for your system if we get a bribe."

That bribe is usually lowered or no kickbacks per disk. If the studio that made Halo was not owned by MS, they could go to MS and say "We figure we will sell 10 million copies of the 360 version of Halo 3 and seven million of the PS3 version. We will not do a PS3 version if you make it worth our while not to, say no fee per disk so we can pocket that $10 per unit and an ad budget worth $5 million".

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TheMART4256d ago

"The death spiral means a company has to shell out more and more money to hold their ground. They have to buy more exclusives, subsidize consoles more, and basically bribe people into taking money from them with each console sold. Worse yet, if you buy a PS3 for $-200 as far as Sony is concerned, and then there are not 20 games you want to buy over the next few years, Sony eats that $200.

MS in the mean time can take that $75 they are making and drop the price to around $300, bundle in a couple of games and a controller, or just do something creative. Sony will have to match this and drop their price by $100, bundle games, or whatever else MS does. Instead of it being a zero sum game like it is for MS, Sony will have to sell 10 more games per console or eat the cash.

Sony is treading on some seriously dangerous ground here, dangerous enough to potentially break the company. Their reputation is pretty well mud among the geek set for the DRM infections, rootkit fiascos and general corporate ickyness of the past couple of years. This drove away some early adopters."

Just like I and many others said months, even a year ago... Sony can go bankrupt over this adventure.

If BluRay fails, the PS3 fails... Their TV market already declined a bit because of Samsungs/Philips/Panasonics succes... Watch out Sony, just watch out

Syko4256d ago

Seriously Mart you are making way to much sense right now for the first post. Give them a second to digest what they read. Then lay into them after the denial sets in. What your doing is laughing at them when they are down, Which isn't very nice....

Deny,Deny,Deny it will never make it true...

weekapaugh4256d ago

"If BluRay fails, the PS3 fails"

totally wrong, the advantage of blu-ray for the PS3 is it can hold more data so games can be deeper and have longer game play. Playing games on little ole DVD format is yesterday.

VirtualGamer4256d ago (Edited 4256d ago )

Their TV market already declined a bit because of Samsungs/Philips/Panasonics succes... Watch out Sony, just watch out

Really? Seems to me I read recently that Sony took over top spot for LCD TV sales. They took away the lead from Samsung.

This article is simply one persons opinion. It offers no credible sources for money being made or lost by Sony or MS for their respective console. Last time I checked MS lost money on every console they sold when they launched. Things maybe different now but then a year from now Sony will be making a profit as well.

The article also tried to suggest the only way Sony or Microsoft can get "exclusives" is to bribe third party developers. Last time I checked pretty much all 3rd party developers are going cross platform so it would appear neither side is paying. It also failed to mention that Sony owns more studios then MS so it can crank out more exclusives. Not only that but if a 3rd party developers is doing great things you could always buy the studio and then every game from that point on would be an exclusive to your console. I guess when things don't fit your theory you simply pretend they don't exist.

I know you really want Sony to fail but its not going to happen.

Die_Sloe064256d ago

.....and Sony does need to be worried. Reguardless of how "authentic" that read was, I would say that the numbers are about accurate. Sony really should have thought about them "eating" 200 dollars per console before releasing such a high end console.

Nevertheless, Blu-Ray is the winning format right now, and this is the ONLY REASON that Sony hasnt lost all hope whatsoever. I know that there are alot of 3rd party developers that are still riding with Sony, however. Although XBox's game selection murders PS3, we need to give it more time before we decide whos going to win this battle.

weekapaugh4256d ago

Hey MART-ee, Sony's stock price is almost at its fifty-two week high and is currently 52.41. Microsoft however is at 29.32. Guess the market doesn't agree with you.

Joe4256d ago (Edited 4256d ago )

I think the real question is:

What really makes a console successful?

Is it the number of units sold? Is it the games? Is it longevity? Is it a combination of everything? How much profit the companys make?

All, I do know is competition is GREAT! It brings out the best of what each company has to offer. Some good, some bad. Sony does well in introducing new technologies, but they haven't been proven and aren't cheap!

I have to admit, the PS3 is too pricey. You know it, and I know it. If you think different about it, than either you're a Sony fanboy trying to justify the price of buying a PS3 or you're rich.

To me, it's all about reaching the mass number of gamers out there. You can pretty much hit all points of success when you reach out to them.

And the PS3 doesn't do that.

VirtualGamer4256d ago

Sony is reaching out to people by offering them 3 different products. Want a masses console with a great library of games and is very afforadable? Then buy a PS2. Want a portable gaming system? Then buy a PSP. Want a console that allows you to maximize the potential of your HDTV? Then buy a PS3. Face it if you can afford to buy a HDTV you can afford to buy a PS3. Heck I payed more for my HD cable box that doubles as a PVR then I will for the PS3.

Sie4256d ago

I don’t think there’s much doubt that the PS3 hasn’t had the best of starts, saying that its not sold too badly considering that its not even out in Europe yet which is classed as Sony's strong hold, though I think this has changed a bit since the PS2 days mainly due to the Xbox 360 and Sony not meeting the hype that they set.

Saying that I’m sure I will pick one up when the price drops drastically.

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