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[Salty Popsicle]

It's not a "death" that we are about to witness, it's an industry transition.

Arcades —> home consoles —> streaming

It's the only logical method for moving forward, yet these guys who hate streaming for whatever reason act like Netflix and Spotify didn't just upend and destroy physical media sales and take down Blockbuster and small mom and pop record/CD shops with them during the past decade.

 

[VN1X]

Playstation wins again. Wow!

 

[rickybooby87]

MS is slowly creeping to full blown publisher status, probably the real reason why they bought Zenimax, ultimately, we'll all be playing various games from MS library on PlayStation and Nintendo as well as PC.

 

[Tripolygon]

It is in Microsoft's best interest to say this. They could have easily not said anything by invoking the 5th. This justifies why the current business model of keeping the platform closed is needed for them to recoup the cost of creating the platform. Same applies to Sony and Nintendo.

Apple cannot justify why another store on the iOS platform will be detrimental to their business as they make a killing on the hardware upfront.

 

[Stuart360]

Even in the 16bit days, they were making lossses on hardware, and making money from game sales. And that was back then when there were only games and extra controllers etc to make money. Today we have game sales, licenses, subscriptions and services, online, etc.
This news isnt really news.

 

[SlimeGooGoo]

.

 

[Salty Popsicle]

This.

There's no reason personal computers and mobile phones should have different rules.
I still believe it sucks not having root access by default on mobile phones. I should be allowed to do what I want with my phone, even install another OS if I want to.

I think a reason is most people do not own their phone outright. They are on 2-year payment plans with their wireless carriers, and until they finish paying the phone off with interest, it is not their property. Also, phones are much more highly re-sellable than PCs. I don't want to buy a used 2-year old iPhone and see that the OS is bugged out because someone installed some custom OS.

 

[NickFire]

It is in Microsoft's best interest to say this. They could have easily not said anything by invoking the 5th. This justifies why the current business model of keeping the platform closed is needed for them to recoup the cost of creating the platform. Same applies to Sony and Nintendo.

Apple cannot justify why another store on the iOS platform will be detrimental to their business as they make a killing on the hardware upfront.

Great post. I can't believe I didn't think of it myself as I've been trying to understand how Epic could theoretically go after Apple without harming Sony / MS, especially Sony who they have semi-partnered up with (I think). Such an obvious answer if you just look at the difference in hardware subsidization, but completely evaded me until I read your post.

 

[THE DUCK]

I can see where they would lose money on hardware overall, but I can't believe they have never made profit on a single xbox machine......I mean an old xbox one must have at least had some razor thin margin later in its life.

 

[yurinka]

It always worked in this way: they sell the console at least during its first years at a lost, and need to sell like a couple of games, or a couple of Plus/Gold years, for that console to compensate with their profits the loss of the console.

And since at the end of the generation they sell 8-12 games per console, with the indirect profit that every consoles generates with the games sold for it they end having an overall profit for each console.

So it doesn't matter if all consoles are sold at a loss.

If PS3 and the first Xbox console geneations generated an overall loss was because its costs on R&D, marketing, infrastructure costs with stuff like server costs, marketing stuff, exclusivity deals with 3rd party games, studio big acquisitions, several unprofitable expensive games and so on. The reason wasn't to sell their consoles at a loss.

 

[Entroyp]

That’s just the business model.

 

[RiccochetJ]

I always thought this was common knowledge. Take a loss at the beginning of the generation and then work to get to break even or tiny profit as efficiencies and manufacturing costs come down. I suppose what's interesting is that MS has never crossed the break even threshold with it's consoles unlike Sony apparently.

 

[Magic Carpet]

So does this mean after the ruling that any company that makes a profit on hardware is considered an open platform.
Xbox-oh no we have never made profits so we can still ban all competing stores on our hardware.
Nintendo- ummm you see your honor....we actually use really high quality parts and also have never made a profit.....umm.

 

[SlimeGooGoo]

.

 

[Bojanglez]

And Sony.

Because it affect all Closed Platforms.
A decision here will affect Xbox, PlayStation, Nintendo, Roku, etc etc etc.

And MS entered to help Epic.

Not necessarily. Epic are making the differentiation between device types (specialised games devices and productivity devices). They are also distinguishing iOS because of its relative size in the market (of phones) and the opinion that (in Epic's eyes) iOS users once invested in the ecosystem are unlikely to change to another platform, whereas data for the other platforms show people change or often own both.

So it could be that some sort of decision goes against Apple, but also allows devices in other markets to continue their closed pricing practices.

 

[Dick Jones]

We all knew this. Nintendo the only ones as they have the clout to sell at least a generation back technology and operate with a profit. Everyone would be shocked it Sony were making a loss on PS5 yet MS were selling the SX at a profit.

 

[Zeroing]

It always worked in this way: they sell the console at least during its first years at a lost, and need to sell like a couple of games, or a couple of Plus/Gold years, for that console to compensate with their profits the loss of the console.

And since at the end of the generation they sell 8-12 games per console, with the indirect profit that every consoles generates with the games sold for it they end having an overall profit for each console.

So it doesn't matter if all consoles are sold at a loss.

If PS3 and the first Xbox console geneations generated an overall loss was because its costs on R&D, marketing, infrastructure costs with stuff like server costs, marketing stuff, exclusivity deals with 3rd party games, studio big acquisitions, several unprofitable expensive games and so on. The reason wasn't to sell their consoles at a loss.

Yes but this is related to Apple and their “gaming” side of the App Store … Apple sells hardware at a huge profit margin plus 30% cut from anything sold at the App Store.

Just shows how amount of money Apple makes, and I remember when European Union forced Apple pay extra tax for the money hidden on offshores…

what is being judged here is Apple.

 

[rodrigolfp]

Last time a company tried to make money on hardware it was the 3DO, and we all know how well that went.

Console based profits are from publishing and licensing. Not the hardware itself and hasn't been since the 2600.

Nintendo almost always makes money on hardware.

 

[IntentionalPun]

I still don't get why people think this should matter to a court; how would you propose a law that determines how "walled" a garden can be based on hardware profits?

That shit is murky as hell.

Walled gardens should either be allowed.. or they shouldn't.. whether a company chooses to create a loss leader or not is a business decision.

Also the "this isn't a general purpose device" thing is so backwards....

"Well we wall this garden SUPER hard.. we don't even allow entire segments of applications, and control who can develop for it.. THEREFOR.. we should be allowed.. to. have a super walled garden, whereas the guy that allows all kinds of apps should.. not"

 

[yurinka]

Yes but this is related to Apple and their “gaming” side of the App Store … Apple sells hardware at a huge profit margin plus 30% cut from anything sold at the App Store.

Just shows how amount of money Apple makes, and I remember when European Union forced Apple pay extra tax for the money hidden on offshores…

what is being judged here is Apple.

I know, I just explained that to show my MS or Sony have that strategy of selling consoles at a loss.

Apple's strategy is more similar to the Nintendo one: on top of the profit from the games and apps they sell overpriced hardware to also get direct profits from it.

I still don't get why people think this should matter to a court; how would you propose a law that determines how "walled" a garden can be based on hardware profits?

That shit is murky as hell.

Apple can use it to say: "See? These guys also have a walled garden where they also charge the 30% and aren't profitable, so it's fair for us to do the same?".

Or Epic can use it to say"See? These guys need the 30% and to wall their garden to compensate the loss they have from hardware. Apple instead doesn't sell their hardware at a loss, so don't need to charge the 30% or to have a walled garden?

It's the only logical method for moving forward, yet these guys who hate streaming for whatever reason act like Netflix and Spotify didn't just upend and destroy physical media sales and take down Blockbuster and small mom and pop record/CD shops with them during the past decade.

Streaming won't be the future of nothing because many country have data caps, shitty internet wired connections and 4G coverage. So not even 5G will help at least in a decade from now. In addition to this, they'll need to put a ton of datacenters around the world to reduce input lag, which is unplayable in most countries that now don't have a single datacenter there because it's too expensive.

Streaming will grow in the following years but always will be a secondary, smaller market for a few countries for at least a decade or two.

 

[LordBlodgett]

Why is it that a court case between Apple and Epic is revealing soo much about Xbox?

They are trying to show that Apple is in the wrong because they have a walled garden ecosystem and take 30% cut but they ALSO make money off the hardware. On the other hand the Microsoft and Sony consoles are loss leaders and they need to take a large cut on the backend in order to make any profit. I actually wonder if the reason the Windows store cut their take to 12% came down to anti-trust issues more than trying to compete with Steam. Windows is very profitable, and the Microsoft Store app is pre-installed on every copy of Windows 10.......does make you wonder

 

[StreetsofBeige]

MS and Sony historically dont make much on hardware. Although Nintendo does.

MS and Sony are doing the razor blade model.

Other industries do it too. Bombardier doesn't much of anything selling buses and subway cars. They make money on 20 year servicing contracts.

The products dont even have to relate. Our companies has sold it's share of shitty loss leaders, but in return the retailer agrees to carry other higher margin products they and us can sell to make profit.

All you dairy lovers drinking the cheap milk and bargain priced cheese blocks make the company no money. But when you amp up and buy that shit that costs double the price or those cute little cheese strings or mini pucks for lunch, thats where they make money off you.

 

[DaGwaphics]

So we are actually having a discussion about how consoles have always worked (with very few exceptions)? Figuratively speaking, you give away the razors, you sell the blades.

The company that is profiting on the hardware and the software is just gouging you. *cough* Nintendo. LOL

 

[Zeroing]

It's not a "death" that we are about to witness, it's an industry transition.

Arcades —> home consoles —> streaming

Err but each transition is only possible if there’s more positives than negatives and if you account internet connection issues, speed or data cap and a small library of titles available… why transition to streaming?

 

[massivekettle]

Man you still don't get it. You are simply wrong dude.

Yeah iOS started out "closed" but thats simply because of the nature of how tiny the market was. There are two key things here. There was no way to "close" Windows or Mac like iOS and Android on their inception. They wanted people working on software for their hardware and distributing them on discs, and in stores etc etc. It was only the advent of the internet that allowed Apple to do what it has obviously.

Apple makes a MASSIVE profit on each phone. The phone sustains itself, much like ... Windows licensing! And Mac computers!

The second aspect is "The windows world [has] lots of scenarios that people use these devices for."

Sorta like ... iOS and Android.

Again, this point is being made over and over. Too many businesses now depend on software distribution on mobile devices for their very survival. You are letting Apple and Google skim 30%(!) off the top for doing absolutely nothing other than providing a download link, and on top of that able to decide if those companies software has a right to even exist. Absurd!

That is the point. iOS has changed from a tiny player in a luxury market to a daily necessity (along with Android) that is literally crucial to the fabric of our global economy. And Apple should have control of ALL software that is allowed to exist? You're completely insane if you believe that. I don't get why you are so pro Apple on this one. The biggest corporation on the planet, with the ability to destroy thousands of businesses on a whim. That's your stance?

Edit: I can see you "laughed" at this Ethomaz, but I suggest you bring some actual substance to this instead of repeating the word "closed" over and over. That the very issue. Using the complaint as a defense is incredibly stupid. Apparently you think Apple should have total control over a giant portion of all consumer focused software and that Apple has a right to 30% of all businesses revenue. That's brilliant stuff guy.

This is wrong. App makers benefit from Apple/Google's userbase and their respective user acquisition costs. Also, Apple/Google handle all the backend, security, payment processing, etc. Whether it's worth a 30% cut or not is debatable, but this isn't costless for Apple/Google either.

Moreover, Apple has the added advantage of catering to a more affluent userbase who is more likely to spend on subscriptions and apps, and therefore app makers benefit from that as well.

 

[kyliethicc]

These console manufacturers most likely can't wait for the day when streaming becomes viable and they won't need to worry about making losses on hardware being sold to end users.

If this isn't the last generation then the next one almost certainly will be.

There will come a time when the only option to play new games on local hardware will be through PC gaming.

Nah the infrastructure isn't there yet. Too much lag for most games, most users wouldn't enjoy it enough to spend as much as they do now.

Its about providing the best user experience in order to get lots of spending on software. Harder to do it with just streaming.

Even Phil XCloud himself said streaming won't replace local play via boxes for at least 10 years.

They'll only stop making consoles if they can grow profits by cutting out console production & R&D costs. Which will be at least a decade or more, for PlayStation and Nintendo at least. (They don't make Windows.)

 

[Zeroing]

So we are actually having a discussion about how consoles have always worked (with very few exceptions)? Figuratively speaking, you give away the razors, you sell the blades.

The company that is profiting on the hardware and the software is just gouging you. *cough* Nintendo. LOL

If anyone at Epic reads this…they will realize Nintendo needs a lawsuit!

Joking but mmm maybe they do deserve it too.

 

[Stuart360]

I havent been following this case at all, so can someone tell me why Apple, or any platform provider, shouldnt be allowed to say what store fronts it allows on its own platform?.

 

[ManaByte]

 

[IntentionalPun]

So we are actually having a discussion about how consoles have always worked (with very few exceptions)? Figuratively speaking, you give away the razors, you sell the blades.

The company that is profiting on the hardware and the software is just gouging you. *cough* Nintendo. LOL

And none of this should matter from a legal perspective.

Nintendo has managed to create products that cost them much less to make, that people perceive as being just as valuable as products that cost other companies more to make in the same segment. That goes for both hardware and software.

So has Sony; they managed to create the much more popular PS4/Pro, charge the same as MS, and actually profit off them fairly quickly. It's a business win, and clearly consumers perceived MORE value out of the PS4 than the Xbox One.

None of this should matter as far as consumer rights with what they can/can't do with a device they buy. Either companies should be allowed to "wall" their gardens, or they shouldn't.

 

[DaGwaphics]

I still don't get why people think this should matter to a court; how would you propose a law that determines how "walled" a garden can be based on hardware profits?

That shit is murky as hell.

Walled gardens should either be allowed.. or they shouldn't.. whether a company chooses to create a loss leader or not is a business decision.

Also the "this isn't a general purpose device" thing is so backwards....

"Well we wall this garden SUPER hard.. we don't even allow entire segments of applications, and control who can develop for it.. THEREFOR.. we should be allowed.. to. have a super walled garden, whereas the guy that allows all kinds of apps should.. not"

Agreed. Allow companies to design and sell products as they see fit. The only thing I would take issue with would be some kind of bait and switch where a product that was open is walled trapping users.

 

[LordBlodgett]

I always thought this was common knowledge. Take a loss at the beginning of the generation and then work to get to break even or tiny profit as efficiencies and manufacturing costs come down. I suppose what's interesting is that MS has never crossed the break even threshold with it's consoles unlike Sony apparently.

Sony didn't make a profit selling PS4 hardware even at the end if those 2019 numbers are to be believed. 1.7 billion dollar loss in 2019 on hardware.....We also know the PS3 hardware never turned a profit. Not sure about PS1 & PS2 though

 

[rickybooby87]

Last time a company tried to make money on hardware it was the 3DO, and we all know how well that went.

Console based profits are from publishing and licensing. Not the hardware itself and hasn't been since the 2600.

But Sony made nearly $20 on each PS4 console sold out the gate, I am sure that margin widened as the generation progressed.

 

[Salty Popsicle]

Err but each transition is only possible if there’s more positives than negatives and if you account internet connection issues, speed or data cap and a small library of titles available… why transition to streaming?

The amount of people who play video games regularly and DON'T have a reliable high-speed internet available to them is growing thinner every day. Heck, if you don't have a reliable internet connection in 2021, gaming is the least of your concerns.

 

[IntentionalPun]

Apple can use it to say: "See? These guys also have a walled garden where they also charge the 30% and aren't profitable, so it's fair for us to do the same?".

Or Epic can use it to say"See? These guys need the 30% and to wall their garden to compensate the loss they have from hardware. Apple instead doesn't sell their hardware at a loss, so don't need to charge the 30% or to have a walled garden?

I know why they were invited to testify.

I'm saying it shouldn't have any bearing on the legal precedent for "walled gardens."

 

[Magic Carpet]

The years before 2020 will go down in history as the golden age of video gaming.
Everything from here on out will be known as Bog standard.
Buy the new season of Tetris only 79.99 for the Year. Have you seen the new block skins? on sale now.

 

[NickFire]

And none of this should matter from a legal perspective.

Nintendo has managed to create products that cost them much less to make, that people perceive as being just as valuable as products that cost other companies more to make in the same segment. That goes for both hardware and software.

So has Sony; they managed to create the much more popular PS4/Pro, charge the same as MS, and actually profit off them fairly quickly. It's a business win, and clearly consumers perceived MORE value out of the PS4 than the Xbox One.

None of this should matter as far as consumer rights with what they can/can't do with a device they buy. Either companies should be allowed to "wall" their gardens, or they shouldn't.

The law disfavors monopolies though. I am not implying that Apple does or does not have a quasi-monopoly. Just saying that once a company becomes a monopoly the law disfavors that because it can harm consumers.

 

[Stuart360]

Nah the infrastructure isn't there yet. Too much lag for most games, most users wouldn't enjoy it enough to spend as much as they do now.

Even Phil XCloud himself said streaming won't replace local play via boxes for at least 10 years.

They'll only stop making consoles if they can grow profits by cutting out console production & R&D costs. Which will be at least a decade or more, for PlayStation and Nintendo at least. (They don't make Windows.)

As i have said numerous times on here, and GHG mentioned himself on the prior page, expect one more generation after current gen (we are talking 14-15 years from now when that gen would end). If we get another gen after that, think of it as a huge bonus, but expect one more gen before one or both of Microsoft and Sony go full streaming.
Nintendo live in their own bubble and do their own thing so who knows what they will do in the future.
The likes of Nvidia, AMD, and Intel certainly wont be pushing for a streaming only future on PC, as hardware sales are their main business. Plus PC gamers care just as much aboutthe hardware itself then they do about the games. So if you really hate streaming that much guys, go PC.

 

[Excess]

I'm more offended by the fact that anyone would have thought otherwise.

It's called "loss leader" strategy.

Loss Leader Strategy: Definition and How It Works in Retail

A loss leader strategy involves selling a product at a price that is not profitable, but is sold to attract new customers or sell other products.

www.investopedia.com

 

[IntentionalPun]

The law disfavors monopolies though. I am not implying that Apple does or does not have a quasi-monopoly. Just saying that once a company becomes a monopoly the law disfavors that because it can harm consumers.

For sure; it also matters in the US how you got that market share.

Having majority market share does not violate antitrust laws.

 

[Zeroing]

Agreed. Allow companies to design and sell products as they see fit. The only thing I would take issue with would be some kind of bait and switch where a product that was open is walled trapping users.

So gamepass in the future? Oh buying a big 3rd party developer and making it exclusive to only one platform/service? Yeah I can see the issues…in the future

 

[Salty Popsicle]

Streaming won't be the future of nothing because many country have data caps, shitty internet wired connections and 4G coverage. So not even 5G will help at least in a decade from now. In addition to this, they'll need to put a ton of datacenters around the world to reduce input lag, which is unplayable in most countries that now don't have a single datacenter there because it's too expensive.

Streaming will grow in the following years but always will be a secondary, smaller market for a few countries for at least a decade or two.

Regardless of how long it takes, whether 5 years or two decades, a streaming future is inevitable. First-World countries with expansive fiber-cable infrastructure will come first, and as the rest of the world catches up, they will join too.

 

[fermcr]

I imagine they both make a killing for paid online too.

What's surprising (or not), they make more money on DLC then game sales.

 

[Salty Popsicle]

So gamepass in the future? Oh buying a big 3rd party developer and making it exclusive to only one platform/service? Yeah I can see the issues…in the future

You talk as if Zenimax was forced to join Microsoft. Microsoft offered a sum of money and Zenimax agreed to be purchased. Nothing wrong with that.

 

[reksveks]

We are all talking about this and not how great the MS expert is :'(

 

[Zeroing]

The law disfavors monopolies though. I am not implying that Apple does or does not have a quasi-monopoly. Just saying that once a company becomes a monopoly the law disfavors that because it can harm consumers.

Fact, when MS was accused of being a monopoly and actions had to be taken… in that void, google grown… so Apple having the same fate would allow other companies to thrive as well. The problem here is, it seems that the new companies rising are more evil than the previous ones…

 

[DaGwaphics]

So gamepass in the future? Oh buying a big 3rd party developer and making it exclusive to only one platform/service? Yeah I can see the issues…in the future

Acquisitions in an open market with plenty of competition is not a problem. From MS, the issue I'm referring to would be more if they decided to suddenly update Windows so that only software from their store could run on it. Look at all the enterprise users that would be trapped in that situation. Or another issue would be if MS worked themselves into all the primary consortiums for Linux and folded them, etc.

 

[driqe]

though don't think it would be enough for some people. I am more interested in the fact that they accidently got shadow kicked off the app store but you know, different interests

"Hardware is critical"

Someone somewhere told me the exact opposite of this statement

 

[ethomaz]

Deadly.

 

[Dr Bass]

This is wrong. App makers benefit from Apple/Google's userbase and their respective user acquisition costs. Also, Apple/Google handle all the backend, security, payment processing, etc. Whether it's worth a 30% cut or not is debatable, but this isn't costless for Apple/Google either.

Moreover, Apple has the added advantage of catering to a more affluent userbase who is more likely to spend on subscriptions and apps, and therefore app makers benefit from that as well.

No, it is not wrong.

Why shouldn't I be allowed to install whatever software I want from anywhere I want on my personal computer, i.e. my mobile device? You're not making an argument. You're just staying the status quo. Yeah of course software makers benefit from the user base of a device. That's what makes making software attractive for it. It's the entire basis for Windows and Mac as well. There are large user bases for both, so writing software for both is attractive.

You think Apple and Microsoft should be getting huge cuts of ALL software written for those OSes too?

Let's use real logic and arguments here not just "Apple made it, Apple deserves to do whatever the hell it wants!"

Remember, MS got nailed for including a free web browser in their OS.