Fair point, although that's coming from the analysists. Reconciling Sony declaring the current generation their most profitable against thin margins isn't terribly difficult when we're seeing their numbers, I feel. Thin margins aren't necessary bad in an economy of scale.
Economies of scale are supposed to create larger profit margins.
Sony's business is focused on 100 million current generation units and 20 million unit blockbusters. Even thin margins on those numbers is evidently enough to create record profit amounts.
Margins are arguably the most important thing. I make this argument with Microsoft all the time: Their revenue is higher than ever (we don't hear anything numerical about profits) but the cost of that revenue is insane. They've had to buy out 30% of the industry on top of being a platform holder to make those "gains", which are less gains than transfers. We've already seen a significant number of studio closures from them, and there will be a flood of more coming in the next few years despite the circlejerking about an 8% bump in revenue.
On Sony's side, there are a bunch of things that have occurred that make them very fortunate, and thin margins despite all that means that there needs to be reform - because things are much more likely to get spontaneously worse than better.
I mean, let's go down the list of things that's bumping up Sony's purely nominal figures:
- The base console is 100 dollars more than the PS4 Pro ever was, and has actually been increasing in price as opposed to the other way around
- The games are 16% more expensive
- The Xbox hardware has cratered to such a degree that this gen will likely not even hit 60% of the XBO - hence, a one-off transfer of customers that will not be made at scale again
I don't need to list the number of precarious circumstances that will manifest by 2030.
As you mentioned in your prior post, it does highlight efficiency concerns, which is a point I'll agree with - having 800 full time staff for linear titles like TLOU2 and spending USD$400 on something as terrible as Concord is simply not a sustainable business model.
TLOU2 never had 800 full time staffers and the issues that cut into that game are not financial in nature; Concord was a game built specifically because Sony was looking for ways to jump on the easy money wagon as a result of thinning game margins.
An interesting consideration, however, that narrows us to talking about Sony's first party specifically.
No, it doesn't. Major Sony first parties often sell more than the average major third party title; Sony takes away 100% of that revenue barring the pittance of 70% they take when they very stupidly port shit on Steam - but for third party publishers, there's no avoiding the 30% storefront tax.
This explains why third party publishers latched onto live services so much more quickly than Sony or Nintendo; the numbers just make it very difficult to make money on actually selling games.
They skewed their ROI heavily with the PS5 generation. I believe the Insomniac documents show they spent around USD$100m on Spider-man, and then spent closer to $300m on the sequel - which ultimately sold about the same.
This is a similar dynamic for every publisher. Dev costs (and licensing in the case of IP/Spider-Man) are only going up.
A similiar scenario occurred for God of War. With TLOU, despite nearly USD$250m for the PS4 sequel, they landed with around 50%-60% of the sales of the original. Sony's pouring more money into titles and genres that simply don't have room to recoup it. This is similar to Square Enix expecting the Tomb Raider reboot to come close to COD numbers. I don't think it necessarily demonstrates an issue with the market, so much as out of touch expectations from delusional management. Titles like Black Myth Wukong and Expedition 33 demonstrate what you can achieve with smaller budgets. Sony simply shouldn't be spending that kind of money on those kinds of games, in my opinion.
Black Myth and Expedition demonstrate what you can do with state-funding and cheaper workforces.
Black Myth was developed with lowly paid and way less pampered Chinese labor funded and, imo, astroturfed by CCP money. Apparently, 75% of sales were in China alone, indicating that Chinese nationalism also played an outsized role. That is not replicable for western or even Japanese publishers, nor do I think it's desirable for us as consumers. I don't even think it's replicable for Chinese devs.
Clair Obscur is a way less obvious or egregious example of state funding, but I can almost guarantee that the French government gave them some funding of significance as they do with a lot of "arts" entrepreneurs.
As for sales, all it's done so far is 1 million units at a pretty severely cut launch price, and similar to Metaphor (which cleared a million in a day) I would not be surprised if it was relatively front loaded. But we do have to wait before we start drawing comparisons. But I would bet that Sony or PS fans would not be happy to have the height of their catalogue to be filled out with games that only reach wherever this game is likely to reach.
Again, they benefit from being in a way lower cost center than anywhere in the States too. I remember people bragging about Space Marine II being "AA" when it was literally developed in Russia. Maybe there's something to be said about it, but it's not practical, reasonable, desirable or even sensible to shift all of these expensive dev studios from America to Europe or China, or (and this'll be coming up next) India or Africa.