Is it GAME OVER for XBOX?

[Music] all right so here we go to Sony's recap they just had earnings Phil pulled some numbers go for it it is probably one of the most unexciting earning Seasons from Sony ma for the PlayStation Network did grow in December 2024 from our last check in in October it went from Once 116 million to 129 million we got to remember this is looking at PSN Network so this includes to my knowledge the PC games and if you remember there's a lot of controversy over them requiring PlayStation Network sign in for hell divers 2 and a lot of their single player games and they've actually just dropped the requirement for their single player games so this is kind of feeds into what we've been talking about in terms of stagnation in the games industry console has not grown for a really long time it's not bringing new audiences into the fold and I think this is just more evidence of that and it's it's troubling

and the the Microsoft situation is is absolute [ __ ] just in terms of terms of a ratio it looks like Microsoft did maybe maybe 29 million units in the last quarter compared to 65 million PlayStations so they're may be being out sold two to one probably even worse yeah I I actually concur with what you're saying like this is just another proof that th this is a market share gains right I mean the PC is helping I'm sure but the this is like market share gains like Sony is absolutely destroyed destroying Microsoft right now and it's just not covered enough really in my opinion like it is so bad out there right and I think again with these even with these Sony numbers there a little bit of misreporting and exaggeration because they had a really good quarter in terms of hardware sales in Q4 but the overall year was down right year over-year which is not what should be happening at this time in the cycle having said that next this year should be better given what's happening with GTA coming in October this should actually either flat or up Hardware this

year which is actually really good for this year in the cycle histo compared to history so from a from a historical Trend perspective we are below what we were last cycle but we should be on par or above but the fundamental thing here is this is the Shar shift this is not an overall market growth right in terms of an install base because Microsoft is just taking it on the chin right now and that that's like the fundamental problem with this whole cycle and when you look at what what's happening at Microsoft their share third party is absolute trash like it is like they are getting destroyed like they used to be like 30 40% of thirdparty games like Call of Duty Madden FIFA and they're like in the tens to 20s now right it is like so bad they've like completely got decimated by Sony on third party because no one wants to buy an Xbox anymore right and not to mention the series s is like half the install base which is a shitty device that no one wants to play so anyway so

this should get even worse when GTA comes out this year because I think even to this day GTA is considered a Sony title because that it was exclusive for a long time in his in history so that should even lead more port to it to to it so Microsoft is really the one the real story here you know Sony is doing extremely well but it's at the expense of Microsoft and that's the point I wanted to make and people just are not talking about that because the reporting is not good from Microsoft about what's happening with their Network the hardware numbers are not being reported as well as either so this is I think that's the real story is that Sony's just taking the console Market away from Microsoft but chis why is it so like like I just want to understand like like why why is Sony is so much better than than Microsoft because Microsoft strategy doesn't make sense Game Pass subscriptions is erased to Zer it is like devaluing all their content there's no reason to buy an Xbox there's no reason to be loyal to Microsoft anymore I think that was a bad strategy it's fundament not the right thing for the

gaming group to create a subscription all you can eat subscription and the only way they can really pull this out as I've said many times is to separate themselves from Microsoft and create an independent entity that has to operate on its own and that it may be too late for that now so on the tombstone it would say killed by Subscription Service yep okay basically that's too for you all I have to do is tell you you're not funny before we record and then you throw them out good job so Chris I I wanted to ask you do we think GTA can grow the market like is that the first time we're going to see any sort of growth well well back to Phil's point like I don't think we're growing the market I think this is a market share shift and even even if we see a big Hardware bump this year from GTA that's only the PS4 users upgrading oh that's not like new users coming in you don't think okay no because because a PS people tons of people are playing

PS4 because it's like they're mad and we got in front of us look at this I mean you look at the ratio between PS4 and PS5 there are still and this is based on the leaked documents remember the Wolverine leak that the hack this is internal documents and so we can see that the PS4 had more users in febru as as late as February 2023 the PS4 had more users than the PS5 on PSN on a monthly basis that's crazy right yeah it's nuts that's not the way it should be happening at this point in the cycle is it like the iPhone syndrome where no one's really upgrading because there's not that much marginal difference between where the tech is like H it's not that much difference well yeah that I think that's one I I had this I had this argument with my cab driver in in Boulder yesterday it's like okay this industry is so mature that again people are Madden players FIFA players and whatever and they don't need a PS5 to play Madden or FIFA it looks just as good on PS4 for most for the

most part part right that kind of use case for a device where you're not really playing anything else there's no reason to upgrade right GTA actually does create a reason to upgrade because I think that game is as big as people think it will be and so they will upgrade but that doesn't mean they're going to change their buying patterns they're still gonna be primarily a Madden or FIFA Player right and they buy GTA you know but as I've said before is like if you bring new consoles upgrade in the market people buy software by definition so you will see an uptick in both hardware and software this year it will be good but ultimately next year will'll probably be very you know flattish to downish right relative to this year with these new players but it's a zero some I hate to say this but it is a zero sum game on Console right it is basically the same audience that keeps buying the stuff over and over for the last 20 years and that has not changed that's the challenge I want to throw one other hypothesis you know kind of like only because I saw this in my

own household so the Next Generation gen Alpha and very late genz they grow up with mobile gaming they grow up with the iPad hand me- Downs they grew up playing Roblox and other things on their mobile devices or their iPads and then with my son what I saw was he graduated from his iPad play to a PC and he skipped console completely is it possible that we're going to lose some of the next generation of Gamers they're going to not even care about about console because they get such great experiences on mobile and you know their Chromebooks or whatever that they have for school and they just might not even go to console I don't think anybody really knows what's going to happen and I think that's one of the concerns that both mic Microsoft and Sony have in terms of yeah what things like ufn and and Roblox are doing to that audience the experiences that you get on Console are very unique and it's aspirational you can't get these type of experiences on mobile I know there's exceptions to that but like for the most part you can't get the

Madden FIFA experience on mobile or the real shooter experience like Call of Duty or GTA in particular unless you're [ __ ] Netflix buying $50 million for chachki download right but anyway so I think there was always being an aspirational like an A A basically an upgrade path like a maturation is that you go from Mobile to Roblox to ufn fortnite and then you buy a console and play the real games quote unquote like for yeah so I think that will always be the casee but there is a risk that these people are so used to having such interconnected experiences from Roblox that they don't really replicate on consoles that the content is not gonna be as appealing to them that's like the biggest risk is like a game like GTA or Call of Duty is not going to be appealing because they don't get the same type of interactions and and and social experiences they've gotten on Roblox right so there's always that risk I want to I want to actually support what Eric just said because I had uh Google's head of gaming today today on a

podcast and we were just discussing about genz and different audiences and their studies on it and what Crest said it was exactly what a Google is saying is that in order to connect to with this audience especially gen Z it was much more about features than the look of the game you know like more Razzy more edgy like no no no it's more about social features playing together and he also had a data that he pointed out that the younger Generations are playing more on more different devices actually so they are using more PC they yeah exactly so they're using more devices they're playing more several more games than the typical and they value these feature sets more than the specific look and so yeah that's actually what might happen is that they just don't resonate by these games made by 50y olds yeah that's the data that I'm seeing is more cross mobile to desktop play and more social like needing you know we talked about this many many times that games are now the new mall like you know for us dinosaurs growing up we went to the mall

to hang out or we did the three-way call like where kids in gen Alpha goes to hang out with their friends is in Roblox and the social experiences and so if games are not on Console or desktop going to offer that we may lose that generation because they need those experiences and they expect those experiences I think we really need to pay attention to how different it is to be a gamer if you're gen Alpha versus what we grew up doing I totally get that argu the thing is that's what they're doing now like what are they going to be doing when they're 18 19 and when when when they actually matter I mean I think the other thing you have to keep in mind is that like what matters is the 18 to 44 year old demographic it's not how they're playing games now it's how they're going to play games in the future we never had that option I mean so you're right we don't know I think hopefully somebody's doing some longitudinal studies to make sure they're following these kids as they grow up exact is that experience as a kid that we never had we were lucky we had Co-op two-player in the same room

like that was when I could play Halo four people on the screen at the same time it was lifechanging and then that changed the way that I thought about games imagine now you've got this whole generation who is learning to play games in a different way my expectation of just seeing how you know people behave I think that's going to have a different impact on their expectations okay but but I would make the argument we've had social media like explode beyond all recognition YouTube [ __ ] NE you know not Facebook obviously Instagram snap like you know all Tik Tok all these things are happening and yet our Market is basically the same if not it's it's growing slightly like that it hasn't impacted our market yet right all these Generations that have come up that have had access to all kinds of different media to consume and we're still talking insane numbers for this business right both mobile and console for that matter right well I'm not necessarily talking about share of time because they're doing both share of time is going to social media uh and the the addiction

qualities there and it's still going to gaming because they can socialize inside of gaming I guess my point is that the behavior inside of gaming having social components where I can play with my friends like imagine when you for Wow for you when you first learn that you could go on raids with your friends and stay up till 4 AM you could only get that in that game or a couple of the you know Ultima you know online now that kids are having that experience are they going to expect that type of I log on my friends are there I can jump into any kind of experience we want to play a funny game we want to play a dress up game and I think that's the difference I I I I know and I guess this is where i' kind of like I would counter all those a lot of people's arguments on this is that as a kid you have that kind of attention span of a gat right and you go from one thing to another as you get to an adult you your interests and are aligned on certain things and so you're going to be interested in Madden or football game you're going to interested in soccer game you're going Shooters you're kind of crystallize as you get

older yeah fair enough fair enough I think the fundamental of wanting to engage with your friends I do think you're going to want to take a vacation in a single player game and we know and we see that in the data we see that as you get older you're like okay I just need a I need a vacation from all of my friends the sweaty games and so I agree with you that your behavior and your tastes for what you do changes over time I'm just wondering if maybe the whole line goes up differently because of how these kids are growing up anyway you did it you made it to the end of the episode as a fan of the show it would help us out if you'd subscribe and leave us a review on the podcast service of your choice those stars and likes while a small action on your part mean a lot to us and help to grow the show more importantly are you a member of the deconstructor of fun slack group if you have five years or more of games industry experience go to deconstructor of fund.com slack and apply to join dur the games industry best professional Community

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