So during last night’s pain in the arse podcast (number 7 if you are reading this in the future) where my ancient laptop crashed several times (I am reinstalling tonight) I mentioned that I have been thinking about a situation where Sony and Microsoft create a joint console.
At the minute the whole idea seems incredibly farfetched right? Why would two successful competitors join forces and create a console? Competing companies join forces all the time to create things that exist in the competing market. A few years ago Citroen, Vauxhall and Toyota came together to create a small city car which turned into the C1, 107 and Aygo respectively. All were effectively the same car with some minor cosmetic changes, but all existed in the same market at the same time.
Not so crazy now eh?
So how would it work? Well keep in mind this is solely my crazy thought experiment, so it could be WAY off, but I still think it might work.
Console development costs a whole lot of money. I am not certain of the exact figures, but in 2013, Sony posted a $149 million loss due to the Playstation 4’s development and Microsoft reportedly spend $100 million just on the Xbox One controller, so let’s just say the console cost another $100 million and round it to an even $200 million flat. Imagine what engineers could do if they had a $350 million budget. Maybe we would hit a point where although we could create a fantastical device, the retail cost would be far too high and the buyers simply couldn’t afford the thing. So Sony and Microsoft both drop $100 million each to create the next console. That’s less than each spent on the last generation but more when combined (assuming the Xbox One was less than $200 million, otherwise it’s the same like I know you so rightly pointed out).
But now there is only one home console on the market, all the chip manufacturers fight tooth and nail to get the contract to supply the new CPU and GPU. Both companies can flex their manufacturing muscle and bring the cost of the machine right down because now there is a monopoly on the market. Want an HD gaming machine in your living room? It’s this one. That’s it. Sure you can get a PC if you must, but you will buy this. Everyone always does.
So the console gets made and enters the market. Companies usually sell consoles at a loss and make their money back on games, so how do you split that?
Third party games:
Each company takes a 50/50 split of the profit. Ok, they won’t earn much, but they also didn’t spend much. Make sense? I think so. Also all third party games will come to the console, so there are more games getting developed which means more games getting sold which means more profit to split. Assume that the console only gets third party games bundled with the machine (you will see why in a second) so Sony and Microsoft get a cut of both parts.
First party games:
Here is where it gets tricky. Sony has their own studios, Microsoft has their own studios. Both spend their own money developing great games. Why should the other company get a split? The answer is they shouldn’t. Microsoft get no money from the sale of Uncharted 6, Sony gets no profit from Halo 7. After all, they didn’t spend any money developing the others first party games, they are entitled to none of the profit. They could make a joint studio which is part financed by both and be entitled to half the profits which probably wouldn’t be a terrible idea.
What about online? Now that there’s only one infrastructure, all gamers can play together. There’s no division for Xbox and Playstation owners and games will have thousands more players. With Microsoft allowing for Xbox and PC cross play online, you can bet the joint console would allow the same. Now millions of people can be playing the same game at the same time. Online play would still be subscriber based and the free games would still be made available each month, so nothing much changes on that front.
I know what you are thinking; this is really only the best case scenario, what are the downsides? Well there are a few glaring issues I can think of. Firstly, with no need to make great games to sell your console because everyone has the same machine, would first parties really make great games? Yes and no. Sure everyone who wants to play it will probably buy it, but now there’s floods of games for the single console making it much harder to be taken notice of, but as each company makes 100% of the profit for their studios games it’s worthwhile for them to really push the first party studios to greatness so they can sell loads of games and get all the profit.
Secondly with only one machine on the market, won’t the console and the games be much more expensive as they aren’t trying to under-price a competitor? Well…. I don’t know. The hardware itself might be more expensive as neither company wants to lower the price because there is nowhere else to go. PC manufacturers could make smaller form factor PCs like the Steam Machine to lure disillusioned console gamers to their side which could spur a price drop. Maybe Sony and Microsoft will be making enough money from new joint software sales to keep the hardware costs low to sell even more games.
Finally we would likely miss out on limited edition consoles. Is that a bad thing? I can’t decide. Sure some of the consoles looked great but offered basically no additional functionality, but Microsoft wouldn’t want to spend money on a Halo edition console that Sony takes a cut of and Sony wouldn’t want to spend money promoting a game it doesn’t get a cut for. I could see each creating skins for consoles and controllers, so it might all work out.
So do you think it would work? Am I talking nonsense? What else could possibly go wrong? Why not drop us a comment and let us know.