Circana / Piscatella: US Physical Software Spending Dropped Under 5% of Total Spending in 2023.

[enpleinjour]

but what about this?

That user is once again spreading misinformation.

Sony reports digital revenue as 100% not just their 30% cut
Sony reports physical revenue as just their cut which is ~10-15% as a platform holder in physical iirc.

i.e 3rd party digital game is reported as $70
same 3rd party physical game is reported as $7-10

Despite both being 1 unit sale.

UK physical vs digital revenue 2023 for consoles:
40% Physical : 60% Digital

 

[xollowsob]

Non-console VR has physical releases?

These comparisons mean nothing with such cherry-picked metrics.

 

[anonpuffs]

Including mobile and pc here is disingenuous af lmao

 

[Cool hand luke]

I think you don't understand the chart. Look at the "digital %" in the right column, the "launch to date" "net sales (million dollars)":

• FY2021 titles total: 59% digital (68% in America)
• FY2020 titles total: 43% digital (54% in America)
• Catalog (meaning, FY2019 or older including early PS4 games) titles total: 37% (52% in America)

As I said it kept growing over time.

You implied it was 75%. That included digital-only titles. Edit: and @enpleinjour has once again thoroughly owned you with footnotes this time. Therefore, you must hate reality and can't accept it.

 

[Yurinka]

You implied it was 75%. That included digital-only titles. Therefore, you must hate reality and can't accept it.

No, I provided the receipts of recent PS physical vs digital game sales split, which prove that what I said is correct.

I'd personally prefer to see all games having physical versions and that all games would be playable offline. But I accept the reality that -as happened before with music, movies, mobile gaming and PC gaming, now console (particularly outside Nintendo) the market has been moving during many years in a row to digital sales, being now the physical ones a minority.

And from the point of view from devs, particularly the small ones: platform holders ask for an abusive revenue cut, publishers too, and making physical versions it's so expensive and has several extra costs (distribution, shipments, storage, extra taxes).

And I say that as someone working not only on physical versions, but even in special editions with custom premium hand made arcade sticks with the best components in the market, or even editions in a fucking real and proper arcade cabinet. I mean, I'm event working on a Game Boy game that won't only have a physical edition: it will have a special audio chip in the cartridge. In 2024/2025.

 

[Bryank75]

Including mobile and pc here is disingenuous af lmao

Even just using console is a bit crappy because smaller games... almost all indies and even now up to AAA, live service and AA are all digital only.

Big PS and Nintendo releases have very very healthy physical sales...often much more than digital.

People like Matt must be paid to advocate for the end of physical for the benefit of a few predatory corporations... maybe I'm wrong and he truly believes that physical is dying or has no place in the market anymore.

But I'd admire someone in his position a lot more if they were trying to advocate to keep physical alive if it was truly under threat.

 

[Cool hand luke]

No, I provided the receipts of recent PS physical vs digital game sales split, which prove that what I said is correct.

Nope, Sony reports only their share of the physical sales whereas they report the full digital revenue in their financials.

 

[Yurinka]

Nope, Sony reports only their share of the physical sales whereas they report the full digital revenue in their financials.

Yes, these numbers include the Sony revenue (the "30%· for digital, different for physical) cut from all the 3rd party PS games, plus the 100% of the first party games.

The cut that goes to the 3rd parties (the "70%" of digital games, different for physical) or in case of physical copies the cut that goes to the retailers, shops etc isn't included here.

 

[Cool hand luke]

Yes, these numbers include the Sony revenue cut from all the 3rd party PS games, plus the 100% of the first party games.

You're getting closer to the truth, yep! The physical numbers do just that. Now repeat back to me what the digital revenue includes and you'll see why you can't create a representative ratio out of it. Shady as fuck is right.

 

[anonpuffs]

Yes, these numbers include the Sony revenue (the "30%· for digital, different for physical) cut from all the 3rd party PS games, plus the 100% of the first party games.

The cut that goes to the 3rd parties (the "70%" of digital games, different for physical) or in case of physical copies the cut that goes to the retailers, shops etc isn't included here.

Honest question.

Do you really believe that when Wal-mart sells a copy of Hogwarts Legacy PS5 on disc, they send $70 to Sony who then distributes money to WB, subcontractor distributors, and Walmart itself?

I mean just think about how ridiculous that would be.

 

[Dr Bass]

Not a fan of the name calling like "Pigscatella."

Attack the argument, not the man.

There is plenty to go after from that standpoint. I can't even tell if he believes the things he is saying, they tend to be so off the wall.

 

[Yurinka]

You're getting closer to the truth, yep! The physical numbers do just that. Now repeat back to me what the digital revenue includes and you'll see why you can't create a representative ratio out of it. Shady as fuck is right.

The numbers in both graphs show the revenue that Sony earns from sales of both digital and physical games.

Which is roughly 30% (there are a few supposed exception with a few top publishers). Then there's the other 70%, which in case of digital goes to the publisher (doesn't have to share it with retailer, shipments, manufacturing costs).

So basically yes, in Sony's numbers that other "70%" of game sales missing for 3rd parties and Sony reports the split in PS game sales between 1st and 3rd but as I remember they don't split them between digital and retail.

As I remember, the percent of 3rd party game sales in PS is way bigger than the 1st one (can't remember the %, but I think was around arond 20% or so). And unlike Sony, who releases almost all their recent games on physical, many 3rd parties publish only in digital or some of their games in digital only.

So the split in digital sales should be bigger for 3rd parties than in physical even if we can't get the exact percentages. So yes, the percentage of Sony's game sales revenue split between physical and digital isn't 1:1 the PS game sales revenue, even if it should be pretty similar because always pretty much matched the console split shared by gaming market research firms, publisher country specific associations, etc.

Honest question.

Do you really believe that when Wal-mart sells a copy of Hogwarts Legacy PS5 on disc, they send $70 to Sony who then distributes money to WB, subcontractor distributors, and Walmart itself?

I mean just think about how ridiculous that would be.

I don't know why you keep mading up stuff about me, I never said that this is the case.

Wallmart buys the games to Sony (or whatever publisher, who pays their cut to Sony) for a price, including the shippping costs, for lower price than these $70. Then sells them for $70 to the people that money in between -different depending on the retailer, bigger ones also get a better deal here- is the cut -after having paid the game and shipment- that the retailer gets.

In case of "big" 3rd parties, they pay Sony to manufacture the amount of physical copies they consider. Or in case of indies, indies normally pays some small companies who also make packaging and produce and distribute alternative limited edition physical copies (but guess what, they -at least here in Spain- also buy the disks to Sony, Sony has a different subsidiary who is the once who manufacture disks, I assume also for movies and music).

In case of digital, the platform holder sells the game, getting for them the 30% to handle the currency exchange/payment platform fees/handles refunds and chargebacks plus customer support costs, store maintenance and server costs. Then every few months (as I remember every quarter) they pay the publisher their "70%" cut after removing chargebacks and refunds on their games made since the last payment (often around 10-15% of digital transactions).

 

[anonpuffs]

Wallmart buys the games to Sony (or whatever publisher, who pays their cut to Sony) for a price, lower than these $70. Then sells them for $70 to the people that money in between -different depending on the retailer, bigger ones also get a better deal here- is the cut that the retailer gets.

In case of digital, the platform holder sells the game, getting for them the 30% to handle the currency exchange/payment platform fees/handles refunds and chargebacks plus customer support costs, store maintenance and server costs. Then every few months (as I remember every quarter) they pay the publisher their "70%" cut after removing chargebacks and refunds on their games made since the last payment (often around 10-15% of digital transactions).

That's correct. Except Sony reports the digital revenue as 100% of the transaction, as that money is money that is paid directly to them - then they remit 70%+ of that money to 3rd party publishers. When I buy a game on the Playstation store, my money is going to Sony directly. Not being split. Meanwhile, Sony never sees any of the money from the physical sale, except the platform fees, therefore they can't report that as revenue.

 

[Yurinka]

That's correct. Except Sony reports the digital revenue as 100% of the transaction, as that money is money that is paid directly to them - then they remit 70%+ of that money to 3rd party publishers. When I buy a game on the Playstation store, my money is going to Sony directly. Not being split. Meanwhile, Sony never sees any of the money from the physical sale, except the platform fees, therefore they can't report that as revenue.

No, Sony can't report as their own money the revenue from other companies. The number they report in their tables is Sony's cut, the remaining after having payed the 3rd parties their cut of digital transactions of that quarter.

Due to signed agreement, Sony (or basically the platform holder any other digittal storefront I know) keeps temporally the 3rd party money to pay refunds/chargebacks with them later, and also to simplify later the hell that are the related invoices and money exchange, taxes, etc. It's better, "simpler" and faster (so cheaper) for both sides to do it every few months than to do it for every single transaction or for every day/month. It is pretty complex because there are things like different regional pricing, differentt taxes per country, in terms of taxes some things have to be detailed when declared in certain way, depending on the country the money comes from Sony, or where they were purchased etc.

It is already a hell to do it once per quarter digital storefront, so it would be even worse to do it for every transaction or day.

Btw, that laugh emoji makes you feel specially stupid and dumb when you put it to posts that explain why you are wrong in something you said having no idea about it.

 

[anonpuffs]

No, Sony can't report as their own money the revenue from other companies. The number they report in their tables is Sony's cut, the remaining after having payed the 3rd parties their cut of digital transactions of that quarter.

Sony keeps temporally the 3rd party money to pay refunds/chargebacks with them later, and also to simplify later the hell that are the related invoices and money exchange, taxes, etc. It's better, "simpler" and faster (so cheaper) for both sides to do it every few months than to do it for every single transaction or for every day/month. It is pretty complex because there are things like different regional pricing, differentt taxes per country, in terms of taxes some things have to be declared in certain way depending on the country they come from or where they were purchased etc.

Beyond wrong. The entire amount paid to Sony is reported as revenue; the remitted part is counted as cost of goods sold. This is incredibly common. Tell me, if Sony only reported its 30% royalty cut as revenue, how do you think that squares with your assertion that the entire console game software market is only 30 billion dollars, when Sony reports its annual G&NS segment as having around 25 billion dollars in revenue? You think that all 3rd party software, MS, Nintendo, only account for 5 billion dollars in revenue?

Please use some basic logic.

 

[Cool hand luke]

The numbers in both graphs show the revenue that Sony earns from sales of both digital and physical games.

Which is roughly 30% (there are a few supposed exception with a few top publishers). Then there's the other 70%, which in case of digital goes to the publisher (doesn't have to share it with retailer, shipments, manufacturing costs).

So basically yes, in Sony's numbers that other "70%" of game sales missing for 3rd parties and Sony reports the split in PS game sales between 1st and 3rd but as I remember they don't split them between digital and retail.

As I remember, the percent of 3rd party game sales in PS is way bigger than the 1st one (can't remember the %, but I think was around arond 20% or so). And unlike Sony, who releases almost all their recent games on physical, many 3rd parties publish only in digital or some of their games in digital only.

So the split in digital sales should be bigger for 3rd parties than in physical even if we can't get the exact percentages. So yes, the percentage of Sony's game sales revenue split between physical and digital isn't 1:1 the PS game sales revenue, even if it should be pretty similar because always pretty much matched the console split shared by gaming market research firms, publisher country specific associations, etc.

Sorry, I don't understand this post. I've read it a few times and can't parse it.

can you let me know if you agree/disagree with the following statements?

1) Sony financials report ONLY the cut Sony gets from physical game sales and the FULL digital revenue from digital game sales.
2) You would need to remove the 70+% of 3P sales from digital to get a representative comparison of income generated by Sony on each revenue stream.
3) A 75:25 digitalhysical split using the as-is financials is inaccurate based on 1) and 2).

 

[Yurinka]

Beyond wrong. The entire amount paid to Sony is reported as revenue; the remitted part is counted as cost of goods sold. This is incredibly common. Tell me, if Sony only reported its 30% royalty cut as revenue, how do you think that squares with your assertion that the entire console game software market is only 30 billion dollars, when Sony reports its annual G&NS segment as having around 25 billion dollars in revenue? You think that all 3rd party software, MS, Nintendo, only account for 5 billion dollars in revenue?

Please use some basic logic.

You're the one who is wong. The logic is simple, and I think you know because explained it showing all the numbers a few days ago including graphs and specific numbers but you can't accept it.

Sony never reported to make around $25B in console software revenue, that's for the whole SIE revenue, also including hardware, accesories, game subs, non-PS revenue (PC+rival consoles) and others.

For FY22 Sony (not me) reported instead "only" around $11B in console software revenue+addons, out of the $30B according to IDG (not me) made in (I think CY?) 2022 by the whole industry in console game revenue (when not counting subs).

Or when also adding game subs to the game revenue, the console market made $38B-$40B according to IDG (not me) during 2022 (not sure if CY or FY) and around $50-55B according to Newzoo (not me). Sony reported that they made of around $14B for FY2022 when adding subs (including the PC one) to their console game revenue including addons.

I posted the receipts of all this with exact numbers, periods and related graphs several times in recent days, won't post them again. Go there to read it.

Sony is the market leader and made a bit above a third of it specially thanks to the cut they get from 3rd party sales on ttheir console, the other companies did the rest. 3rd party sales on Xbox and Switch are way smaller than in PS, a huge chunk of software sales in Switch are 1st party as can double checked in their reports / IR page.

 

[Yurinka]

1) Sony financials report ONLY the cut Sony gets from physical game sales and the FULL digital revenue from digital game sales.

Disagree. Sony is reporting the revenue their company makes for both digital and physical games, hardware, accesories, game subs, etc. Not the revenue made by Wallmart, Nintendo or Capcom.

In the case of a physical game, Sony sells the units (and reports this revenue) to Capcom, who sells them more expensive to Wallmart, who sells them more expensive to the final user.

In case of a digital game, Sony sells them to the final user and after some time (where returns or doesn't receive part of it due to chargebacks/refunds/other issues related to payment systems) reports their part as revenue and sends Capcom their part.

2) You would need to remove the 70+% of 3P sales from digital to get a representative comparison of income generated by Sony on each revenue stream.

Don't need to remove them because aren't included. Sony is reporting their revenue, the money they made from game sales some time after they are made.

3) A 75:25 digitalhysical split using the as-is financials is inaccurate based on 1) and 2).

Please notice that roughly 75:25 split was revenue and not units sold. It was to divide their digital games sold revenue by physical digital revenue not sure if for FY2022 or for the last quarter.

Fake edit: exactly is 3.41:1 for FY2022 and 3.24:1 for Q3FY2023. So on average, roughly around aprox. 3.33:1, which is 75%-25%. Please notice this percentage doesn't include addons and subs, because I think this would unfairly bump digital when some addons are for physical games.

 

[anonpuffs]

You're the one who is wong. The logic is simple, and I think you know because explained it showing all the numbers a few days ago including graphs and specific numbers but you can't accept it.

Sony never reported to make around $25B in console software revenue, that's for the whole SIE revenue, also including hardware, accesories, game subs, non-PS revenue (PC+rival consoles) and others.

For FY22 Sony (not me) reported instead "only" around $11B in console software revenue+addons, out of the $30B according to IDG (not me) made in (I think CY?) 2022 by the whole industry in console game revenue (when not counting subs).

Or when also adding game subs to the game revenue, the console market made $38B-$40B according to IDG (not me) during 2022 (not sure if CY or FY) and around $50-55B according to Newzoo (not me). Sony reported that they made of around $14B for FY2022 when adding subs (including the PC one) to their console game revenue including addons.

I posted the receipts of all this with exact numbers, periods and related graphs several times in recent days, won't post them again. Go there to read it.

Sony is the market leader and made a bit above a third of it specially thanks to the cut they get from 3rd party sales on ttheir console, the other companies did the rest. 3rd party sales on Xbox and Switch are way smaller than in PS, a huge chunk of software sales in Switch are 1st party as can double checked in their reports / IR page.

 

[Cool hand luke]

Disagree. Sony is reporting the revenue their company makes for both digital and physical games, hardware, accesories, game subs, etc. Not the revenue made by Wallmart, Nintendo or Capcom.

In the case of a physical game, Sony sells the units (and reports this revenue) to Capcom, who sells them more expensive to Wallmart, who sells them more expensive to the final user.

In case of a digital game, Sony sells them to the final user and after some time (where returns or doesn't receive part of it due to chargebacks/refunds/other issues related to payment systems) reports their part as revenue and sends Capcom their part.

Ok, that's incorrect and that's why you're mistaken. See the below:

It makes no sense to report only Sony's cut as revenue. When you buy a digital title from PSN, Sony registers the entire amount as revenue because you pay Sony the entire amount. They then pay publishers/developers their cut. That's the cost of goods sold and is a completely separate line.

Conversely, Sony only sells their discs to retailers, so they can't report the full amount for third party physical titles (just the royalties they're entitled to on those titles).