As Sony announces the $700 PS5 Pro, the internet unleashes the memes — and even the Xbox is catching strays

@fjtorres5591I agree !

Some would say that Playstation is pushing consumers towards PCs, others that they're testing the level of indoctrination of their consumers, others that they're preparing the ground for the next generation, others that they're doing it on purpose so that they can then run promotions. It's probably a bit of all that!

I was talking more about the branding strategy behind all this, which reminds me of Apple, but emphasizes that apart from price, nothing brings them together, and that only marketing can hold it all together. I find that building an entire strategy almost solely on marketing remains rather fragile and costly. What's certain is that it's worked so far, but in a world where purchasing power is at half-mast, where the console market is saturated, and where ways of playing are increasingly varied, I'm not sure that marketing alone is enough to maintain the illusion. (ps: o PS4 era it was a but different because PS had greater added value but this is much less the case on the PS5, which is mainly made up of remakes and sequels 1.5 And an uncontrolled shift towards service games)

At the same time, I've noticed that Xbox is beefing up its marketing more and more, with a greater presence. I've even seen Xbox ads on soccer matches, where we usually only saw Playstation, and also more and more partnerships with nvidia, amazon, samsung, etc...

@GraniteStateColinI don't agree when you say "Yet MS seems to place zero value on its existing customers" You can't seriously say such definitive and extreme things. I have the impression that you're basing this feeling on the fact that they're diversifying their strategy across several media and on the loss of certain exclusives. That's what people were saying when Xbox was releasing all its games on PC.

I'm not going to return to the subject of exclusives that I've already commented on in other articles, but Xbox is not sending everything to other platforms, Xbox knows that exclusive games are important, and they have Currently more studios, more licenses, more exclusive games than PlayStation, just compare the line up of the 2 manufacturers/publishers. Xbox jas just an hybrid strategy, it's not all or nothing !

In reality, there are no objective reasons to say that Xbox is mistreating its current players. Xbox continues to bring new features to consoles (dynamic backgrounds, discord, friend requests, etc...), they continue to bring exclusive games to console, first party and third party players like stalker 2, ark 2 , ...

With all the exclusive licenses that Xbox holds, we should not be offended that Xbox sends 4 games (2 small games + 2 old service games) + Indiana Jones which is a Disney license.

In fact, the problem is the media treatment which tends to overinterpret to make clicks, and the comments of fanboys from one side or the other.

Never forget that what you see on the web is only the tip of the iceberg. The reality is that Xbox consoles are selling like before, 32 million at the moment, which is very good considering the general tension in the console market and the fact that Xbox is not only on console but also on PC and cloud.

GraniteStateColin said:

Regarding brand loyalty being rational, I think it depends on the nature of the loyalty. If you just mean buying the brand in spite of material deficiencies for the customer, then I would agree. But brands carry some important meaning that rationally should make a difference on the margin beyond the obvious ability to play the user's game library: UI and controller familiarity, knowledge of how to navigate the company's support systems (for when the customer needs tech or warranty support), works with existing controllers and other accessories the customer may already own, connection with other players (community), support for or shared ethos with the company (the main reason companies promote their "green" bona fides), etc. None of these would be strong enough to dictate a purchase decision on their own, but absent a compelling preference related to first-party exclusives or technology, these can drive a brand preference.

A good company will court brand loyalty because in general, a happy customer will buy the same brand again when it comes time to repurchase or upgrade, whether that's Ford, Nike, Apple, Xbox, Coke, or the Democrat/Republican party. This is also why it's much cheaper for a company to retain customers and resell to them than to win a new customer. It's especially difficult and expensive to woo a customer away from a direct competitor.

This is why Microsoft's treatment of its existing users is so baffling. These are not ethereal points or casual opinions. This is basic brand marketing that everyone with even just a bachelors in marketing knows (unless they're really focused on a subsegment, like marketing communications or advertising, where those branding lessons are often not taught). Yet MS seems to place zero value on its existing customers, which is just bad business. This costs it sales, raises its cost of sales (reducing margins), and greatly increases the risk of failure when releasing a new product, which in turn increases even the cost of product development.

Generally true...in a vacuum.
But in the real world, brand loyalty is "sticky" and lasts well after the company actually deserves it. And often it is the product of spending on marketing rather than actual product value.

There are examples all over: german cars have had among the worst reliability and new car defects in the market for decades. Apple went an entire decade without doing much for the Mac line with fiasco after fiasco without sales being impacted because of massive ad campaigns promoting "cool". Athletic shoes charge hundreds for cheap sweatshop products supported by celebrity endorsements. In market after market, consumers run like lemmings after overpriced ad fueled mediocrities.

And Sony?
Remember when the PS2 was hyped as a home computer for surfing the internet, photo-editing, and more? They FUDed Sega right out of the market.(MS took them seriously enough to rush out the OG XBOX.)
Or when the PS3 was supposed to be a LINUX supercomputer that could cure disease? And turned out to be such a goldplated money losing fiasco, even at the 2006 equivalent of $900 they spent five years stripping out features to get the cost under the sale price, including the hyped features.
PS4 Pro was supposed to be a 4K rendering monster except it only managed it via checkerboarding coding tricks and was instantly outshined by the true 4k Scorpio.
PS5? Oh where to begin? " We believe in generations!" $70 games. Paid crossgen updates. 8K gaming that never showed up. VRR that only worked with Sony TVs. RDNA2 that lacks the full feature set and a CPU/GPU that relies on developers manually controlling the clock speed to squeeze extract enough graphics power to advertise 10TF.
Or how about paying game publishers not to support XBOX in particular? Buying timed exclusivity and NDA-ing the deal so the PS drones can pretend they have no competition? Or buying EU and UK regulators to attack XBOX?
Sony spends millions upon millions on ad campaigns instead of games, on hype instead of accesibility, or vaporware features instead of innovation.
The PS5 Pro? They promise 8K and 120Hz frame rates and brag about the GPU cores but fail to mention that frame rate is CPU bound and their CPU only offers 10% extra overclocking. Or that they still don't support full Rdna2 or...

None of which matters.
The Playstation brand justifies everything.
They overcharge and underdeliver because the consumers (and gaming media fans) let them get away with it. Just as they'll get away with $1000 consoles and $100 games. They have a closed market built on the legacy of PS1 and PS2 and the lock-in of brand loyalty that is no longer deserved but maintained by ads and media hype.

It works. And it will keep on working...until it doesn't.
One more generation, methinks. But they will not enjoy 2030.
(Hint: "Sony needs more IPs.")

@fjtorres5591 and @fatpunkslim, great and thoughtful comments. Thanks. To @fatpunkslim, If I said MS places "zero value" on keeping its existing customers happy, then I admit that's a bit hyperbolic, but it's not far off. They certainly place very little value on maintaining customers and building brand loyalty. Note that I'm not referring to Xbox customers exclusively, but across all their product lines. It's clearly something that's either in their corporate culture or coming down from the top. I tend to think the latter, and it's something from Nadella, because they didn't used to be like that under Gates or Balmer.

Marketing, in rough order of importance to productline and company success (I say rough, because these can change order in some cases, or if a company does a really good job with one, it can eclipse the others):

1. Market segmentation (the "People" P in marketing) -- know who your customers are and understand their purchase drivers, and their ethos (what do they care about beyond the product?), because these will influence and drive all the rest.

2. Product development and incorporating features that customers will want within the technical capabilities and budget of the company (not necessarily what they ask for). A subset of this is product lifecycle management and support.

3. Pricing to position the product relative to competing products, accept a winning profit margin (which could involve, say, losing money on hardware, but making it back on software sales, or not)

4. Advertising and promotion. This is what many people think of when they think of marketing, but it's much less impactful than the above items. Ideally, these ads should work based on #1 -- some customers are very feature oriented in their purchase decisions, others almost entirely touchy-feely (think Apple's ads with people dancing). Many products have customers that span that whole spectrum, so they need ads that do both or different ads for different segments.

5. Distribution -- how do you get the product to people and where do you sell it (the "Place" P in marketing). This often connects with Pricing in terms of subscription plans vs. direct sales vs. only selling through certain certified retailers. In some cases, this can be much more important than its lowest place on this list indicates, but usually it's not the key determinant in success.

All of those taken together, plus projected company (or at least productline) ethos define the brand. Companies care about and value their brand because a good brand has a high repurchase rate. If you're happy with your Ford or Subaru or whatever you drive, it's much more likely that your next car will also be one. Most car ads on TV (at least in the U.S.) target existing owners to increase their sense of satisfaction with their current purchase so they will buy again.

Microsoft, whom I support and want to succeed, seems largely oblivious to this. They are a kinder, gentler company Nadella, which I think is a good thing. They are also very smart about their Cloud services product development, distribution, and pricing, far better than they had ever been pre-Nadella (and far better than I would have done with it, huge respect to Nadella for that). But where they used to be good at showing love to their customers and iterating on failed products until they succeeded, which established a brand theme of "we care about constantly improving, and even if it's not great now, you can trust to buy from us because we'll keep working on it to get it right for you." Now they live Nadella's "Press reset" mentality of "if it's not an instant success, we're going to assume that means the market doesn't want it and give up" which also sends the message "Don't trust us with any product, because we're likely to abandon it shortly."

It's too early to be sure, but it looks like that's what they're doing with the investments they made in purchasing all those game studios: Well, it didn't instantly translate to Xbox market dominance over PS, so press reset and go in a different direction. That directive to Spencer would be consistent with how Nadella has treated other consumer-facing productlines and sub-brands (Windows Phone, Band, Groove, music store, etc.).

While that approach may be OK for companies with mostly static customers and productlines (e.g., Hertz Rental Car), that's objectively bad business for any company involved in innovating new products, because it makes it very difficult for any product launch to be successful. And MS is in that innovative space.

fatpunkslim said:

I'm not going to return to the subject of exclusives that I've already commented on in other articles, but Xbox is not sending everything to other platforms, Xbox knows that exclusive games are important, and they have Currently more studios, more licenses, more exclusive games than PlayStation, just compare the line up of the 2 manufacturers/publishers. Xbox jas just an hybrid strategy, it's not all or nothing !

In reality, there are no objective reasons to say that Xbox is mistreating its current players. Xbox continues to bring new features to consoles (dynamic backgrounds, discord, friend requests, etc...), they continue to bring exclusive games to console, first party and third party players like stalker 2, ark 2 , ...

With all the exclusive licenses that Xbox holds, we should not be offended that Xbox sends 4 games (2 small games + 2 old service games) + Indiana Jones which is a Disney license.

In fact, the problem is the media treatment which tends to overinterpret to make clicks, and the comments of fanboys from one side or the other.

Never forget that what you see on the web is only the tip of the iceberg. The reality is that Xbox consoles are selling like before, 32 million at the moment, which is very good considering the general tension in the console market and the fact that Xbox is not only on console but also on PC and cloud.

MS is playing a long game on XBOX and are building an ecosystem for 2030 and beyond. (Problem is MS top management has the bad habit of going after new market before they're ready and then quitting it just before they are. WindowsCE, MS READER, Journal, WinPhone...) The risk isn't that the XBOX everywhere strategy is wrong (it isn't) but that whoever follows Nadella gives up on it before it fully delivers.

The key to XBOX everywhere is in the 41 named studios and the 100(?) development teams working on their massive IP hoard. (That and their inhouse AI teams that are shotgunning SLMs.) But new hardware typically takes 3 years to get to market and (barring AI-driven change) major new games take 5-10 years to produce results. And MS is mostly owned by institutional investors and pension funds. And with an XBOX-hostile legacy gaming media the anti-hype campaigns could spook the shareholders before the plan comes together.

They have the right goal and the right plan but it is a six year plan that won't really be fully exposed for another year. Unless MS pre-announces the next XBOX. Which I hope they don't. They need to stay quiet and rope a dope the console market for the next 15-20 months.

If they keep quiet on the hardware front and line up a solid game lineup for 2026-27 they'll shut up the anti-xbox hype once and for all.

Big if, though.

fjtorres5591 said:

Generally true...in a vacuum.
But in the real world, brand loyalty is "sticky" and lasts well after the company actually deserves it. And often it is the product of spending on marketing rather than actual product value.

There are examples all over: german cars have had among the worst reliability and new car defects in the market for decades. Apple went an entire decade without doing much for the Mac line with fiasco after fiasco without sales being impacted because of massive ad campaigns promoting "cool". Athletic shoes charge hundreds for cheap sweatshop products supported by celebrity endorsements. In market after market, consumers run like lemmings after overpriced ad fueled mediocrities.

And Sony?
Remember when the PS2 was hyped as a home computer for surfing the internet, photo-editing, and more? They FUDed Sega right out of the market.(MS took them seriously enough to rush out the OG XBOX.)
Or when the PS3 was supposed to be a LINUX supercomputer that could cure disease? And turned out to be such a goldplated money losing fiasco, even at the 2006 equivalent of $900 they spent five years stripping out features to get the cost under the sale price, including the hyped features.
PS4 Pro was supposed to be a 4K rendering monster except it only managed it via checkerboarding coding tricks and was instantly outshined by the true 4k Scorpio.
PS5? Oh where to begin? " We believe in generations!" $70 games. Paid crossgen updates. 8K gaming that never showed up. VRR that only worked with Sony TVs. RDNA2 that lacks the full feature set and a CPU/GPU that relies on developers manually controlling the clock speed to squeeze extract enough graphics power to advertise 10TF.
Or how about paying game publishers not to support XBOX in particular? Buying timed exclusivity and NDA-ing the deal so the PS drones can pretend they have no competition? Or buying EU and UK regulators to attack XBOX?
Sony spends millions upon millions on ad campaigns instead of games, on hype instead of accesibility, or vaporware features instead of innovation.
The PS5 Pro? They promise 8K and 120Hz frame rates and brag about the GPU cores but fail to mention that frame rate is CPU bound and their CPU only offers 10% extra overclocking. Or that they still don't support full Rdna2 or...

None of which matters.
The Playstation brand justifies everything.
They overcharge and underdeliver because the consumers (and gaming media fans) let them get away with it. Just as they'll get away with $1000 consoles and $100 games. They have a closed market built on the legacy of PS1 and PS2 and the lock-in of brand loyalty that is no longer deserved but maintained by ads and media hype.

It works. And it will keep on working...until it doesn't.
One more generation, methinks. But they will not enjoy 2030.
(Hint: "Sony needs more IPs.")

I strongly agree with this and believe this exactly supports my driving point in posting here: MS is screwing up by not taking care to nurture brand loyalty among its large customer base. Your examples of customers remaining with a company even when competing products may be superior by what appear to be the chief decision drivers show why courting brand loyalty is so important. This is exactly why it has a place on the balance sheet (as goodwill) of major corporations. And not having brand loyal customers is expensive, because then you have to fight (spending money) to win customers instead of just leveraging your existing customer base.

Typically, the only (chief?) case where brand loyalty is not important to a company is if their marketing is all about having the lowest price. "We're the cheapest." They don't need brand loyalty because they're effectively admitting the other products are better, just not worth what they charge. But this is also a precarious position -- if someone else comes along who's even cheaper, poof, your entire customer base will abandon you.

To your point that Sony may be squandering its PS brand, that may be. No debate on that either way. I follow MS much more closely than Sony, so I don't feel qualified to speak to Sony's behavior. I can say that MS is screwing up with respect to caring for customer and brand loyalty (it may still do well in the long run due to other good decisions, but it will be in spite of its lack of brand focus, not because of it), but that's all independent of how Sony is doing.