FWIW, Valve is probably also selling the Steam Deck at a loss. $400 for an Xbox One-tier AMD chipset in a nice-feeling controller case? Something tells me they're not banking on hardware margins to sell this console any more than Nintendo did with the Switch. Valve's real boon (IMO) is that they're teaching the rest of the industry how they should operate - first-party app stores can charge whatever fees they want for convenience, as long as third-parties have the same degree of control over the hardware. And guess what: it worked! The fact that Valve is talking about Steam Deck successors means they're not losing too much money, and I think it makes sense financially. If Valve takes 10-30% of every game bought on Steam, the amount they're making from Deck users must be monumental. I'd bet anyone 10:1 that there's a dashboard internally at Valve tracking how much money they've made from purchases directly on Deck hardware.

I think they might have been taking a small loss on the 400 USD unit, though with bulk production maybe it was closer to 0% margin initially. Just a gut feeling as someone not in the hardware fabrication specialization.

An IGN article breaks down the replacement kit parts that were, presumably, offered with a profit baked in. https://www.ign.com/articles/ifixit-replacement-parts-steam-...

You’ve sparked a realization that I am suddenly very uncomfortable with...

It seems like the biggest reasons we have such restrictive business deals around media (movies/music/etc) is because of the gigantic publishing companies that got the chance to grow throughout the media boom and who are now absolutely terrified by the fact that they are not needed.

As gaming budgets and revenue have been increasing over the past couple decades, I think what I just realized is that we might be seeing game publishers following the exact same trajectory.

That in another decade or two it could be game publishers who are sitting on top of piles of contracts, using their lawyers to try to sterilize the gaming landscape because they are terrified of losing their positions. They could even make deals with “the old guard” and lock down all entertainment under one umbrella...

Terrifying thoughts.

Sony has other monetization levers too, like that time on PS4 they pushed a mandatory, irreversible update that dropped support for a bunch of HDMI codecs, effectively downgrading millions of TVs overnight.

They got me. I went and bought a new TV. Not a Sony, but aggregate demand still affects prices.

> Most consoles are sold at a loss, with revenue being made up largely through title sales.

This is only the case for when the console gets released. The hardware stays fixed through it's life span and the cost of old tech either gets more efficient, the manufacturing process becomes more efficient, or the parts get cheaper. (With exceptions to disasters that spike ram production or halt chip production)

Hardware Refreshes: I'm sure someone is going to mention that. Those are pretty much entirely new console releases .. but you rarely ever get to take advantage of the new performance improvements.

I seriously doubt this. The most expensive parts like CPUs and GPUs don't get cheaper. Their pricing for the entire life cycle is most likely negotiated and locked in at design time, in fact.

No one, not even Sony, can build PS5-class hardware and sell it at a profit for $500 at retail... not at launch time, and not on the last day of the product life cycle. Attach rate isn't everything in the console business, it's the only thing.

PS4 units were profitable to sell after roughly a year

https://www.polygon.com/platform/amp/2014/5/23/5744344/ps4-a...

> From a profitability perspective, PS4 is also already contributing profit on a hardware unit basis, establishing a very different business framework from that of previous platform businesses.

They've been selling them at profit since the middle of last year [1], following the trend set the previous gen of consoles making profit on hardware in less than a year. Things in gaming, both in terms of prices and how consoles approach the business, has changed quite radically in the past ~decade.

[1] - https://www.pcmag.com/news/sony-says-499-ps5-no-longer-sells...

This is completely false. They just did a die shrink to make the CPU/GPU cheaper.

https://www.tomshardware.com/news/playstation-5-refresh-boas...

> Most consoles are sold at a loss

After it took Sony way too long to get PS3 sales profitable, they said "no more" and made sure PS4 and PS5 sales were profitable within a year of release, just like the PS1 and PS2 were.

Xbox is sold "at a loss" only because Microsoft is still accounting for the massive cost incurred by RRoD failures, not that they're losing money per-unit.

Nintendo only ever sold the Wii U and 3DS at a loss for any real amount of time (and the Virtual Boy was a money pit if you count that.)

So yeah, that's basically only true for the 7th gen consoles, because the PS3 was overdesigned and Microsoft was willing to spend money like water to break into the market, then not sour their lead because of RRoDs.

> This puts the game publisher and the console manufacturer on the same team in ensuring that sales are protected, and as such decisions are made to tightly control what software can run on these otherwise incredibly powerful, compact machines.

There were consoles, for example the original Xbox, that while inferior to the counterpart had success only because the modding community and homebrew software that you could have used on them. To the console manufacturer opening up (like how Microsoft is slowly doing) to homebrew software is in the end a good thing, not a bad one.

It's a bit of a weird spin to call the PC platform 'lawless'.

Or rather it's weird to call the platforms plagued by barely legal artificial deprivation of digital liberty 'lawful'.

It kind of is, there's a lot of demand now from console gamers to disable cross play with PC due to the abundance of cheaters. This was pretty evident in the Modern Warfare 2 beta.

seems to be a case of "tell me you're extremely biased without saying you're extremely biased" :)