EA: Old Console Cycles Were “Painful;” Sony and Microsoft’s Micro-Upgrades “Great” for Everyone
At the Nasdaq 35th Investor Program Conference in London, Electronic Arts Chief Financial Officer Blake Jorgensen talked about the mid-generation console refresh by Sony Interactive Entertainment and Microsoft.
Jorgensen mentioned that in previous console cycles investors always tried to identify the peak earning period, because moving from a generation to the next involved huge expenses to upgrade. Consoles were also very customized, with Xbox and PlayStation being very different and built on customized chipsets, and they were very difficult to program for early on.
At the same time, there was no compatibility between cycles, so people simply stopped buying games for the older consoles. According to Jorgensen, it was a “painful cycle.”
At the end of the last cycle, things were a bit different from Electronic Arts. They were down to two engines, and updating only two was a lot cheaper than 25, the company was controlling costs a lot better, and hardware was more standardized. Yet, software was not compatible across generation.
Today, both Microsoft and Sony are starting to do micro-upgrades more often, allowing compatibility of games across those upgrades, making it look a lot more like a traditional PC market versus specialized console market. Jorgensen thinks this is “great for the industry, great for their [Sony and Microsoft’s] production, great for software costs, and great for the consumers.”
That said, Jorgensen believes that we’ll still see consoles getting more and more powerful, so the older software “just won’t be fun to play,” but “the whole notion that investors had of the cycle is gone away.”
Sony Interactive Entertainment just launched the upgraded PlayStation 4 Pro on November 10th, following a form-factor refresh of the standard PS4 with the CUH-2000 model. On the other hand, Microsoft released a smaller and slightly improved unit with the Xbox One S, and plans to release the much more powerful “Project Scorpio” next year.