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> Console business has always operated this way.

Actually, I think the practice of selling the console at a loss only started with roughly the PS2 or PS3 generation. (The PS3 and later were very definitely sold for a loss, but I've been unable to track down verifiable statements for the PS1 or PS2.)

Sega Dreamcast sold at a loss. I'm sure there were others in the past as well.

Pretty sure the SNES and megadrive were sold at a loss as well.

Nintendo does not sell hardware at a loss. That's one of their quirks.

But they do sell hardware at very tiny margins and have to rely on software sales to keep the business going.

So let's say the breakeven price was $X. You're saying if they sell at ($X-$0.01)/unit then restricting competition is OK but if they sell at $X/unit then it isn't?

Am I representing your stance correctly and if so do you see any potential issues with this?

No, I'm not saying that.

I'm saying that the business of gaming consoles is to not make money on the hardware or even make a loss in hopes of making money on software.

There are gaming businesses that make a profit on hardware such as Nvidia GPUs, AMD gaming CPUs, etc. Consumers should have a choice:

- Expensive gaming hardware but more choices for gaming app stores

- Cheap gaming hardware but only one gaming app store allowed

Let the consumers decide what is best for them. Both business models should be allowed.

I still don't see how this is inconsistent with what I described. If your business is to sell consoles at >$X/unit then your business is to sell consoles at a profit. If it is to sell at <$X/unit then your business is to sell them at a loss and make up for it later at the gaming app store. Console businesses prefer the latter model nowadays; of course they can still always go for the former model too. So you believe the console businesses following the latter model should be able to restrict the app store but not those following the former. That means $X/unit is where you draw the line for the cutoff where they earn that right to restrict app store competition... how is this not what you're saying?

You are drawing a line I'm not drawing. There is no magic cut off.

My point is that cheap/subsidized hardware and a closed store is one viable business model. The other business model is expensive hardware and an open ecosystem, which already exists in the PC. Consumers should have a choice instead of forcing Sony into the PC model.

That makes no sense, I'm sorry. The criteria ultimately need to be clear so people know what is allowed and what is not. Either the fact that Sony has a sell-console-at-a-loss business model is why they deserve a pass for anticompetitive behavior... or it is not. In the first case (what you're arguing) then Sony indeed gets a pass like you want, but it comes with uncomfortable questions you apparently would rather avoid. In the latter case then you're not even divulging what criteria you're using. You can't just keep waving your hands around and repeating how poor Sony's entire business model is selling these at a loss while refusing to claim that that's your criterion, it makes no sense.

I'm arguing that what Sony is doing isn't anticompetitive behavior at all. Period.

That's your desired conclusion, not an explanation of how you're reaching it.

And the only way that would make any sense is if you also believe that what Sony is doing wouldn't be anticompetitive even if they were selling their consoles at a profit.

Which makes that argument a complete distraction, given the sheer number of opportunities you've evaded to simply clarify that that criterion (or any other, for that matter) would actually make a difference in your eyes. Honestly, how hard you've avoided approaching this speaks volumes for itself IMO, but perhaps other readers will see this differently.

The reason it doesn't make any sense to you is you're still arguing against a criterion I never proposed.

You haven't established why Sony making its own app store the only app store on its subsidized Playstation hardware is anticompetitive. You're simply assuming it is anticompetitive and demand that I invent a hardware margin cutoff disprove it.

> Let the consumers decide what is best for them. Both business models should be allowed.

Yeah! And let's make sure the customers have the choice of whether flour should have asbestos in it! And whether watches should have radium dials!

Sorry, this only works when you've got a robust market with lots of competition. The console market is almost the textbook definition of a non-free market: only three players of any consequence, each of them giant, multi-hundred-billion-dollar megacorps, and with very few actual distinctions between them.

When one business model is more obviously beneficial to the megacorps—not just in terms of profit, but in terms of control—it's going to tend to dominate, regardless of "consumer choice". Let's make sure that we, the consumers, get to still have choices, shall we? And the only way to do that is with government regulation.

Playstation, Switch, Xbox, PC, Steam Machines, Steam Decks, iOS, Android, iPad, MacOS, VR headsets, GeForce Now, Luna.

How many more choices do you need to allow Sony to exclusively sell their own software on their $400 MSRP hardware?

Mobile gaming absolutely dwarfs Playstation in revenue by the way: https://www.visualcapitalist.com/sp/video-games-industry-rev...

Let's bring back common sense to gaming.

> Sorry, this only works when you've got a robust market with lots of competition.

It’s even worse than that. It only works with goods that are fungible and suppliers that are interchangeable. Otherwise it’s just a race to the bottom to build higher walls, increase friction and seek to extract rent from an audience that’s as captive as possible.

Indeed: and the most common good that is largely non-fungible is media.

Sure, if all I'm looking for is "entertainment", I can watch Star Wars or play Final Fantasy or read The Lord of the Rings. And for some people who enjoy gaming, they'd be just as happy with Call of Duty as they would with Battlefield as they would with some version of Halo.

But if I've heard about this new game Breath of the Wild and it sounds really cool, the only way I can experience that is, in fact, to play Breath of the Wild. And the only way to play Breath of the Wild is to have a Switch. And the only company that makes the Switch is Nintendo.

And while some of the other big names in gaming have been moving away from console exclusivity (which is an unqualified benefit to us gamers), the games themselves are still (largely) nonfungible.

> Sony sells their consoles at break even or sometimes at a loss. They hope to make money from their software sales.

I don’t have a strong opinion in this case (of the games marketplaces on consoles), but this argument is fallacious. The question would not be whether they’d always done it, it would be whether that’s legal. It is not difficult to find business plan that don’t work because of laws and regulations. Anything related to health and safety, for a start. Basically, if society thinks strongly enough that your business should not be run that way, then tough luck. Either change your business plan or die.

For example, if locking out competitors’ cartridges in your printer is ruled anticompetitive, then don’t do it. Just because HP has been doing it for 20-odd years is no excuse.

If locking out competition in your own platform breaks the law, then nearly no business is legal.

Common sense needs to prevail.

The law draws a line. Plaintiffs think that line was crossed, Sony thinks they it was not. We have mechanisms to arbitrate this kind of dispute, and I am not taking sides.

My point is that it can be perfectly legitimate for a law to outright ban or effectively prevent some business models.

Sony sells the PS5 for $400 that can produce the graphics of a $1,500 - $2000 PC.

In return, only Sony can have an app store in the Sony hardware. No! This business model is not allowed!

Just yikes. Like I said, let's bring back some common sense.

Your other replies were insightful, but you're just getting emotional in this one. You like the sell at a loss model. Thats fine. Its not really relevant to whether or not it breaks existing laws.

Any existing law that prevents this should be repealed. Common sense needs to come back. That's my point.