Activision boss all but threatens Sony to drop the PS3 price

[Queasy]

Dems fightin' words!

Activision head honcho Bobby Kotick, the the third largest games publisher in the world, had some non-to-subtle words for Sony concerning attach rate:

?I'm getting concerned about Sony; the PlayStation 3 is losing a bit of momentum and they don't make it easy for me to support the platform. It's expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation,? he says.

This isn't good enough for Mr. Kotick after paying out $500 million in royalties and other goods to Sony last year.

?They have to cut the price, because if they don't, the attach rates [the number of games each console owner buys] are likely to slow. If we are being realistic, we might have to stop supporting Sony.? Ask when and he says: ?When we look at 2010 and 2011, we might want to consider if we support the console ? and the PSP [portable] too.?

Given the sales of franchises like Guitar Hero and Call of Duty on Sony platforms, I don't think Activision would ever actually drop Sony (that would be a weird day) but this was definitely a shot across Sony's bow to lower their prices.

 

[RyanPaulShaffer]

Originally posted by: Queasy
Dem's fightin' words!

Activision head honcho Bobby Kotick, the the third largest games publisher in the world, had some non-to-subtle words for Sony concerning attach rate:

?I'm getting concerned about Sony; the PlayStation 3 is losing a bit of momentum and they don't make it easy for me to support the platform. It's expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation,? he says.

This isn't good enough for Mr. Kotick after paying out $500 million in royalties and other goods to Sony last year.

?They have to cut the price, because if they don't, the attach rates [the number of games each console owner buys] are likely to slow. If we are being realistic, we might have to stop supporting Sony.? Ask when and he says: ?When we look at 2010 and 2011, we might want to consider if we support the console ? and the PSP [portable] too.?

Given the sales of franchises like Guitar Hero and Call of Duty on Sony platforms, I don't think Activision would ever actually drop Sony (that would be a weird day) but this was definitely a shot across Sony's bow to lower their prices.

I don't recall a major game publisher ever publicly lambasting a console maker like this before. Interesting stuff.

I wonder how much profit Activision actually makes on the PS3 and PSP, considering everything from the dev/publishing costs to the licensing and royalty fees that are paid to Sony? Keep in mind that the PS3 only has its numbers because it is big in Japan. Guitar Hero and Call of Duty aren't exactly flying off the shelves in the land of the rising sun...

Bold move by Kotick, and I like it. Sony has become arrogant and lazy because of their massive success with the PlayStation and PlayStation 2, just like Nintendo did after the NES and SNES days. Nintendo got knocked off their throne and spent some time in the basement, and it forced them to rethink their strategy, and they rose from the ashes bigger and better as a result. I wonder when/if Sony will learn that humbling lesson...

 

[purbeast0]

kind of nice to see someone in the industry calling out Sony like us end users have been doing for years now.

 

[SunnyD]

WHAAAAAAAAAA! MY WALLET ISN'T FAT ENOUGH!!!! WHAAAAAAAAAA!

 

[bl4ckfl4g]

Originally posted by: SunnyD
WHAAAAAAAAAA! MY WALLET ISN'T FAT ENOUGH!!!! WHAAAAAAAAAA!

Thanks for contributing.

 

[Dari]

The PSP is rightly priced, but perhaps it was the PSP Go that finally broke the camel's back. Add the expense of the PS3 and this will be a good public fight (for the consumer).

 

[oznerol]

They want people to have more money to spend on $120 peripheral-based games and $60 expansion packs.

 

[Dumac]

Fuck Activision.

(I contribute so much to every thread I post in)

 

[biggestmuff]

Originally posted by: Dari
The PSP is rightly priced, but perhaps it was the PSP Go that finally broke the camel's back. Add the expense of the PS3 and this will be a good public fight (for the consumer).

Don't forget about the stable PS3 price, but a reduction in features; no PS2 BC, 2 less USB ports, deletion of card readers.

 

[erwos]

Originally posted by: biggestmuff

Originally posted by: Dari
The PSP is rightly priced, but perhaps it was the PSP Go that finally broke the camel's back. Add the expense of the PS3 and this will be a good public fight (for the consumer).

Don't forget about the stable PS3 price, but a reduction in features; no PS2 BC, 2 less USB ports, deletion of card readers.

Hey, the PS3 had a hundred dollar price drop when they did that!

I agree that it's mind-blowing to see the CEO of a major publisher make threats like that.

 

[Kromis]

Fucking ownage!

 

[Beev]

Kotick is a piece of shit. I have never respected a damn thing he's done.

 

[MagicConch]

If someone asked him "Why don't you lower the price of your games to increase the attach rate?" he would say "b/c they cost a lot to develop and we need to recoup our investment" but when Sony no doubt says the identical thing re: pricing of the hardware...

 

[mugs]

It's a mostly empty threat. It may be the case that they get a better ROI from the 360 than from the PS3. But it's very likely also true that they get a better ROI from 360+PS3 than from 360 only (as a percentage). Depending on how they divide up the cost of developing common assets - the graphics, maps, audio, pretty much everything that isn't actual game code - it could look like the PS3 is detrimental. But taking away the PS3 means they're not sharing those game assets, and the whole cost of those assets belongs to the 360 version of the game.

 

[mmntech]

Yeah, let's stop producing games for a console with 23 million units out in the wild. Talk about cutting off the nose to spite your face. The PS3's price is fair as it as and it has been said that Sony would incur major losses if they cut the price by just $50. It's an incredibly stupid move on Activision's part. It would be as if they said they're going to stop developing for the 360 because there are more Wiis. Give me a break.

Personally I don't have any Activision games in my collection for any system so it wouldn't be a big loss. Isn't Rock Band supposedly vastly superior to Guitar Hero anyway.

 

[SunnyD]

Originally posted by: bl4ckfl4g

Originally posted by: SunnyD
WHAAAAAAAAAA! MY WALLET ISN'T FAT ENOUGH!!!! WHAAAAAAAAAA!

Thanks for contributing.

Commentary from Ars:

It's doubtful Activision Blizzard has lost money by supporting the PS3 and PSP as platforms, and again, the company needs the numbers Sony delivers to meet its goal of having Modern Warfare 2 be the "biggest property launch of all time." What Kotick can do is attack Sony in the press and create a perception of weakness and then exploit it for better terms when releasing these blockbuster titles, and that's what we're seeing here.

I think my original contribution was pretty much spot-on in more ways than one.

 

[Fingolfin269]

First, I have no problem with a business trying to help their bottom line. That's just business plain and simple.

Second, I doubt this will ever happen. However, just because there are X number of PS3s in the wild doesn't mean their sales would proportionally decrease. I know plenty of people who have both a 360 and a PS3.

 

[FuryofFive]

Originally posted by: mmntech
Yeah, let's stop producing games for a console with 23 million units out in the wild. Talk about cutting off the nose to spite your face. The PS3's price is fair as it as and it has been said that Sony would incur major losses if they cut the price by just $50. It's an incredibly stupid move on Activision's part. It would be as if they said they're going to stop developing for the 360 because there are more Wiis. Give me a break.

Personally I don't have any Activision games in my collection for any system so it wouldn't be a big loss. Isn't Rock Band supposedly vastly superior to Guitar Hero anyway.

no way... I'd have to say Guitar hero is much better. Rock band has a cool soundtrack. but the game itself is not that good. i wont debate it there are other threads for that

 

[DaveSimmons]

Why he's not credible:

- They were happy to develop for the 360 back when it had the PS3's current install base.
- Game sales for new titles are usually the same for PS3 & 360 per console, i.e. 2:1 in the US
- Development costs are mostly for assets and design rather than programming: I've seen costs for adding a second platform for multiplatform titles as being as low as 10%, which returns an extra 50% in US sales for 360+PS3, more for worldwide titles.

The PS3 does need a price drop to compete, but shareholders and their board wouldn't be happy if Activision cut off their ps3 income nose to spite their face.

 

[Fingolfin269]

Originally posted by: DaveSimmons
Why he's not credible:

- They were happy to develop for the 360 back when it had the PS3's current install base.
- Game sales for new titles are usually the same for PS3 & 360 per console, i.e. 2:1 in the US
- Development costs are mostly for assets and design rather than programming: I've seen costs for adding a second platform for multiplatform titles as being as low as 10%, which returns an extra 50% in US sales for 360+PS3, more for worldwide titles.

The PS3 does need a price drop to compete, but shareholders and their board wouldn't be happy if Activision cut off their ps3 income nose to spite their face.

Income yes but profit is what matters. It's really hard to know without actually seeing the numbers. The PS3 must have its own set of development costs (just like the 360 and Wii have their own) so it's really about what level of profit they would lose. If it's costing them twice as much to sell half as many just how much does that equal? And then take into consideration that some people could theoretically choose to just buy the same title on the 360 (assuming they have a 360) where a greater profit margin exists (assuming it does indeed cost less to develop for the 360). Lots of assumptions just like we have lots of unknowns.

I'm not trying to suggest he's right. I'm just saying he may be closer to right than we want to think.

 

[DaveSimmons]

If it's costing them twice as much to sell half as many just how much does that equal?

Possibly for a single-platform exclusive title, definitely not for adding a second platform that uses the same engine, models, textures, sounds, voice acting, cutscenes, level design and game design.

 

[gorcorps]

Originally posted by: FuryofFive

Originally posted by: mmntech
Yeah, let's stop producing games for a console with 23 million units out in the wild. Talk about cutting off the nose to spite your face. The PS3's price is fair as it as and it has been said that Sony would incur major losses if they cut the price by just $50. It's an incredibly stupid move on Activision's part. It would be as if they said they're going to stop developing for the 360 because there are more Wiis. Give me a break.

Personally I don't have any Activision games in my collection for any system so it wouldn't be a big loss. Isn't Rock Band supposedly vastly superior to Guitar Hero anyway.

no way... I'd have to say Guitar hero is much better. Rock band has a cool soundtrack. but the game itself is not that good. i wont debate it there are other threads for that

I haven't touched a GH game since GH3 because RB does everything better.

 

[ChaoZ]

Cause rehashing the same game over and over is really hard to do am I right?

 

[FuryofFive]

Originally posted by: gorcorps

Originally posted by: FuryofFive

Originally posted by: mmntech
Yeah, let's stop producing games for a console with 23 million units out in the wild. Talk about cutting off the nose to spite your face. The PS3's price is fair as it as and it has been said that Sony would incur major losses if they cut the price by just $50. It's an incredibly stupid move on Activision's part. It would be as if they said they're going to stop developing for the 360 because there are more Wiis. Give me a break.

Personally I don't have any Activision games in my collection for any system so it wouldn't be a big loss. Isn't Rock Band supposedly vastly superior to Guitar Hero anyway.

no way... I'd have to say Guitar hero is much better. Rock band has a cool soundtrack. but the game itself is not that good. i wont debate it there are other threads for that

I haven't touched a GH game since GH3 because RB does everything better.

whatever bro, goto the GH vs RB debate thread... your only a single person

 

[Queasy]

Sony Responds (via Kotaku)

"PlayStation has tremendous momentum coming out of E3, and we are seeing positive growth with more than 350 titles slated to hit across all our platforms, including many anticipated games from our publishing partners," said Playstation spokesman Patrick Seybold. "We enjoy healthy business relationships with and greatly value our publishing partners and are working closely with them to deliver the best entertainment experience."