Tuesday, June 23, 2009

Console Post Of The Week: A Curious Blast

Bobby Kotick (rhymes with ...), CEO of Activision, recently had this to say about the PS3:
Activision CEO Bobby Kotick has said that his company may have to stop supporting the PlayStation 3 if Sony does not drop the price of the luxury console.

"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," said Kotick to The Times.

"When we look at 2010 and 2011, we might want to consider if we support the console — and the PSP [portable] too."

"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."

I believe every major videogame publisher in the world is telling Sony some variation of this behind the scenes. I also believe they've been telling Sony since the day the console launched that the price is to too high.

What makes this different is that it's happening in public.

I've never really had a handle on Kotick, because he sometimes seems to go out of his way to antagonize the competition as well as his partners for no good purpose. But I'm guessing that this is a case of someone with leverage pressing when they perceive a weakness. Sony hasn't been developer-friendly, to say the least, in this generation, and now the chickens are coming home to roost.

Everyone in the world knows that Sony is cutting the price on the PS3 this year. The only questions are when they do it and whether it will be $50 or $100. With sales down 20% year-over-year in the U.S., though, they don't have any chance of hitting their unit target of 13M (30% growth) without one, and given how long they're waiting, it's looking more and more likely that it's going to have to be a $100 cut.

Unless they revise their financial forecasts downwards, of course.

Because this is all known, it seems unlikely that Kotick's blast will have much effect. Sony is a dreadnought, moving at dreadnought speed, and their course has, in all likelihood, already been determined.

Here's one more note: I find it very interesting that the phrase "luxury console" was used in the story. When the PS3 launched, Sony played up that angle, but it's looking more and more like that tag is a millstone.

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