Slashdot Mirror
Activision CEO Warns Sony That the PS3 Needs a Price Cut
Bobby Kotick, President and CEO of Activision, one of the largest game companies in the world, has come out with a none-too-subtle warning to Sony that they need to seriously consider a price drop on the Playstation 3. Rumors have been circulating for months that such a drop was forthcoming, but Sony has staunchly denied that they had any plans to drop prices, Kotick said, "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. ... 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." While it's unlikely that Activision would follow through with such a threat, it definitely adds to the pressure Sony is feeling to lower the PS3's price. Sony issued a brief response which said nothing of consequence.
This may have more to do with their recent releases being outsold by first party titles on the platform. Infamous outselling Prototype, Killzone 2 and Resistance 2 outselling World at War. Add to that Rock Band outselling Guitar Hero and bar Modern Warfare Activision are struggling for a top selling IP.
Not being overpriced. The 40GB models are comparable in price to an Xbox and it is a simple matter to change the HDD . Mine is 320GB.
As someone who's been around since the Atari 2600/Intellivision/ColecoVision days, this is the first generation of consoles that I've skipped buying. And as a prior owner of a 3DO, that says a lot. Why? Two reasons.
1) This generation of consoles feels like too small of an improvement over the last to justify the purchase.
2) With the enjoyment of seeing a generational leap in graphics being non-existent, I feel like, for the first time, I can turn to any one of the billion casual gameplay sites out there for a quick 10-minute to an hour gaming fix at no cost.
Sure, I still play an Oblivion, a Half-Life, or a Fallout once in a while, but for the most part I like getting a quick fix and moving on to something new the next day, week, or month. Casual gameplay sites (for now, anyway) let me do this extremely cheaply.
I'd probably look into getting one of this generation's consoles for $100. Money isn't the issue, the enjoyment:money ratio is.
Why does everyone just say 'Activision'? Uneasy about dragging your beloved WoW into this? It's Activision Blizzard, and that 'Blizzard' along with Call of Duty and Guitar Hero are why Kotick can afford to be the huge raging prick he is.
He's got a long history of being a total @#$hole to squeeze profits, and it's worked. He's the reason you're going to be paying for Starcraft II three times instead of one, no matter what lame excuses they feed you. He's got no compunctions about selling you multi-hundred dollar overpriced plastic controller sets to go with his games while he complains about PS3 prices. His unbridled douchebaggery works quite well, at least in the short run, and it might work in the long run because Blizzard can get away with anything.
Now of course he knows that Activision Blizzard paid Sony $500 million dollars last year in per-game royalties and other crap, and I'm sure he's looking to shave some of that. That's what this is really about. And Sony is vulnerable - just the suggestion that a major publisher could drop the PS3, even if they wouldn't, is hugely damaging when they're in third place in the largest markets. I'm sure fanbois will sneer that they don't need Activision, but someone's sure buying their stuff on PS3.
I'm not giving them any money because of the Brutal Legend fiasco (part of Kotick's deliberate cockmongering), but I realize that's sort of quixotic. In general you people (forgive my broad brush) will continue to bend over and spread wide for Call of Duty and WoW and Starcraft and Diablo III.
Especially with a slim model on the way. Anyway its fairly likely what Sony will do since they've done it before. When the new model appears they'll dump the price on the old model, bundle the new model with some goodies and sell at a premium. Then when the old are cleared out, unbundle the new model and continue selling at the new lower price.
Therefore I don't accept the motivations for this statement. More likely Sony and Activision are in a pissing match over something like certification fees, PSN fees, technical requirements, 3rd party accessories or similar and this is Activision making their power play. Any way, a price cut is bound to happen sooner than later. Everyone knows its needed, including Sony, especially if the Slim is inbound as it is.
. . . is probably a royal pain in the ass. Any /. Cell developers care to comment?
Kotick said, "It's expensive to develop for the console." Read that as time, people and money, when compared to other platforms.
I would think that Sony would be bending over backwards to support developers.
OS/2 was a better OS than Windows, but there were not enough applications for it, so folks flocked to Windows.
I'm curious to hear how the Cell development environment is: "Great, Challenging, or Run Away!"
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
The wikipedia article you point to has Sony benefiting from the reverse-Osbourne effect. When they announced the end of PS2 hardware emulation in the PS3, sales of the 60 GB PS3 with PS2 Hardware soared.
Choosing the lesser of two evils is a choice for evil.
You people in the US tend to use hourly, weekly, monthly, yearly wages. Over here, when we refer to salaries, it's pretty much implicit that we're talking about monthly salaries, as it's very rare to use any other timeframe (except maybe for your hourly example, but, given the context, that's obvious anyway). I don't think I ever had the need to attach the interval when refering to salaries.
Unfortunately reality seems to disagree with you.
http://kotaku.com/5222086/ps3-attach-rate-overtakes-wii-attach-rate
From a year ago:
http://playstation.joystiq.com/2008/04/25/npd-releases-home-console-attach-rate-ratios-ps3-not-so-hot/
There has not been any period at all where the PS3 has had a higher attach rate than the 360 and it's only just very recently managed to overtake the Wii.
The closest I could find to your claims was this:
http://www.gamasutra.com/php-bin/news_index.php?story=23186
But it really doesn't make any sense, attach rate is number of games purchased per console, not number of units of certain cherry picked titles sold per console. I suppose if you're completely unobjective and a total Sony fanboy you might take away from that in your mind that Sony has a higher attach rate, but if you step back and be objective and look at the first link you'll notice that regardless of what Sony says and how they twist a few figures the cold hard truth is that they do have a lower attach rate even when adjusted for console lifetime on the market. Nintendo could play a similar game to Sony taking games that were really built for the Wii but ported to other consoles anyway and suggest they have a higher attach rate, but still, the reality is that they don't. Effectively what Sony is abusing is the fact they have a much lower selection of titles on their system, so the good titles get a higher ratio bought for their console than for the other consoles, but this makes no sense because attach rates aren't about specific individual titles. It also ignores the fact their system has sold much fewer of the titles they've cherry picked overall too which should be the real measure of per-game success on each platform. If they have sold less of a specific title because they have a smaller install base that doesn't mean anything in terms of how well they're doing, in fact, it only exagerates the problem of having a smaller install base. If you can make up for that smaller install base with greater profits from game sales (i.e. real attach rates) then you may be able to live with that, but the problem is Sony is struggling in terms of both install base AND attach rates. It looks like they're improving things on the attach rates front, but they're certainly nowhere near Microsoft and they're certainly even further from having a big enough lead on attach rates against Microsoft that they can make up the profit differences from a lower install base.
At the end of the day all a publisher like activision sees is the amount of profit gained per console they publish for, and the fact is, Sony's mangled statistics don't change that one bit, it's simply an attempt at improving PR.
Really, if you have any sources that show the PS3 really does have a higher attach rate than the other two consoles rather than a bunch of cherry picked mangled stats that actually have nothing to do with attach rate because attach rates are game neutral I'd love to see it, but I've yet to see anything that shows this and certainly nothing from independent and product neutral sources like NPD.
I don't expect you to change your mind and accept that Sony doesn't have the highest attach rate, because the fact you came out with that unsourced and clearly untrue comment in the first means you're probably not open to the idea that the PS3 isn't doing as well as it should be but it seems silly to leave such an incorrect comment uncorrected. Still, if you can somehow prove your comment then I'll step back and accept I stand corrected but mangled statistics that are effectively meaningless from the marketing department of the company you're referring to don't really count for obvious reasons, it needs to be objective 3rd party stats that really tell us something about profit from games sold per console.
To provide some evidence for your claim-
When the other consoles were released the 360 was arguably the most expensive - it was outright more expensive than the Wii, and when you compared like for like it was more expensive than the PS3.
Yet it had a much higher attach rate, by far the highest of the three.
Since then it's dropped to offer the cheapest system out the lot yet still has the highest attach rate (http://kotaku.com/5222086/ps3-attach-rate-overtakes-wii-attach-rate).
That suggests that you're right, console price has nothing whatsoever to do with attach rate.
What this has to do with the PS3 is left as an exercise to the reader.
The wheel is turning, but the hamster is dead.
Really, the wattage of the device as a BluRay player is all you've got left now that the games are out for the PS3 and there is a sustainable userbase?
The bluray in the PS3 is the cause of the high price. If they just put in a regular dvd drive that plays Sony PS2, PS3 and regular dvd movies and games, then the price can be lowered. Who is going to watch Bluray, when a disc costs $20-30 compared to a regular dvd costs like less than $10 at walmart. If they get rid of that bluray and the price gets lowered, then people would buy the console and Sony will be back in business.
The problem is, Sony is in a tough spot.
Firstly, the PS3 is among the best future-proof Blu-Ray player out there. Since release, it got upgraded from Profile 1.0 to 1.1 to 2.0 (BD-Live). And now Blu-Ray is getting managed copy sometime in 2010, it looks like the PS3 will be one of the few Blu-Ray players that will get it as an upgrade. (Managed copy lets you rip a Blu-Ray officially to a media player, DRM encrusted and whatnot, but there it is). It started as the first cheap Blu-Ray player, then it now it represents the ceiling price for a consumer level Blu-Ray player.
Secondly, the PS3 s a gaming system, one of the more expensive ones. It's feeling pressure to cut prices to better compete with the Xbos360 and Wii.
The problem is, Sony needs to decide if they want to concentrate on the Blu-Ray side of things, or the gaming side. Because a good positive price cut (say, $100) means that it puts a bunch of Blu-Ray players into the "why bother" price categtory (practically all Profile 2.0 players are $250+...), and I'm sure Samsung, Panasonic, Sharp, etc., will be really happy to have to be forced to cut prices in order to sell product. This could seriously impact Blu-Ray sales if people start to believe it's not only "just a Sony format", but a "Sony PS3 format" as people think you must have a PS3 to play them (as they're the only player left on the market).
So Sony needs to keep the price high to keep other manufacturers making Blu-Ray players, but they need to reduce prices to compete with the other game consoles.
Blu-Ray vs. Gaming - what does Sony want to promote more?
Maybe what Sony should do is release a "slim PS3" for $200 that only plays games, no movies. Its not like there aren't enough PS3 models and features that differ between them...