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Activision CEO Warns Sony That the PS3 Needs a Price Cut

Posted by Soulskill on from the take-the-hint-sony dept.

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.

31 of 149 comments (clear)

  1. When planning on lowering prices, best to shut up by BadAnalogyGuy · · Score: 5, Informative

    Sony execs aren't dumb. They aren't going to announce price cuts until they happen.

    http://en.wikipedia.org/wiki/Osborne_effect

  2. Inferior IP = Inferior Sales, lets blame someone by Anonymous Coward · · Score: 3, Interesting

    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.

  3. The PS3's problem is lack of games. by yourassOA · · Score: 4, Interesting

    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.

    1. Re:The PS3's problem is lack of games. by stardude82 · · Score: 2, Interesting

      Agreed also true in the sense they could also bundle more games with it. For instance, I got my 40Gb with a $100 gift card to a large international retailer.

      Off Metacritic.com, the same games have higher scores for the 360 and average top 20 games are 2 percent better.

      Generally, me thinks (and this is no secret) the developers just hate Sony and their hardware.

    2. Re:The PS3's problem is lack of games. by macshit · · Score: 4, Interesting

      Hmm, not sure I agree.

      My typical procedure is to pick up a console when I come across a game I really want. I think that while the PS3's game lineup is hardly the best history's seen, it has some pretty good stuff. But every time I think "oh maybe I should just get it", the price of the console itself smacks me in the face and I end up thinking I'll just wait.

      There's a vague price threshold below which I buy stuff without worrying too much about the price, and the PS3 is comfortably above that threshold. It isn't a impulse purchase, and I think that in many cases, that's the kiss of death.

      --
      We live, as we dream -- alone....
  4. attach rate info is wrong by YesIAmAScript · · Score: 3, Insightful

    High console price doesn't lead to a low attach rate. It leads to many other problems, but it doesn't lead to a low attach rate.

    I think the problem in question is that the high price keeps the console sales down which means there are fewer owners for Activision to sell copies of their games to.

    Attach rate is the number of games sold per console sold, not total number of games sold for a particular platform.

    --
    http://lkml.org/lkml/2005/8/20/95
    1. Re:attach rate info is wrong by Xest · · Score: 4, Interesting

      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.

    2. Re:attach rate info is wrong by Xest · · Score: 2, Interesting

      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.

    3. Re:attach rate info is wrong by YesIAmAScript · · Score: 2, Insightful

      Here's a tip Xest, if you feel personally attacked when someone else says something nice about their favorite console (even incorrectly), you are a fanboy.

      --
      http://lkml.org/lkml/2005/8/20/95
  5. What % of people will buy with lower prices? by Anonymous Coward · · Score: 4, Interesting

    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.

    1. Re:What % of people will buy with lower prices? by am+2k · · Score: 3, Interesting

      Uh, if you just want casual games, gaming consoles aren't for you anyways.

      Maybe you're no longer interested in nowadays' consoles because you have changed since the old days?

    2. Re:What % of people will buy with lower prices? by Derek+Loev · · Score: 3, Insightful

      Uh, if you just want casual games, gaming consoles aren't for you anyways.

      This doesn't make sense to me. Gaming consoles *are* for the casual gamer. I always thought PCs were for the hardcore gamers.

    3. Re:What % of people will buy with lower prices? by sznupi · · Score: 4, Insightful

      That's a misconception originally promoted by some to feel more elitist, I guess, and nowadays mostly to point fingers at consoles and yell "they dumb down our games!"

      There are also "hardcore" (as you put it...whatever that means) games for consoles. And there was more of them in the past. As is the case for the PC.

      Simply an effect of marginalizing early and "mid" adopters, now that both types of platforms have became much more mainstream.

      Also, thank MS for bringing them so close together that it's "obvious" for publishers to aim games for both. Which means: the need to be compromise on both platforms, cutting out things that work great on one, but are not really doable on the other. "Jack of all trades..." and all that...

      --
      One that hath name thou can not otter
  6. Lots of products are overly expensive.. by mysidia · · Score: 3, Insightful
    • Windows OS, Office, MSSQL, etc, the windows SW
    • iPhone
    • Acrobat, Flash, Photoshawp
    • Inkjet printer cartridges

    Come to think of it, the iPhone is almost as expensive as the PS3 (if not more so).

    Pass or fail is more than about price.

    1. Re:Lots of products are overly expensive.. by ink · · Score: 2, Interesting
      Seriously? You're going to swallow the $99 argument? Try taking a look at the TCO of the iPhone. The FCC is even looking into this anti-competitive bundling crap. IPhone manufacturing costs put it just below $200, and yet AT&T will only sell you one for $600 w/o a contract.

      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.
  7. Activision BLIZZARD can afford to be dicks. by Sarusa · · Score: 5, Interesting

    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.

  8. Re:When planning on lowering prices, best to shut by DrXym · · Score: 4, Interesting
    Sony execs aren't dumb. They aren't going to announce price cuts until they happen.

    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.

  9. Comment doesn't make much sense by DrXym · · Score: 2, Interesting
    Activision like most huge companies employes teams to write middleware libraries and tools which probably means a substantial portion of title specific code is platform neutral. Games hit the middleware, not the hardware except in some timing critical places. On top of that, the PS3 would share virtually 100% of the graphical and audio assets with its PC and 360 counterparts. The upshot is developing for 360/PC/PS3 is not vastly more expensive than developing for 360/PC. Compare to the Wii where virtually all of the game code and assets would be different.

    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.

  10. Who needs the price cut? by SharpFang · · Score: 3, Insightful

    Nintendo does. In the eastern european countries.

    I've been to an electronics store recently, and just out of curiosity, checked the prices. Back when Wii was announced at $200, I had hoped to buy one. Now I can say FUCK YOU NINTENDO.

    PS3: 1450PLN = 445USD
    XBOX360: 850PLN = 260USD
    WII: 1250PLN = 384USD

    That's about half of an average salary too. Bastards really need to pull heads out of their asses and cut the crap with "double the price for Europe" politics.

    --
    45 5F E1 04 22 CA 29 C4 93 3F 95 05 2B 79 2A B2
    1. Re:Who needs the price cut? by mindstormpt · · Score: 3, Interesting

      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.

  11. Developing for Cell Processors . . . by PolygamousRanchKid+ · · Score: 5, Interesting

    . . . 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!
    1. Re:Developing for Cell Processors . . . by hattig · · Score: 5, Insightful

      The majority of the cost of writing a game is in media creation, not programming. Media = textures, videos, 3D objects and animations, maps, structures, music, sound effects, etc.

      The media can be reused across different platforms - typically 360, PS3 and PC. A Wii version might use scaled down versions of the same media.

      On top of that, you usually develop a game on top of a game engine, so if you re-use that engine across titles, the per-platform development cost goes down even further.

      The PS3 has plenty of games, many of then unique to its platform. Its sales rate is the same as the 360 across the world, and if you exclude the USA it's outselling the 360. The 360 does have a year's headstart on its side, hence its 7m extra sales. Most game developers have got the hang of the PS3's hardware to the point where the games are now no worse than the 360, with promises of more improvements to come.

      If anything, this entire article says more about the standard of programmers at Activision.

      However I do think a price drop on the PS3 hardware would benefit everyone. I do suspect that they're creating a slim-line version using 45nm components. This is when the sales will take off (as with the PS2 slim), especially if GT5 launches at the same time. Right now Sony must be making a profit on the hardware, given how much the price of BluRay drives has dropped.

    2. Re:Developing for Cell Processors . . . by Anonymous Coward · · Score: 3, Interesting

      Actually while the source media can be the same, the final media on the disc can and is different. More compressed or in a different format that is more amenable to getting the most out of the consoles hardware.

      We have a lot of *fun* getting the PS3 to perform at the same speed as the 360 on the same real world scenes, mostly due to two factors1) the GPU in the PS3 is not as good as the 360s, 2) The Cell processor is a ~#&$ to get performance out of without a lot of additional work... additional work that could be used to make the game code better for better AI/Physics or whatever.

      The extra dev time is rarely warrented except for big budget cross platform games (Burnout series for example), otherwise "good enough" does for cross platform with PS3 usually suffering.

      Sony is still making a rather large dollar loss per unit last I heard, MS is loosing less per console, but probably having to pay out more later on for the red ring of death replacement consoles...

      Thanks

  12. Re:When planning on lowering prices, best to shut by madsenj37 · · Score: 4, Interesting

    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.
  13. Re:When planning on lowering prices, best to shut by BadAnalogyGuy · · Score: 5, Insightful

    Yes. As I said, Sony execs aren't dumb. They leak info that helps them.

    Osbourne effect:
    company: Next generation models are going to be faster, cheaper, and better!
    consumers: We should definitely wait for the next one.

    Reverse Osbourne effect:
    company: Next generation models are going to slower and less featureful!
    consumers: Oh shit! We better get while the getting's good.

  14. Re:Politics wouldn't have anything to do with it,? by Anonymous Coward · · Score: 5, Insightful

    Bzzt. Try again.

    Nobody outside /. cares about the fact that Sony is part of the MPAA and RIAA.

    Sales are down because just about everyone that's willing to buy one at $399 has already done so. Sony is just playing chicken with the fence-sitters, because they know they can get more money if they wait it out.

    Personally I plan to buy one the minute it goes under $350, and I don't care how long it takes. Longer just means more good+cheap games in the greatest hits collection.

  15. Re:When planning on lowering prices, best to shut by Kokuyo · · Score: 3, Funny

    Now you know better.

  16. Re:When planning on lowering prices, best to shut by feepness · · Score: 3, Interesting

    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?

  17. Re:When planning on lowering prices, best to shut by Gnavpot · · Score: 2, Insightful

    Well, over the last decade, what has the CO2 level been doing? What has the global temperature done?

    Increased, both of them.

    Now, over the last decade, what has the number of doping tests in cykling done?

    Right, they have increased. This proves that both global warming AND CO2 level is caused by doping tests.

    Correlation is not causation.

  18. Re:When planning on lowering prices, best to shut by daath93 · · Score: 3, Insightful

    No, again, there is the price. I can afford it. Its just not worth it when there are equal devices out there that do a better job, are more efficient when it comes to power consumption, and has the added bonus of having more titles and online features. Playing netflix watch instantly on a 360 is a huge feature. Frankly the one or two titles that i would want to play dont justify the addition of a 3rd console beyond the wii and the 360.

    Some people are just so anti-microsoft that they cant see past their bias. the PS3 is seriously overpriced, sure its more expensive to make but obviously people dont think the features are worth it or it would sell better. Dont blame the masses because they wont support the silly overpriced black box of your dreams.

    maybe sony should lobby congress to spread the wealth of the playstation and force rich people to buy them for poor people. This seems to be what american economy is based on now.

  19. Re:Politics wouldn't have anything to do with it,? by DaveV1.0 · · Score: 2, Insightful

    I've heard young children say "I don't want a Sony because they're bad people".

    Really? Which young children? Who were their parents, friends of yours? Or, did you over hear this in a playground? Were their parents perhaps rabid anti-copyright people who hate the **AA and all their members? Or, are they your children?

    Your anecdote is too vague to be of any value. In fact, here is a refutation of your anecdote: my 18yo nephew saved up his money to buy a PS3.

    --
    There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.