Activision concerned about SONY..may have to cease support

[metallicorphan]

http://business.timesonline.co.uk/tol/business/industry_sectors/media/article6531367.ece

I can't say i think Activision are that serious,maybe just giving SONY a little nudge,or a wake up call

Bobby Kotick and a partner bought the once-struggling Activision for $440,000 in 1991, at a time when it was losing $30 million on $10 million in revenues. Now the world's biggest independent computer games company, it has a market value of $16 billion (£10 billion) and operating profits of $179 million in the first quarter on sales of $981 million.

Activision overtook Electronic Arts last July when it was in effect taken over by Vivendi of France in a deal where Vivendi injected World of Warcraft into the company for a 56 per cent stake. With such success, Mr Kotick, who runs the business from Beverly Hills, can probably get away with saying anything, which, soon enough, he does.

The target is Sony, the once-dominant hardware maker. “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.

It is not a very subtle hint, although Mr Kotick says his company paid $500 million to Sony in royalties and other goods last year, which “probably still worked out at 400 per cent of the profit they made”. Actually, Sony's games division lost $597 million last year, and Mr Kotick seems to think it may have to risk more losses if the £299.99 PlayStation 3 is to develop.

“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.” Sounds like Sir Howard Stringer, Sony's chief executive, is going to have to call Mr Kotick pretty fast.

Activision is pretty fortunate in that it has ridden the trend away from traditional “shoot 'em up” titles to family-oriented, interactive games such as Guitar Hero, which grossed more than $1 billion last year. “It was as big as Titanic [the film] with better margins”.

DJ Hero, with its own turntable, will follow this year, although Activision will have to endure its main competitor, Viacom's Rockband, launching a Beatles-themed game.

But it is a trend that, unlike Nintendo, which practically reinvented gaming with the Wii, Sony has been slow to react to. To illustrate the point, Mr Kotick stands on a plastic skateboard that turns out to be the controller for Tony Hawk: Ride — the company's attempt to reignite the well-worn franchise. Using motion and infra-red sensors, the board detects movements in both the player's body and feet, and speed is generated by swiping a foot on the floor next to the board. It is hoped the title will be a blockbuster later this year.

“Such a physical interface could be ideal for Sony,” he says, building up the sales pitch, before he warns that he will “generate better returns on invested capital” on the Wii and the Microsoft console. If he can persuade Sony to bend to his will, then it will be a sign of how far the power in the computer games industry has changed.

[TiLT]

Empty words. Activision knows that if they cut support for the PS3 and the PSP, the only ones that are going to be blamed are themselves, not Sony. Of course, given the rest of the things the company has been doing lately, they might not think public support is a worthwhile concern.

[Harkonis]

I know it will sound like a fanboy, but I really think more companies should have done this quite awhile ago.

The PS3 had plenty of faulty marketing and was such a mess from the beginning that I'm of the thought that the less third parties that put up with Sony's self deluding bullshit the better.  The machine could have been awesome but the implementation was lacking and it didn't seem like Sony was willing to help out the third party developers as much as they could.

Same goes for the 360 too in some ways, with the whole RROD issues I think developers would have every right to withdraw support, but it seems that Microsoft put more effort into keeping that from happening than Sony.

[Bullwinkle]

Empty words. Activision knows that if they cut support for the PS3 and the PSP, the only ones that are going to be blamed are themselves, not Sony. Of course, given the rest of the things the company has been doing lately, they might not think public support is a worthwhile concern.

It's not about public support.  It's about ROI. 

If Sony can't get people buying and playing the PS3, it won't be worth it, financially, for Activision to continue to throw money at making games for it.

This is the reason why there are 80 gazillion games for the Wii.

They may be just talking the talk, but if it's not worth it, I don't see how anyone can blame Activision for shifting away from PS3.

Now, when they release the Call of Duty Combat Boots ad Spider-man Web-Shooter peripherals, then we can start blaming them for shit.

[Kevin Grey]

With pretty much all of Activision's 8 billion franchises already having done the grunt work to get their engines working on PS3, I doubt Activision is serious about not releasing a PS3 version of Guitar Hero, Modern Warfare, etc.  They are almost certainly selling enough copies to justify the porting investment.  They are just pushing Sony to lower the price of the hardware so then Activision can sell even more software. 

[Fellow]

I'm inclined to agree with Kevin. I think this is just another nudge at Sony in trying to have them lower the price. Which they really should've already done.

[Bullwinkle]

I'm sure it's more talking the talk than anything, but it's out there as a line in the sand.  If it got to the point where Activision really did back out, it would be for financial reasons entirely, and I think the public would be behind them (or at least wouldn't up in arms about it).

[raydude]

This is Bobby "We axed Ghostbusters and Brutal Legend because we fail to see how we can milk it" Kotick we're talking about. He cares nothing for public opinion on whether his company and games are crap. All he cares about is the bottom line. And bottom line, if he feels Sony is not making him enough return on investment then he will drop it.

[jersoc]

I wish Blizzard would cut from this company and activision would just tank. On the other hand, thanks to them we got EA back, for the most part. So they aren't all bad I suppose. But seriously. Activision is just a horrible development house now. I can't say I'm surprised he would say such things. However, he does have a point and it's something we gamers have been saying for 6 months. CUT THE PRICE OF THE PS3. Oh well, I guess he can't exploit the franchises well enough on the ps3. 

[Fellow]

Don't worry. If he doesn't find a way, he'll just end up suing the living shitsu outta them.

[Ridah]

I wish Blizzard would cut from this company and activision would just tank. On the other hand, thanks to them we got EA back, for the most part. So they aren't all bad I suppose. But seriously. Activision is just a horrible development house now. I can't say I'm surprised he would say such things. However, he does have a point and it's something we gamers have been saying for 6 months. CUT THE PRICE OF THE PS3. Oh well, I guess he can't exploit the franchises well enough on the ps3. 

A lot of good games come out of Activision, why would you want them to tank? It's like when Rush declared that he wanted Obama to fail. It just makes no sense to me.

[th'FOOL]

I wish Blizzard would cut from this company and activision would just tank. On the other hand, thanks to them we got EA back, for the most part. So they aren't all bad I suppose. But seriously. Activision is just a horrible development house now. I can't say I'm surprised he would say such things. However, he does have a point and it's something we gamers have been saying for 6 months. CUT THE PRICE OF THE PS3. Oh well, I guess he can't exploit the franchises well enough on the ps3. 

A lot of good games come out of Activision, why would you want them to tank? It's like when Rush declared that he wanted Obama to fail. It just makes no sense to me.

ditto.

(heh.)

[WinoMcCougarstein]

I wish Blizzard would cut from this company and activision would just tank. On the other hand, thanks to them we got EA back, for the most part. So they aren't all bad I suppose. But seriously. Activision is just a horrible development house now. I can't say I'm surprised he would say such things. However, he does have a point and it's something we gamers have been saying for 6 months. CUT THE PRICE OF THE PS3. Oh well, I guess he can't exploit the franchises well enough on the ps3. 

A lot of good games come out of Activision, why would you want them to tank? It's like when Rush declared that he wanted Obama to fail. It just makes no sense to me.

Pretty sure it's a phase just like how it used to be cool to hate EA.  I mean, God forbid if a company wants to make money. 

[metallicorphan]

SONY respond kind of

"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."

[mytocles]

SONY respond kind of

"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."

 
Well, that's good, because I'm beginning to think that a price cut alone will not sell me on the PS3.  If there isn't at least one PS3 exclusive game that I'd care about, I might be OUT!

[Misguided]

If only Sony could announce the new slim PS3 at 299 for this Christmas bundled with GoW III. They'd sell as many consoles as they could make.

[Greggy_D]

I think $299 is still too high.  Imagine how they would fly off the shelves at $199.  The entire buying public would purchase one.

[Biyobi]

This post on Gamers.com is the most recent article I could find on the PS3's profitability.  With them still losing 10% on each console as recently as May, cutting prices by $100 (or Greggy_D's shroom-inspired $200 ) just doesn't seem likely at this point.

[Space Herpes]

I think $299 is still too high.  Imagine how they would fly off the shelves at $199.  The entire buying public would purchase one.

That would be awesome.  At current costs/expenses, though, wouldn't that mean each person who purchased a PS3 would have to buy 10+ news games (on average) for Sony to break even?  Eh, I'm not sure of the costs and numbers and things.

[Misguided]

This post on Gamers.com is the most recent article I could find on the PS3's profitability.  With them still losing 10% on each console as recently as May, cutting prices by $100 (or Greggy_D's shroom-inspired $200 ) just doesn't seem likely at this point.

I was assuming that the slim version is real and that there will be enough of a manufacturing cost savings associated with it to allow such a drop.

[Kevin Grey]

Sony is planning a price drop this fiscal year based on their shipping estimates.  The only question is when.  The most credible theory seems to be that Sony is going to let current stock near sell out before introducing the Slim to market. 

[Greggy_D]

I think $299 is still too high.  Imagine how they would fly off the shelves at $199.  The entire buying public would purchase one.

That would be awesome.  At current costs/expenses, though, wouldn't that mean each person who purchased a PS3 would have to buy 10+ news games (on average) for Sony to break even?  Eh, I'm not sure of the costs and numbers and things.

And that is the basis of my $199 figure.  Sony will easily make their money back by selling games, controllers, peripherals, Blu-Ray movies, etc.

Better than losing the amount of money they are now by having the consoles sit on store shelves.

[metallicorphan]

how much of a price drop are we talking about here?

here in the UK it was £425(which is the price i paid-2 games,2 Blu Rays)..its now something like £300(with two games)..if you guys are realistically looking at $299..then that would be £183...add 15% V.A.T,we'll prolly see it as something like £200-£210 here in the UK...which i think would help sales a lot,but any less i can't see a massive change


how much is the Playstation 3 in the U.S...and is that a stand alone or bundle?

[Huw the Poo]

I have to say that as Sony have lost so many exclusives, and since standalone blu-ray players can be bought, even a £200 or less price tag wouldn't entice me to buy a PS3.

It's kinda sad in a way, I loved the PSX and PS2 for years.

[TiLT]

Anyone who thinks Sony will reduce the price to $199 needs to take some classes in basic economics.

I can see a reduction of about $100 from the current price. Many places are already selling the PS3 at that price level. The game lineup (both exclusives and non-exclusives) looks way better on the PS3 than the 360 this year, so the positive press from a price reduction combined with the new games could (notice the emphasis) make Sony regain at least some of the lost revenue.

At this point, I honestly think they aren't really trying to win the console war. They're just trying to survive. In the current economy and with the losses Sony has suffered over the past few years, they aren't going to be willing to take massive losses just for the small chance that they'll regain the throne of the console wars this late in the current generation. If you think otherwise, you're way more optimistic than me (and probably deluding yourself, but that's open to debate).

I like the theory that Sony is trying to get rid of the current PS3 stock before introducing a PS3 Lite. It sounds plausible, mostly because it's become a common tactic for consoles recently, and also because this would allow them to reduce price (thanks to reduced manufacturing costs), gain positive momentum in the news, and appear as a very strong underdog with an increasingly solid game library.

[mytocles]

So, does anyone think that the PS3 is anywhere close to becoming the latest Dreamcast? 

Just curious, as there seems to be some similarities... 

[Space Herpes]

how much is the Playstation 3 in the U.S...and is that a stand alone or bundle?

The 80gig machine retails for $400 at Amazon (no pack-ins).  You can find some specials and deals and there is also the used market.

[leo8877]

So, does anyone think that the PS3 is anywhere close to becoming the latest Dreamcast? 

Just curious, as there seems to be some similarities... 

I'm going to go with no.

[Razgon]

So, does anyone think that the PS3 is anywhere close to becoming the latest Dreamcast? 

Just curious, as there seems to be some similarities... 

I'm going to go with no.

yeah, me too - with what, 250 new games coming within a year, I dont really think so, and a lot of those are AAA games it seems as well...

[Misguided]

I can see a reduction of about $100 from the current price. Many places are already selling the PS3 at that price level.

Oh? Do tell.

[TiLT]

I can see a reduction of about $100 from the current price. Many places are already selling the PS3 at that price level.

Oh? Do tell.

I'm referring to local prices here in Norway. I've seen several PS3 packages sold at that price lately.