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Activision: "We might have to stop supporting Sony"

Fri 19 Jun 2009 12:26pm GMT / 8:26am EDT / 5:26am PDT
Business

Guitar Hero, Call of Duty publisher threatens to pull support unless PlayStation 3 price is dropped

Activision Publishing

Activision, Inc. is a leading international publisher of interactive entertainment software products....

activision.com

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

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."

According to the report, Activision paid USD 500 million in royalties to Sony last year which, "probably still worked out at 400 per cent of the profit they made".

He added: "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."

Big releases from Activision this year include a reinvigorated Tony Hawk title complete with peripheral, DJ Hero, the latest spin-off of the popular Guitar Hero franchise, and Call of Duty: Modern Warfare 2, which Activision expects to be the "biggest entertainment launch of all time".

8 Comments

Franck Sauer Creative / Tech Art Director, Fresh3d

63 9 0.1
Is he serious? How come losing more than a third of the potential sales would make it more profitable. Also I don't see any relationship between console sales and tie ratio. It has more to do with the number of available games imo.

Posted:5 years ago

#1

David De windt Key Account Manager, Ubisoft

3 0 0.0
He's just putting pressure on Sony.
Don't think that Sony will take it seriously.
Although he has a point on the pricecut.

Posted:5 years ago

#2

Jonathan McEnroe Freelance 2D artist

47 20 0.4
Having sold over four million units of Call of Duty 4 on the PS3 I seriously doubt they are going to drop PS3 development. They would be missing out on a lot of game sales if they did this.

Posted:5 years ago

#3

Alex Wright-Manning Talent Officer, Playground Games

172 2 0.0
The price cut is inevitable. However I can see his point. The cost of developing for a platform with a smaller customer base - particularly with the renowned difficulty inherent with development on the Sony platform - would make it far less profitable. It's a simple economy of scale matter, if development costs are in the $10-20 million region and the platform only has a limited amount of users - of which only a certain percentage will purchase the title - then that platform will become less attractive. Admittedly his views are 'worst case' scenario, but you can understand his reasoning. Until the PS3 is sitting under more TV's worldwide, development for that platform will be inherently less profitable than platforms with a greater customer base.

Posted:5 years ago

#4
Well, he's probably selling a few games, but if we believe this:
"ccording to the report, Activision paid USD 500 million in royalties to Sony last year which, "probably still worked out at 400 per cent of the profit they made"."

Then it's definitely not that interesting to develop for the PS3.

Ultimately this is just a pressure game, but one could understand why he's a bit pissed off...

Posted:5 years ago

#5

Jonathan McEnroe Freelance 2D artist

47 20 0.4
If the PS3 Slim images are real, then Sony is holding off the price cut until these units are ready to ship for a much lower price.

I think Activision need to realise that Microsoft had a one year head start, and that Sony also had a 5 month European delay after the Japanese/U.S. Playstation 3 release, yet still managed to sell consoles in it's first two years faster than Microsoft did.

I can understand the need for a price drop, but Sony has done pretty damn well considering the odds stacked against them and the sales of MGS4 and COD4 prove that you can sell games on the system.

Multiplatform development is always going to be expensive.

Edited 1 times. Last edit by Jonathan McEnroe on 19th June 2009 3:09pm

Posted:5 years ago

#6

Alex Wright-Manning Talent Officer, Playground Games

172 2 0.0
Quoting 'must have' titles such as CoD & MGS as an example is a mistake, we all know that these types of games make up a very small percentage of all releases. In order for a run of the mill title to be success from an economic perspective, a basic requirement is for there to be a considerable consumer base.

Posted:5 years ago

#7

Richard Gardner Environment Artist, Ubisoft Reflections

13 0 0.0
Activision are about to make some of there biggest franchise releases to date, they want a price cut before they hit the shelves. The majority of all game sales for a title happen within the first month or so I believe. This is what came to mind when reading through this.

I think its a fairly bold comment to make and can understand how Sony would brush it off as obviously Activision would lose a lot of money doing this, but may be this isn't directed at Sony, but other developers to join forces and put even more pressure on them.

Sony finally have some major titles coming, it would be perfect for them to price cut around November I would have thought.

Posted:5 years ago

#8

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