You know, when the world's largest independent game publisher says that they're planning to drop you, you tend to pay closer attention. That world's largest is Activision, one half of the Activision-Blizzard monolith, and its Chief Executive Officer Bobby Kotick made this overture to Sony Computer Entertainment and in particular its PlayStation 3 console. Not a marketing guy or some errant public relations agent but the CEO himself. Yeah, that big.
Read on to see who said what...
Mr. Kotick in an interview with The Times (from the United Kingdom) said the following:
"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."
Kotick mentions that Activision paid $500 million (that's half a billion!) in royalties and miscellany to Sony last year which he says "probably still worked out at 400% of the profit they made". Activision-Blizzard, Inc., for their 2008 financial year ending December 31, 2008 (like a real calendar year!), came out to a net income LOSS of $107 million despite record net revenues of under $3.03 billion. Activision by itself saw its greatest yearly revenues console-wise on Nintendo's Wii platform ($407 million) followed by Microsoft's XBox 360 platform ($361 million). Sony's PlayStation 2 performance ($284 million) exceeded the PlayStation 3 ($241 million). Listen further:
"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."
What? How? When?
"When we look at 2010 and 2011, we might want to consider if we support the console — and the PSP too."
Sony's PS3 debuted in the U.S. over 2 years ago with a two-level price of $599 for the deluxe model and $499 for the lesser-featured one. Throughout a series of convoluted model/feature shifts, the U.S. price of the two-leveled console has stood at $499 for the deluxe model and $399 for the lesser-featured one since October 2007.
The 4-year old PlayStation Portable or PSP debuted in the U.S. with a price of $249 later to see a basic barebones package of the handheld for $199. Over the past couple of years and system revisions (Slim and Lite, PSP-3000), the PSP has priced at $199 for the prize package and $169 for the barebones. However at the recent Electronic Entertainment Expo (E3) 2009, Sony announces that their new revision/upgrade called the PSP Go! will be priced again at $249.
Sony Computer Entertainment had an operating loss (difference between revenues and expenses before taxes/etc.) of $597 million which accounted to near 1/4 of Sony Corp.'s total operating loss of over $2.32 billion. This $2.32 billion figure even with windfalls from foreign exchange rates and redone Japanese tax regulations still could not stop Sony from reporting their 1st net income loss in 14 years, a company record at $1.01 billion.
The PlayStations have been industry shapers and commerce makers for Sony for most of the 15 years since the original one came to market but in this current climate the systems are in decline. After 9 years of record-selling existence the PS2 is preparing for the videogame museum as its technology becomes more and more obsolete. The PS3, upset by rivals the XBox 360 and Wii, has always languished in the marketplace by comparison and is currently in its 7th straight month (in U.S.) of comparative yearly decline (not to mention that it hasn't yet mastered its production expenses). And the PSP, while proving to be the only formidable challenger to Nintendo's handheld monopoly, is now in its 9th straight month (in U.S.) of comparative yearly decline.
With its systems seeming to have already hit their peaks, this announcement from the world's first (and largest) independent videogame producer is sure to shake up the sensibilities of the SCE gang. Let's hear the response from Sony to gauge the Richters:
"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. We enjoy healthy business relationships with and greatly value our publishing partners and are working closely with them to deliver the best entertainment experience."
Indirect as always for PR talk. For Sony's sake, they had better work more closely on delivering that audience to Activision's products because I don't think Activision's messing around. The context of Activision's financials makes it clear for Sony's. Get the job done by any means necessary...even if that means chipping at the price tag.
These chronicles clocked into you by TimesOnline and IndustryGamers.com.
blog comments powered by Disqus