Activision chief: "We might have to stop supporting Sony."

Discussion in 'Console Games' started by jaw04005, Jun 19, 2009.

  1. jaw04005 macrumors 601

    jaw04005

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    #1
    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.

    http://business.timesonline.co.uk/tol/business/industry_sectors/media/article6531367.ece
     
  2. Tokiopop macrumors 68000

    Tokiopop

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    #2
    There are millions of PS3s, it'd be stupid to stop making games for them.

    Yeah, sure. The Wii sells more, but how many of us actually go on it? I have a Wii and a PS3, if Modern Warfare comes out for both, I'd get it on the PS3 without a second thought. Not many people buy games for the Wii any more, unless they're good and exclusive.

    PS3 sales are rising anyway, and it's just such a good system.
     
  3. MikhailT macrumors 601

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    #3
    You do realize there is Xbox 360 which is still selling more than PS3?

    There may be millions of PS3s but the costs of developing for it is still the highest out of all three consoles. Sony needs to cut the developer fees and royalties or cut the PS3 price down so that there is more consoles out there to make even with all the fees.

    For some companies, making games for one console would give them more profit than to make games for all consoles.

    It's not a simple as saying, "look there are 10 million PS3s, we need to support it regardless".
     
  4. Tokiopop macrumors 68000

    Tokiopop

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    #4
    Yes, there are more 360s out there, but it's just plain stupid. If they're not going to stop 'supporting' Nintendo, then why Sony? They get more sales on the PS3 than the Wii.

    To be honest, I think they've been bought out. I wonder who did that? Cough, Micro$oft, cough cough.

    And yes, for some companies it would be better, but such a large one? I think not.
     
  5. Dagless macrumors Core

    Dagless

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    #5
    Err, yes they do :p
    http://vgchartz.com/weekly.php

    It's a very daft thing of them to say, I doubt they'll drop support for the PS3. It's growing into its own now, IMO its still behind the 360 in terms of variety of games and genres but it's getting there. And then they just need to get their online stuff on par with Live.

    But lol at Activision
    I couldn't contain myself after that.
     
  6. eleven2brett macrumors regular

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    #6
    I'm just going to be ticked if I've picked the wrong console in this generation. I owned a GameCube, a Dreamcast and a Genesis. I just don't understand how I can go wrong every time. I enjoyed each of those systems in their own right, but they were pretty much regarded as the losers each time around.
     
  7. Signal-11 macrumors 65816

    Signal-11

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    #7
    If the money they use to create a game on one system is causing them to get less of a return on investment than on another system, this would be one very simple and legitimate cause for someone to say that.

    If the studio/publisher wants to reduce overhead by not maintaining seperate sets of developers, etc, then it could make even more sense.

    This is all in the article.
     
  8. MikhailT macrumors 601

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    #8
    Because Wii games are much cheaper to produce than PS3, there's less development costs and fees. Selling one million on Wii would net them more profit than selling two million on PS3. Same story with xbox 360, they sell much more on xbox 360 than they do on PS3.

    While larger companies do tend to take more risks, they are still in it for making money and if dropping support for one console would get them more profit, they'll do it.

    Go take a business class and maybe just maybe, you'll understand what Activision is talking about.
     
  9. BoyBach macrumors 68040

    BoyBach

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    #9
    It has nothing to do with the number of PS3s sold compared to the Wii or 360. I read this as Activision's way of telling Sony that they want preferential treatment and prices now that they're the largest developer.
     
  10. MRU macrumors demi-god

    MRU

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    #10
    ^
    PS3 development kit's are supposedly horrendously expensive, and it does require more staff and development time due to the wayward programming required on the PS3.

    Sony also take a big $$ for the rights to produce blu-ray discs. This is often passed onto consumers here, with the PS3 version usually a few € more than the 360 version in a lot of stores.

    I think this was a big threat/warning to Sony to get with the game and reduce those costs for developers and publishers alike, otherwise they 'may' look elsewhere and the 10 year life-cycle claim from Sony will be mute 'if' that happens.
     
  11. Signal-11 macrumors 65816

    Signal-11

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    #12
    This is more or less the way I see it, too. It's a push to get Sony to loosen up.
     
  12. sikkinixx macrumors 68020

    sikkinixx

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    #13
    Well they are going to cut the price, just a matter of when (Madden 10 time was the rumor). Maybe Bobby should cut gamers some slack and drop the price on Guitar Hero 93, or Tony Hawk 10293? PS3 ain;t doing THAT badly, they are getting outsold by tens of thousands against the 360 but hell, they are DOUBLE the price of the "consumer" level 360.
     
  13. 2nyRiggz macrumors 603

    2nyRiggz

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    #14
    So activision is talking about cutting at least 5-6 million customers from their revenue....yeah right and cows fly. They're only trying to get Sony to lower the PS3. The PS3 is in a stable position right now and I see Sony cutting the price for the holidays.

    Empty



    Bless
     
  14. e²Studios macrumors 68020

    e²Studios

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    #15
    They are trying to threaten Sony in to lowering their royalties and dev kit cost. Sony has just lowered their dev kit not so long ago, as far as their royalties go it is no more expensive than any other console. Bluray royalties get paid to the BDA, which Sony is a part of, but all the top tier members see the same return from the fee.

    They bring the consumer in to this in order to make it a media spectacle of this. While I am sure they would like to see a lower price point for a attach rate point of view, ultimately its really about the dev costs and royalties. Sony did well to just ignore it for the most part with their response.
     
  15. e²Studios macrumors 68020

    e²Studios

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    #16
    PS3 Dev kits just had a price drop not so long ago.
    Smaller developers can take advantage of a $2,000 dev kit, as well Sony has a program that will reimburse 100% of development costs for any game that is released exclusive to PSN and the developer still maintains all rights to the software.

    The BDA takes 1.8% more than the DVD folks take, not big $$ in the scope of things. While Sony see's some of this money being on the board, all other board companies do to. Sony does NOT dictate this cost, the BDA as an entity does. The extra cost you see in retail can be anything from a overpriced distributor, to a retail outlet that is marking up the price for whatever reason.

    See my post before this. This has nothing to do with the consumer price of the PS3 and everything to do with them whinging over dev costs and fees associated with producing a PS3 game. They brought the consumer cost in to this for media fodder.
     
  16. Tokiopop macrumors 68000

    Tokiopop

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    #17
    You're all wrong!! You're all wrong!! :(:(:(

    If they stop making Guitar Hero games for PS3, I don't give a damn. If they were to stop CoD games, I'd just get a gaming PC.
     
  17. Dmac77 macrumors 68020

    Dmac77

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    #18
    I think that this actually might happen, Sony has totally screwed up with the PS3. While it is a great system, sony has overpriced it, and has not marketed it well. Also, the PS3 doesn't have a game or series that is as big as Halo. Everyone knows what Halo is, even my grandpa. Also, Microsoft really nailed the online gaming experience on the head, with XBOX LIVE. Sony has not been able to replicate the success of LIVE, and I don't think that they will be able to.

    If sony wants the PS3 to succeed, they need to cut the price, get a Halo killer (probably won't happen), and get their online gaming experience on par with XBOX LIVE (which I don't think will happen).

    Don
     
  18. 2nyRiggz macrumors 603

    2nyRiggz

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    #19
    I'm going to whisper GT to you so you can go and look up just how big that series is and maybe you'll rethink what you posted.

    This empty threat won't happen, it was truly unprofessional of the head of Activision to blurt this out in public just to flex his muscle and not consider the consequences of him not supporting the Sony brand when theres more to Sony than just the PS3.

    I'm actually liking Sony response, read between the lines and you'll see "whatever dude, make your move" in there.


    Bless
     
  19. Dmac77 macrumors 68020

    Dmac77

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    #20
    Oh, believe me, I know that Gran Turismo is a huge franchise, but it isn't nearly as big as Halo. Now you can't tell me that if you were to go and ask ten people who aren't gamers if they know what Halo is, and if they know what GT is, that more would say they know what GT is. Everyone knows what Halo is, whereas most people who aren't gamers don't know what Gran Turismo is. It's just another example of Sony's poor marketing.

    Don
     
  20. 2nyRiggz macrumors 603

    2nyRiggz

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    #21
    Are you sure about that seeing as the GT series has accumulated more sales than both Halo series AND Gears series....GT is bigger than you think and definitely a huge bullet in Sony's backlog of 1st party games.



    Bless
     
  21. Time Clock macrumors member

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    #22
    I find it funny that Activision talks about the PS3 being too expensive when the Guitar Hero bundles have steadily become more expensive each release. And look at DJ Hero- $120.00 for the bundle, Band Hero (how that makes it different than the current iteration of Guitar Hero, I have no clue) is reportedly $200.00. I think if anyone needs to examine their pricing structure, it's Activision.
     
  22. MRU macrumors demi-god

    MRU

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    #23
    The reality is simple. Activision are pissed that they paid $500 million to Sony in royalties.

    IF (I'm hypothesizing) they paid in that same period $100 million to Microsoft for those same royalties, and in fact 'sold' more units on the 360 platform, then you can quite easily see where Ativision are coming from.

    They have to appease their share holders. They have to maximize profit, and Sony need to listen.

    Sony's attitude / response of 'whatever' may make you snicker, but reality is that Sony's complacency this generation is what has put them into 3'rd place after two successful console generational victories.

    Their up yours attitude of 'we do what we do only' is what lead to UMD, over pricing themselves and stupid claims about the PS3's superior power amongst many other silly disasters this generation.

    Sony do need to listen to disgruntled industry insiders. This is not just a few fanboys on the internet, or small time developer crying out at them. This is THE BIGGEST game publisher in the world right now, telling Sony they need to sort out their royalty structure.

    Or reduce the price of the PS3 so that more units are sold, customers have a little extra $$ and the attach rate goes up. It's simply no good if 25-30% of PS3's are being used mostly as Blu-Ray movie players. That's why attach rate to publishers is so important.



    I really hope Sony do learn from their mistakes this generation and when the inevitable PS5 appears, that the Playstation 5 actually incorporates what development communities are telling Sony (hard to program SPU's/CPU's and paltry onboard memory do not make great bed fellows - or will ever live up to claims of FULL HD in everything and Dual 1080p ports, Rumble that was supposedly impossible with sixaxis motion, only to be re-instated when customers called BS! one too many times on their asses) & what end users want (a games console that won't break the bank) - and they do not fall into the same holes again. I wont' get my hopes up though, and i'll probably end up buying a PS5 despite it's over promise. :)

    Microsoft have made MANY mistakes this generation, mostly owing to the RROD situation. However they have lead the field in nearly all this generations main triumphs. First to bring HD gaming to the masses, a very successful online service, great online marketplace, console SKU's that suit the pockets of the buying public (regardless if things work out more expensive in the end). Their attach rate is high. Video marketplace, and continue to re-invent and listen to the community by incorporating facebook, and twitter, SKY, HULU and wherever else they lead - and Sony eventually follow a few months later ;)

    For as much hatred their is to all things M$ on this forum, they ARE NEEDED in this console marketplace, and they have done some great things, because without them Sony would be continuing their Godzilla like stampede, and not listening to industry or consumers at all, and that would be a bad thing indeed.

    So yeah, err ramble over..... Sony do need to listen to the gripes. They need to address them, and not be complacent.
     
  23. Dmac77 macrumors 68020

    Dmac77

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    #24
    Yes, I'm sure about that. Sales aren't everything. Capitalizing on the success of a game is more important. Sony has failed to do that, while Microsoft has done a wonderful job doing so. Has a GT release ever caused 5th Ave. to be shut down? No, has a GT release seen 10,000 stores across the US holding midnight release parties? Is one of the GT games, or for that matter, any PS game, the fastest selling video game in history? Did any GT game, or any PS game, have one of the largest, if not the largest marketing campaigns for a video game ever? The answer to all of those questions is no. Now if you were to change GT to Halo, and PS to XBOX/XBOX 360, the answer to all of the questions would be yes.

    Halo is better known then GT. It's a fact.

    Don
     
  24. fiercetiger224 macrumors 6502a

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    #25
    Ahh geez. Sony should just drop the price of the PS3 soon. Hopefully they do it around when Madden get released.

    I can see Activision stopping support for the PS3. Does anyone remember the ill-fated Dreamcast? Remember when the EA, the world's biggest publisher back then, didn't support the Dreamcast back then? That was a fatal blow to Sega. I imagine if EA did support the Dreamcast back then, Sega would have at least survived until the end of the 5 year span of the console.

    Yes, I know the reason why EA didn't support the Dreamcast, which was because they wanted to develop all their sports games exclusively for the system. But Sega decided they wanted to develop their own sports titles through Visual Concepts, which led to EA not supporting them. :rolleyes:

    Anyway, back on topic. I don't think Activision, at this point in time, should stop support for the PS3. Or rather, they can't. Why? Install base is close to the 360, and if they ended support for the PS3, their revenue would probably drop by a third. Yes, the 360 does have a lead in sales thanks to the year lead. If you think about it, the PS3 has sold more in the same period as the 360. What woulda happened if the PS3 and the 360 launched in the same year? Hmm...Who knows. The PS3 would have definitely been in the lead. :p

    Point being, is that there are over 21 million PS3 owners, and 30 million 360 owners. Oh and 50 million Wii owners. It's fairly close between Sony and MS, and Nintendo is just kickin' their butts. ;)
     

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