Activision CEO Threatens PS3 Pullout
Activision CEO Bobby Kotick sent a warning shot at Sony in an interview with the UK’s Times Online. The company, which merged with Blizzard in 2008 to become the world’s largest independent game publisher, is targeting the PS3. “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 claims.
He went on to say that, “They have to cut the price, because if they don’t, the attach rates are likely to slow. If we are being realistic, we might have to stop supporting Sony. When we look at 2010 and 2011, we might want to consider if we support the console – and the PSP too.” Raising the potential for an Activision pullout of support for the PlayStation brand seems more of an outburst of frustration that Sony has not lowered the price of the PS3 than a serious threat.
Despite Kotick’s claims, his own company’s financial statements seem to indicate a PS3 pullout would be unwise. The PlayStation 3 trails the Xbox 360, in terms of the company’s net revenue for the 2008 calendar year, 9 percent to 13 percent. Considering the cost of development has increased considerably from the last generation to the current, it makes sense for third parties to release a game across multiple platforms. Companies such as Electronic Arts and Take-Two would love to take Activision up on that offer to pullout from competing with them on the PS3.
Perhaps it has less to do with the PS3 than it does with Activision. Mr. Kotick indicated in an earnings call reported by MTV last November that the company is not interested in making games that “don’t have the potential to be exploited every year on every platform with clear sequel potential and have the potential to become $100 million dollar franchises. … I think, generally, our strategy has been to focus… on the products that have those attributes and characteristics, the products that we know [that] if we release them today, we’ll be working on them 10 years from now.”
Indeed while Activision may only be interested in supporting franchises which can be “exploited every year on every platform”, that strategy has – up until now – included the PS3. Returning to Activision’s own financial statements, for the most recent quarter (the three months ending March 31, 2009), the PS3 earned Activision $131 million in net revenue. This was equal to the 15 percent of net revenue that the Wii also managed.
