Bobby Kotick, head of Activision has been running his mouth about the PS3 offering a lower return on investment than the 360 or Wii. He says that the attach rate to the PS3 is likely to suffer if the price is not dropped. If this is the case, come 2010/11 they may stop supporting the PS3 and possibly even the PSP.
To try and illustrate his point, let’s use Call of Duty 4. Let us say that on 360 each game sold generates 50% revenue for Activision and on PS3 25%. To break even on 360 Activision must sell 1m copies and on PS3 2m.
This is a game that sold 7.4m on 360 and 4.4m on PS3. Having broke even, 360 has generated profit equivalent to 2.7m copies sold compared to only 0.6m by PS3.
Data from vgchartz.
If this is true, then of course Kotick has a point. He is running a business and if you’re not making money you won’t be in business long.
If all the COD4 owners on PS3 bought it on 360 that would be an additional 2.2m copies worth of profit. But would it be good business sense to turn your back on an install base of 22m in the hope 4.4m of them will buy a 360?
If the 360 generates 4.5 times the profit of PS3 on an operational level, risk-return ideology would mean the death of PS3.
Sony has made a loss on every PS3 sold to date, a price drop would increase this loss. Subsidizing this loss would have to come from somewhere. That may be the PSP GO, other Sony divisions or maybe they would be forced to increase the royalties on each game sold; so instead of 25% revenue on each game sold, Activision makes only 15%.
Of course my figures are quess work, but I think they help to illustrate the point Kotick is making. If Activision is making less than I’ve said I’ll be surprised, if they make more then shame on Kotick.
Games shouldn’t be about profit, it should be about getting your game to as many people as you can.
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Poor Sony, they had to compromise on sales for quality.
The Playstation 3 is a thing of beauty but Microsoft know how to milk money from producing inferior products and then marketing them as equal revivals
I think you’re forgetting something important though. In your example for CoD4 if they didn’t support the PS3 and only sold it for the 360 then they would’ve spent less money to develop it. So the 2.2m that bought it for the PS3 is irrelevant and it doesn’t matter if they would’ve bought it for the 360.
You’re also partially right about your last statement. I agree that making games should be about fun and entertaining people but just like everything else it’s a business and money makes the world go ’round.
So…. the Activision CEO said “we gonna make more money selling less”
durrrrrrrrrrr
you said the ps3 needed to sell 2 million copys to break even. if theres 4.4 million total, then thats 2.4 million sold with profits. where did you get 0.6m? and the 360 numbers are wrong too. am i missing something here?
hahahahhaha think it this way.. activision is releasing a call of duty by year.. so how much money can be 4 them to release one game.. and they keep reciclin their engines. so they don’t need to sold that many copies to get a profit i think.. so those numbers are ridiculous…
If they gt 25% of revenue n they sold 4.4m on ps3 doesn’t that mean they gt the same as selling 1.1m copies or lik 60m $
The numbers are definitely flawed. First, once you have the game engine built, your development time on future similar games is greatly reduced. The PS3 install base is growing more all the time. At the same point in the life cycle, the PS3 is already ahead of the Xbox for the same shelf period. And the PS3 is quickly gaining on the box. XBox has more sales partly because all the duplicates people got for the red ring of death – a friend had his break three times. More people are discovering that you do not need to pay on the PS3. Plus add ons like Home, God of War III, Uncharted 2, and many other great exclusives, more people are buying a PS3.
Other developers have indicated that it is easiest to develop for the PS3 first and then port over to the box. Perhaps Activision should take some lessons from other companies that have learned that it is best to develop on the PS3 first.
Perhaps Activision should seek a new chairman before he kills his company and the profits go in the crapper.
Thank you very much for the responses.
I’m not going to waste any more of your time on my figures, cos they are just to illustrate where Kotick may be coming from.
The other factors, like knowledge gained from making one PS3 game makes the following cheaper, are other reasons to doubt the validity of Kotick’s statement.
If the PS3 sales produce enough profit to cover and surpass the development cost of the game (which is probably minimal due to porting), what is his problem?
exactly “me”,
greed is his problem and also the fact that this isn’t so much about the Call of Duty games as it is about selling games like…
Guitar Hero
Marvel games (Ultimate Alliance 2, Wolverine, Spider-man games etc.)
Dreamworks games (Transformers, Shrek, etc.)
Tony Hawk
the CoD games will sell regardless, but it’s more-so about the games that could sell “that” many more copies by having a larger install base….
I’d like to see how well the Wolverine game recently sold….
I could go on a bit more, but I’ll finish this thought on the Vice Weekly podcast we’ll be recording soon…
so be sure to check it out…
Kotick needs to shut the fuck up. The PS3 has a smaller install base than the 360 but it still sold the most software for Ubisoft. Activision needs to stop putting out bullshit shovelware and it’s sales might go up.
That PSP Go really looks neat, just hope I can get a nice bundle.
A fun fact for Activision and gamers:
PS3 costs $500 and comes with a built in blueray drive and has no charge for online pay.
As per the console’s 10 year life span, PS owners roughly pay $4 a month for a PS3.
Xbox360 costs $200, doesn’t have a blueray and comes with a yearly online fee of $60.
So in 10 years the total cost of the console is $200+$600=$800.
=$7 per month.
And then come the problems like RROD, disc scratching and hundreds of others.
Compare $7 a month and $4 a month. Which one’s cheaper? Which is the better investment? You decide.
(For those who have seen the infamous vs prototype thread, yes, I’ve posted these facts there too.)
P.S: Activision, please kill yourself. You’re quick turning into EA while EA is finally getting some sense.
Your blog is really nice to read