Activision CEO Calls For Sony PS3 Price Cut - InformationWeek
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6/19/2009
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Activision CEO Calls For Sony PS3 Price Cut

Cutting PS3 prices would be difficult for Sony as the company last month reported its first annual loss in 14 years.

The chief executive of video-game publisher Activision has called on Sony to cut PlayStation 3 pricing, saying that without it the company may have to stop supporting the video-game console.

CEO Bobby Kotick said in an interview with The Times of London that the PS3 is losing "a bit of momentum" in the market, which is making it increasingly difficult for Activision to develop games for the console.

"It's expensive to develop for the console, and the [Nintendo] Wii and the [Microsoft] Xbox are just selling better," Kotick said in the interview published Friday. "Games generate a better return on invested capital on the Xbox than on the PlayStation."

To boost sales, Sony has to drop prices, the CEO said.

"They have to cut the price, because if they don't, the attach rates [the number of games bought by each console owner] are likely to slow," Kotick told the British newspaper. "If we are being realistic, we might have to stop supporting Sony."

Asked when support might stop, Kotick said, "When we look at 2010 and 2011, we might want to consider if we support the console -- and the PSP [PlayStation Portable] too."

Kotick's comments have weight because of the market strength of Activision. The company is the world's largest independent computer games company and has a market value of $16 billion.

Cutting PS3 prices would be difficult for Sony. The company last month reported its first annual loss in 14 years, caused by a strong yen and a sales slump in its consumer electronics business. While the economic downturn hurt sales, Sony also suffered from competitors' lower prices.

As a result, sales in Sony's electronics business fell 17% from the previous fiscal year, and revenue from its game unit fell 18%. While Sony sold more units of the PS3 and PSP, the company saw a drop in software sales.

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