Activision CEO: “We Might Have To Stop Supporting Sony”

[liolio]

I doubt this is about royalties. Activision has to base how much resources they want to devote now to projects that won't see retail shelves years into the future. He trying to use leverage (the amount Activision pays Sony in licensing fees) and the media to persuade Sony to cut prices for the PS3. His concern (along with alot of other pubs who have been rumored to be pressuring Sony in private) is that the current pricing and very conservative price reduction strategy might make the PS3 very uncompetitive in the future.

If you devoting resources to new projects right now then you have to do some forward projecting analysis to determine what the future console landscape will look like at game releases and not current circumstances. Maybe the reason he went public because the prodding in private was going nowhere and he is hoping going public will somehow be more effective in forcing Sony to cut prices sooner.

Or as Ms and Sony fight for the same bucks and Nintendo is in another space they may choose to focus theirs efforts on MS or Sony + Nintendo and have as high quality products as possible and be able to have bigger marketing budget for one hardcore platform and one casual one.

Overall I still think it's about royalties/hard price. But a CEO doing such a bullhead declaration can't be good in anyway, Sony must better be succesful this fall.
EDIT
I'm at a friend's place no spell checking... sorry if my english is even uglier than usual

 

[RobertR1]

Did you read others members comments? especcially in regard to royalties?
It looks like under table discussion made public on purpose as others stated.
If anything it shows a relative Sony weakness for one big editor to dare to go that route.

Could you copy paste some of the comments? There's a ton now and a lot to navigate through

 

[liolio]

Could you copy paste some of the comments? There's a ton now and a lot to navigate through

It's late and I'm having a break while friends are playing poker and I may not be completely sober...
I may have misunderstood his post thus there was no agressivity the overall consensus was that it was public pressuring on Sony and not a real threat. An opinion I share accordingly to what we know about market shares.

 

[RobertR1]

I'm curious why you guys think this is in the realm of impossibility. Sure, not in the next one or two years while the console landscape stays the same, but what about when a new machine comes out, like an Xbox 720? You all know very well about the cost, difficulty and support issues on PS3, or at least you should know if you have read my posts over the past few years You also know that publishers have finite budgets. So why do you think it's impossible that a major publisher would drop PS3 in a few years and instead shift all those dollars to a new cash cow?

If next gen systems came out at a proper price range, then I could easily see someone like Activision dropping the PS3 and working in the Xbox 720 and WiiHD. If the new 360 and WiiHD come out in 2 years ranging from $250 to $250, a then priced PS3 at $250 would get steamrolled in sales anyway so it'd be an easy decision. From what I can gather, not just from his comments but others comments on this boards and articles, it seems like they have to go out of their way to develop for the PS3 and the ROI is sketchy. While we know about CoD and GH games selling well on all 3, it's the likely the loss leaders and break even games where the PS3 could be really hurting profits due to higher dev costs. I'm sure Sony charging for bandwidth doesn't make things more tolerable either.

 

[RobertR1]

It's late and I'm having a break while friends are playing poker and I may not be completely sober...
I may have misunderstood his post thus there was no agressivity the overall consensus was that it was public pressuring on Sony and not a real threat. An opinion I share accordingly to what we know about market shares.

oh! I got it confused. I thought you read some comments on Kotaku that revealed insider info. Good luck with at Poker

 

[liolio]

oh! I got it confused. I thought you read some comments on Kotaku that revealed insider info. Good luck with at Poker

Thanks a lot! But actually my wife is my best bet for any sucess She is such a tight player and she has a patience that I admire...

 

[MazingerDUDE]

This is utterly ridiculous, as if going multi platform with PS3 would cost as much as creating a game for the 360. The majority of production cost is spent on creating art assets (which is pure labor), and such is something that's being shared on both systems. I've heard things like only handful of people doing the port for PS3. Like COD3 had 2 people doing PS3 port, and how many copies did it sell?

 

[liolio]

This is utterly ridiculous, as if going multi platform with PS3 would cost as much as creating a game for the 360. The majority of production cost is spent on creating art assets (which is pure labor), and such is something that's being shared on both systems. I've heard things like only handful of people doing the port for PS3. Like COD3 had 2 people doing PS3 port, and how many copies did it sell?

I agree (see my posts above) but Joker has a point it's not out the realm of possibilities.
Editors are getting bigger and bigger as they do marketing budget are getting bigger and bigger, the quality may go up, the competion may get tougher etc. At some point decide a platfrom as THE platform and invest a lot (in an even more competitive market) and have proper marketing resources could make sense (once gain it's tto anticipated right now, so I don't bite in it).
EDIT when I say THE it's about Hardcore gamers and having Nintendo for the rest which spells doom on both Ms and Sony efforts in regard to motion sensing devices (not outside the realm of possibilities either).

 

[Richard]

This is utterly ridiculous, as if going multi platform with PS3 would cost as much as creating a game for the 360. The majority of production cost is spent on creating art assets (which is pure labor), and such is something that's being shared on both systems. I've heard things like only handful of people doing the port for PS3. Like COD3 had 2 people doing PS3 port, and how many copies did it sell?

The bottleneck is not the assets at all. As you say, it's pure labour. In the video game business artists are available by the metric ton and the average wage is very low (compared to the other parts of development). What makes a game break a milestone or not is the programming which is something you can't throw a lot more hands at and expect a significant improvement in efficiency (though you might expect an improvement in risk exposure by having redundant systems - though this is costly).

Anyway, IF Acti has noticed that in most multiplatforms games, the PS3 version takes 3-6 weeks longer to finish while Sony expects same feature set as the XBOX version (as it is their policy for simultaneous launches) Acti may wonder if the extra effort/cost wouldn't be put to better use shipping earlier for XBOX and starting a new project.

Also, whether Acti makes money on PS3 games is irrelevant. Acti (like a lot of publishers nowadays) view breaking even or even small profit not as a gain but a lost opportunity to make huge profits. Case in point: why develop a new IP even if you could confidently determine it would turn in healthy profit when you can just whip out CoD7 that you *know* it's going to clean house? Which of the two projects are you going to allocate resources to (financial, marketing, developers, etc.)?

^^^^ Anyway, in my opinion this is simply Acti trying to force Sony's hand into droping the price sooner rather than later even though the above still stands.

 

[mrcorbo]

Another aspect of this that applies to Activision specifically is the amount of shelf space retailers are willing to allocate to their products. With multiple iterations of GH as well as GH:WT for multiple platforms, Activision is asking quite a bit of retailers to stock all of them. Now they're adding TH: Ride and DJ Hero to this mix. If one platform consistentyly sells through only 50% what the other platforms do of these SKU's Activision may begin to wonder if it isn't better to drop this platform so retailers might be willing to dedicate more space to the ones that sell best.

It may be that these titles would be the first to get pulled off of the PS3 should Kotik make good on his threat. Whether that would be that big of a loss or not is another question.

 

[obonicus]

Also, whether Acti makes money on PS3 games is irrelevant. Acti (like a lot of publishers nowadays) view breaking even or even small profit not as a gain but a lost opportunity to make huge profits. Case in point: why develop a new IP even if you could confidently determine it would turn in healthy profit when you can just whip out CoD7 that you *know* it's going to clean house? Which of the two projects are you going to allocate resources to (financial, marketing, developers, etc.)?

This is true, but Activision is also really reluctant to engage in new IP. Between making CoDx for PS3 and making new IP for 360, or god forbid the Wii, I do think they'd go with the former. The more convincing sources of revenue would perhaps be DLC for the 360 version, but I don't know how much money they actually make on those, so it's hard to comment.

 

[MazingerDUDE]

Anyway, IF Acti has noticed that in most multiplatforms games, the PS3 version takes 3-6 weeks longer to finish while Sony expects same feature set as the XBOX version (as it is their policy for simultaneous launches) Acti may wonder if the extra effort/cost wouldn't be put to better use shipping earlier for XBOX and starting a new project.

I doubt it'd require a genius to figure out what would make them more money, like spend a bit of money to do the PS3 port, wait 3~6 weeks longer and EXPAND YOUR TARGET BUYER from 30 million to 50 million. That's exactly why 99% of publishers do make their games multi platform.

However, with almost all games going multi platform these days with so many good games being buried in dust, a privilege of getting extra attention for being exclusive to a console and getting possible aid from the platform holder would make much sense for a publisher to go exclusive.

But if it's just the cost alone they say, that's just ridiculous.

 

[MazingerDUDE]

BTW, if Activision's not happy with the returns on invested capital, they should stop making games for PC looong before they do with PS3.

 

[draconian]

His quote is clearly there to pressure Sony since he can't really pressure MS with their already lower price. He's hoping a Sony price drop will force another MS price drop.

It's amazing to me how sony screwed up so badly on the pricing of the ps3. I'm still puzzled why the ps3 still costs so much to make. the XDR ram? the licensing fees for the blu-ray drive? I don't know. Sony slim ps3 that's coming out soon better have the blu-ray feature removed(and maybe only activated via an online purchse), and maybe they can also reengineer the CELL to use gddr ram.

 

[Squilliam]

I heard (this is hearsay) that Sony charges a lot more for the dev kits than microsoft.

But in terms of actual, game licensing fees, sony is cheaper.
Sony = $12 per game
Microsoft = $15 per game

Do you have a source for this? Im not doubting you, its just that I always assumed that royalties were something like $7.50 per game to the console manufacturer so I would like to see some confirmation if anyone can provide it.

Also what does this entail? Is this per disc or per DVD package shipped from factory, because the latter would probably cost a dollar more or so to make.

 

[draconian]

Do you have a source for this? Im not doubting you, its just that I always assumed that royalties were something like $7.50 per game to the console manufacturer so I would like to see some confirmation if anyone can provide it.

Also what does this entail? Is this per disc or per DVD package shipped from factory, because the latter would probably cost a dollar more or so to make.

I'm sorry, I don't. I think it was from a post in this forum or neogaf. I think it was this one. I'll do some searching.

 

[Squilliam]

Thank you. Maybe one of the developers here can broach the cloak of silence regarding this issue! ;-)

 

[draconian]

Thank you. Maybe one of the developers here can broach the cloak of silence regarding this issue! ;-)

well, I found this link on ps3 and original xbox fees. Both were $8.00.

http://greggman.com/pages/making2.htm

Sony = 12.00 and MS = 15.00 doesn't seem right anymore.

I would image both charge somewhere between 10-12 dollars.

 

[Squilliam]

well, I found this link on ps3 and original xbox fees. Both were $8.00.

http://greggman.com/pages/making2.htm

Sony = 12.00 and MS = 15.00 doesn't seem right anymore.

I would image both charge somewhere between 10-12 dollars.

That would make sense, if it was ~$8 last generation and those fees have increased since then. I think I saw a break down of the extra $10 cost and the breakdown had a little extra for the developer, retailer and console maker royalties.

 

[MazingerDUDE]

That would make sense, if it was ~$8 last generation and those fees have increased since then. I think I saw a break down of the extra $10 cost and the breakdown had a little extra for the developer, retailer and console maker royalties.

You guys might be interested in reading this

http://www.1up.com/do/newsStory?cId=3156044