Blog Post

Activision’s Kotick: ‘We May Not Make Games For The PS3 Next Year’

It’s one thing when indie developers, bloggers and a couple of analysts plead with Sony (NYSE: SNE) to come down on the price of the PS3. It’s another thing when the CEO of *Activision* — currently the biggest gaming company in the world — says that it might stop making games for the PS3 next year, if Sony doesn’t do something to boost sales. That’s just what Activision (NSDQ: ATVI) CEO Bobby Kotick has done, essentially initiating a very high-stakes game of chicken with Sony’s CEO Sir Howard Stringer: “They have to cut the price, because if they don’t, [the number of games each console owner buys] are likely to slow,” Kotick told the Times Online. “If we are being realistic, we might have to stop supporting Sony.”

Sony’s in a tough place with the pricing issue: poor electronics sales across the board led to the company’s first full-year loss in well over a decade, and it’s just about breaking even on the PS3’s manufacturing costs (the console has been out since 2006). There are also signs that PS3 sales are starting to gain momentum (at least in Japan). The caveat is that the sales spike came from a roster of exclusive, in-demand games — meaning that Sony needs publishers like Activision much more than they need the PS3 right now.

“It’s expensive to develop for the console, and the Wii and the Xbox are just selling better,” Kotick told the Times Online. “Games generate a better return on invested capital on the Xbox than on the PlayStation.” Publishers typically plan game release schedules roughly one to two years in advance — and Kotick said Activision was thinking hard about whether to release games for the PS3 and the handheld PSP in 2010 and 2011. That would mean no future iterations of the best-selling Guitar Hero or Call of Duty franchises for PS3 owners — which could spark a downward spiral of even fewer console sales for Sony. (As for other publishers following suit, that could go either way. Rivals could choose to cut their losses, or spotlight the fact that they still put out PS3 games as a value proposition).

Sony’s response to Kotick’s remarks is bland and carefully worded: “We enjoy healthy business relationships with and greatly value our publishing partners and are working closely with them to deliver the best entertainment experience” (per IndustryGamers). Whether Stringer comes out swinging just as hard with a statement in the future remains to be seen.