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Games Not Profit

Tony @ Gamingvice.net writes:

"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."

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KionicWarlord2223078d ago

Pretty interesting article . what did the quote mean

"only possible on ps3"?

Then theres someone playing cod 4 : modern ware.

really duh3078d ago

I was trying to figure out the video and the statement as well.

KionicWarlord2223078d ago

At least you notice that. I was kind thinking:

huh?

lol

ugly13078d ago (Edited 3078d ago )

Maybe it's a representation of the article? eh

gamesR4fun3078d ago

u guys check out the vid omg hows that possible? looks to real for photoshop...

+bubbles to the guy who tells us how lol

Marceles3078d ago

whoever was driving must've had Miss Daisy in the car

Crazyglues3078d ago (Edited 3078d ago )

the car glitch, he was saying this glitch is only possible on the PS3 version...

where someone is driving a car in the video...

As far as the story, this guy did a very good job of trying to breakdown what the hell the CEO of Activision meant.

What would have been nice is if the dam CEO just gave us the dam numbers so we would be able to see if what he was saying had any truth to it.

KionicWarlord2223078d ago

lol?

a glitch?

ahaahah....thats funny.

really duh3078d ago

OK I'll be clear relation please...

Tarasque3078d ago

"Bobby Kotick, head of Activision has been running his mouth". Soon as i read that i quit reading hate fanboy whiney article's.

JL3078d ago (Edited 3078d ago )

Is it just me or does the Activision guy argument seem weak? Haven't read this article nor am I going to, but I just thought of something and wanted to add my two cents. For the most part, how does the price of a system really effect the attach rate for that system? I mean I've already spent my $500 so it doesn't matter how cheap the PS3 gets, I'm still going to end up buying the same amount of games (since attach rate is amount of games sold per console). It all likelihood wouldn't the most determining factor of attach rate be the price of games rather than price of console? And wouldn't it benefit attach rate if Activision lowered they're games by like $10 or so, moreso, than it would help if Sony dropped $50 off the PS3?

Maybe my logic is flawed here (so feel free to disagree as long as you can give me a logical and intelligible counterargument), but I just see game cost being a much more important factor in attach rate rather than console cost.

Chuk_Chuk3078d ago

wonder if they realise MS have higher royalty fees than sony.

pilotj253078d ago (Edited 3078d ago )

A lot of my friends bought the PS3 for movies as it was a cheap and upgradeable blu-ray player and they really only own 1 or 2 games. I think this is what activision believes is happening with the PS3 (not necessarily 1-2 games but no where near the attach rate of 10 for the 360.)

Just averaging here guys so no raging fan boy hard ons if I don't get the numbers exact and I rounded some ratios...I used World Wide VGchartz for figures. Even though the PS3 has 22 million units sold and the 360 has say 30 million units sold the game sales are not in a 2:3 ratio as the consoles that were bought. When COD 4 sells 7.4 million of the 360 and 4.3 million on the PS3 they likely feel that the PS3 should have sold closer to 500k more to keep on par. That's a big chunk of money. If you look at most releases the PS3 versions sell below 66% of the 360 versions. With bottom line thinking that cuts into companies profits.

So they look to other reasons, maybe people in America only bought it for a Blu ray player, or in europe only women bought it because it looked sexy with the black sleek design, or maybe they included a fleshlight with it in Japan. OR maybe only 40-55 year old men could afford one because the price was so ridiculous when it came out you had to sell your first born to get one and keep food on the table.

The point is likely the demographic that buys games and uses a console as a console cannot afford an extra 100-200 to play the same video game on the PS3. You look at most people that play video games it's 13-30, and me being 25, I can't see myself spending an extra 200 (at the time) on a PS3 to play the same games, I really couldn't afford it and that's 4 games that I could have bought. I don't care what extras it has, I want it to play games. I can't afford spending the extra $10 a movie for blu-ray with marginal quality improvements so that doesn't make it an incentive for me to buy it. The exclusives aren't really great on either. And the PS3 usually craps the bed with regards to sales except for MGS4.

Likely all of the parents buying kids their consoles, people on more of a budget, less concerned with bells and whistles, or people that really just want to play games will buy a 360 and buy the games. For the PS3 to continue to be competitive they need to sell hardware to people that buy games, not movies, games. And it's not at $399 CDN.

I can do more gaming on the 360 with the better graphics.

JL3077d ago (Edited 3077d ago )

Wow, I'm going to have to bubble you for actually bringing an intelligible counterargument instead of some fanboy "You're wrong, Sony sucks!" comment like others might have.

Now, that is in interesting take what you wrote there, and I guess on some levels they were valid points, however, for me, it doesn't truly hold water when broken down. I'll give it to you that yes, some PS3s were bought just as blu-ray players. However, now that you can get a stand alone for much cheaper, I seriously doubt that that happens at all anymore. It's just too expensive to buy for only movies. Going on those reasons (that people buying it just for movies lowers attach rate), wouldn't it make sense that if lowered the price and made it more along the lines of standalone players, then people would once again start buying it just as a blu-ray player, and that would further hurt the attach rate? That would seem the more likely case for me. I just don't see anybody in their right mind buying PS3 for just movies anymore when you can get a player for half the price.

As for, only the older crowd can afford to game with the system. I don't see that much effecting the attach rate either. I mean a price drop isn't going to effect how many games I buy as I already own the system. And I don't think that extra 200 initial charge really has all that much of an impact on game sales, as it's only an initial charge, plus if you're able to afford the PS3, chances are you're not short enough on money that you can't afford games afterwards either. I mean maybe that's the reason, but, for mine, I just don't see it. I see the console price effecting the amount of consoles bought, not so much the attach rate, especially not in the long run.

All in all, really for me, it seems that game price (more so than console price) is the reason attach rates aren't higher. I mean I own like 20 games for my PS3 right now, but I know for sure it would definitely be more if games weren't an outrageous $60 a pop for each game.

I think in the end, the real reason for higher attach rate on 360 is because I'd say the average xbox owner is much younger than the average on PS3. I'd venture to bet that the xbox age is something more like 18, while the ps3 is more like mid-20s. And yes, this is partly due to price, but I think even more so would be the fact that xbox dominates the US, and the US has these spoiled American kids who probably make up half the xbox customer base, who are xbox gamers because xbox is the one more pushed down throats over here and really holds the spotlight more. And these kids really have no responsibility and are free to spend all the money they have on gaming as opposed to dividing it between gaming and bills, etc. So I guess in a sense price does affect that cause maybe more of these lil i-spend-all-my-money-on-games kids could afford a ps3 and start blowing that money on ps3 games instead, but I think it's sort of more about who the average demographic is for each system.

These are just my thoughts though, and maybe I'm wrong. Though as I do get towards the end of that argument there I do realize how a BIG price drop could eventually bring in more KIDS and thus bring up attach rate (though I still think not have near as much of an impact as cheaper games rather than cheaper consoles). But honestly, if that means having to get rid of the mature crowd that I'm accustomed to, I'll pass really. Cause I'm not missing out on anything. Activision has nothing for me. In the end, though I still think it's kids that push these attach rates up and I think xbox is the place for said kids because that's the stigma of them and their image. Xbox has always been this cool toy that you get mom to run out and buy and Playstation has always been the high tech piece of technology from one of (if not THE)leading name in electronics, just the way I see it.

Anyways, thanks for the intelligent reply and counterargument. Though could have went without the fanboyish "...with better graphics" at the end. All the same though, bubbles for you.

GrandTheftZamboni3077d ago

There are twice as many 360s in North America as PS3s. If it's true that 360 owners buy more software, you would think that 360 games would sell more than twice as much. Well, it's actually less than that. Either PS3 owners buy more games, or bunch of 360s are actually RROD replacements, or combination of those. Worldwide ratio is even more reflective of that statement, but it's easier to see in NA example. That is according to VGChartz.

+ Show (12) more repliesLast reply 3077d ago
ugly13078d ago (Edited 3078d ago )

All hypothetical. We don't know how much it costs to develop on either the PS3 or 360. The PS3 isn't as difficult nor as expensive as it was when it first launched. Cost have obviously come down since then, and the COD4 engine is already optimized for both the PS3 and 360 equally.

Realistically, selling 4- 5 million of any game is profitable business. This is more a about a company that wants more money and wants to exploit their ips, being the top dog, (by releasing three Guitar Heros in one year) any and every way possible. Of course they want more PS3s sold, rather than drop it completely.

There is no PS2 this generation.

Koticks' comments are more long term, rather than short term. As, he seemingly expects the PS3 to continue to sell at $399.99 for the next few years, disappointed at the lack of a price cut so far, after crying for one all year.

To any company, though, it's all about profit. These executives are vampires out to drain their ips dry and to sell you their products.

TapiocaMilkTea3078d ago

Something's not right about the article. It's comparing the cost for developing an Xbox version to a PS3 version as if they're two different games. When you make an Xbox version, you already spend money on most of the development that is transferable to the PS3 at little to no cost, like the gameplay, story, art etc. The marketing is transferable also, you just need to add an extra PS3 logo to the ad.
It doesn't seem like it cost that much just for porting the game to a PS3 version, the extra PS3 sales should be more than enough to make a profit out of it.

DragonWarrior_43078d ago

That vid is freaking epic. I ccant believe I just witnessed that.

gamesR4fun3078d ago

looks like were the only ones who watched it lol

still mindblowing gonna show this to my friend the cod addict XD

The Great Melon3078d ago

That was cool, never seen that happen.

Knightrid8083078d ago

Wow, that was pretty funny lol.

El_Colombiano3078d ago

I think I might have to buy COD4 again if you can drive online!

themyk3078d ago

ok now i have to watch the video. hold on

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