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Box shot of upcoming rumored "slim" PS3  (Source: Engadget)
Sony CEO dismisses Activision CEO's threat to stop supporting PS3

Sony is taking a hard hit in the current poor economy. The firm announced a massive loss last quarter and sales for many of its divisions are at historic lows. Sony is also under lots of pressure for it gaming division to perform.

In June, Activision CEO Robert Kotick put pressure on Sony CEO Howard Stringer to cut the price of the PS3 console. Kotick said at the time that Activision might have to reconsider developing games for the PS3 is price cuts weren't made. Sony issued a retaliatory press statement reading, "We enjoy healthy business relationships with and greatly value our publishing partners and are working closely with them to deliver the best entertainment experience."

Both Stringer and Kotick are at the Allen & Co conference in Idaho this week. Reuters reports that when Stringer was asked directly about Kotick's statements Stringer said, "He [Kotick] likes to make a lot of noise. He's putting pressure on me and I'm putting pressure on him. That's the nature of business."

Stinger was also asked about the logic of not cutting prices on the PS3 console. Stringer replied, "I [would] lose money on every PlayStation I make [if prices were cut made] -- how's that for logic."

Stringer also said that Sony was not looking to shed any of its assets despite recent losses and a continued poor economy. Stringer says that Sony is trying to closely integrate hardware and software and selling off assets in either camp didn’t make sense.

Stinger said, "We're learning to fuse content and hardware. This wouldn't be a time to get rid of either."

Stinger said at the conference that he sees a bottom in China to the economic crisis and that most of Asia is looking good. However, he points out that it is too early to call a bottom to the recession overall. He said, "I see green shoots but it's a very light shade of green."

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So basically
By FITCamaro on 7/8/2009 10:20:06 AM , Rating: 5
Sony's response is now "I know you are but what am I?"




RE: So basically
By bighairycamel on 7/8/2009 10:27:44 AM , Rating: 2
Well I would have to side with Sony on this one. Not because they shouldn't need to lower their price, because eventually they will have to, but because Kotick is an idiot.

He talks like he doesn't want to support the console because it's in last place, but it's still sitting at over 22 million units vs 30mil for the 360. Dropping support would just piss off the investors. I don't understand what his vested interest in the price of the console is. He just wants to pressure Sony to lowering the price so that they will sell for units so that Activision can in turn sell more games. He can pretend he will drop support but I would bet my 401k that he is just full of crap.


RE: So basically
By DEVGRU on 7/8/2009 10:32:44 AM , Rating: 1
...yeah, what does he care Activision probably spends 2-3 times more in development and time costs for a PS3 title in addition to pathetic sales once released vs. anything Activison makes for a 360. :P


RE: So basically
By bighairycamel on 7/8/2009 10:42:42 AM , Rating: 3
That's part of my point though. He complains about net profit of 360 sales vs PS3 sales because of development costs vs. gross profit, but the fact remains they are still making a net profit! I don't see them forsaking any profit at all for the sake of an argument with Sony. Like I said, dropping the console will just piss off investors.


RE: So basically
By bhieb on 7/8/2009 11:18:23 AM , Rating: 4
Correct he is not loosing money per game on the PS3, just not making as much as he'd like. Just posturing by him to pressure Sony into a sweeter deal for him. Business as usual people nothing to see here, carry on.


RE: So basically
By BansheeX on 7/8/2009 4:30:51 PM , Rating: 3
This is like the fourth "drop the PS3 price" article this year on Anandtech where a columnist picks up on some quote from a developer. Be patient for god's sake, the console is losing money at its current price, and maybe $400 wouldn't seem like so much if we weren't so damned hellbent on destroying the value of our currency by borrowing trillions at interest. Vote someone who will pay off debt for once instead of going deeper, or stop whining that you can only afford a souped up gamecube and an X-Pinto 360 Arcade.


RE: So basically
By christojojo on 7/8/2009 6:50:49 PM , Rating: 4
Newsheadline 2021

PS23 finally makes a profit, the psps still only 179 even after removing the processor and the screen, and the PS4 outsells everything that isn't out selling it, and the PS 5 still losing money.... news after our hourly Michael Jackson tribute.......


RE: So basically
By RandallMoore on 7/8/2009 6:58:06 PM , Rating: 2
yeah I agree. I'm sick of hearing people complain that premium electronic equipment is at a premium price.


RE: So basically
By nuarbnellaffej on 7/10/2009 10:59:18 PM , Rating: 2
lol premium


RE: So basically
By bety on 7/8/2009 9:15:07 PM , Rating: 2
The fact that he's doing this PUBLICLY should tell you all you need to know...it's POSTURING. Makes Activision look like "good" guys to people who don't think critically...


RE: So basically
By quyeno on 7/9/2009 7:42:11 AM , Rating: 2
Bobby Kotick is a fat douche bag. He's absolutely full of himself because he's heads the largest games publisher. I'm sure if people asked him to reduce the price of their games he would probably choke on his doughnuts. He's just sabre rattling with no intention of any action whatsoever. If he wants to miss out on hundreds of millions in sales then go ahead but I'm sure he would get his butt handed to him by investors. Sony will lower the price of the PS3 intime but onyl when its right for them, they have their books to look after. Regardless of how you feel about teh PS3, its undeniable that it is a premium product which offers more features than the 360 and Wii. It is also alot more reliable than the 360, I would say it is solid as a rock. £60 overheats even with an external PSU, whereas the PS3 has an internal PSU, doesn't overheat and is silent. Not exactly the features of an inferior product. Quality comes with a price.

I'm a game developer at ubisoft and have worked at EA. The extra cost of developing PS3 games isn't that high as in my experience, both platforms share alot of the code base. very few aspects are unique, making anything unique is generally the exception. Developers that complain about developing on the PS3 is difficult tend to be lesser talented or just plain lazy. Programming the PS3 is not difficult, just different and that what seperates good developers from poor ones.


RE: So basically
By kamel5547 on 7/8/2009 11:29:36 AM , Rating: 4
Companies exit plenty of businesses where they are making a net profit. Net margins are very relevant, would you rather invest 10 million and make 5% or invest the same amount and make 10%? Simple economics dictate that lower margin markets be abandoned if you can gain greater returns elsewhere. After all, you have a limited amount of capital (Especially now) and staff, assigning them effeciantly is generally the difference between industry leading companies and others.


RE: So basically
By encryptkeeper on 7/8/2009 11:48:21 AM , Rating: 2
And it's hard to rationalize pumping resources into something that was on top of the world, and in the last few years has sunk to rock bottom. Sony went from being #1 with the PS2 to #3 with the PS3. For anyone vested in the company, that's a hard pill to swallow. He hopes that a price cut will jump sales of the console therefore jumping sales of games. The guy from Activision couldn't care less whether or not Sony makes money off the sales of their console.


RE: So basically
By hduser on 7/8/2009 5:06:23 PM , Rating: 2
We saw the Xbox 360 do a price cut last year, it just solidified the hold on second place against the more expensive PS3. There doesn't seem to be any hope of overtaking the Wii at this point no matter what Sony or MS does. So what good will a $50 price drop for the PS3 will do? There's no miracle here.


RE: So basically
By mfed3 on 7/8/2009 11:43:17 AM , Rating: 2
the problem is that they are probably losing money on all the ps3 ports.

the development costs associated with paying a full team to get the same assets and code running on the ps3 alongside the 360 and pc versions can be extremely high. in fact, they probably mirror the cost of the 360 / pc versions, but return less money than was spent since the sales are so poor in most cases except call of duty or rock band.

if i was EA or activision/blizz i would carefully choose the games that i would port to ps3 because its simply not worth it for anything but high profile overadvertised ips that are bound to be popular.

anything new or not expected to sell a few hundred thousand copies i simply wouldnt bother wasting my valuable programmers' time and especially my investors' cash.

summary: the ps3 is a burden to the game industry and shouldnt exist.


RE: So basically
By TA152H on 7/8/2009 12:16:33 PM , Rating: 1
Not to be rude, but someone with your limited intelligence will probably never get a position where your decisions carry so much weight. That's not only good for everyone else, but, really, it's good for you too, so don't get upset by it.

I doubt you know more than they, and they have indicated only the magnitude of profit is different, not that they are losing money. Were they doing so, no doubt he could have used that as ammunition for his argument for dropping the PS3.

In reality, of the three, the PS3 could be said to be the only one that should exist. The Wii is really a last generation machine, if that, and the X-Box is unreliable. Both are overpriced for what they are. The PS3 is the only one selling for around what it costs to make, or less.

Being in third place really is not so important, as the volume of consoles sold. With 22 million consoles sold, regardless of market position, and well over 100,000 new consoles sold every month, there is a huge and growing installed base. It's not as big as the others, but it's still really big and getting bigger. It's not easy to walk away from, especially since it's not so easy to get started back up again when Sony turns it around.

Sony sales are really strong considering the cost. Do you think the X-Box could sell so well at $400? So, really, it's just a matter of lowering the cost, since the console is very well received considering the cost and economic environment. The one certainty in all this is that component costs will continue to go down, and when they do, the price of the PS3 will go down with them. This will almost certainly increase sales of the consoles. If a software developer walks away from this, and then tries to get back in, it's not trivial or immediate, as they have to retrain their programmers, which adds time to the normal lengthy period of actually creating a product. So, you lose out while your competitors enjoy this market without your presence. Would you do this? Well, maybe you would, but as I said, you'll never be in a position to make these decisions. The people that do though, are bright enough to just make noise about walking away, but not actually do it.


RE: So basically
By Jovec on 7/8/2009 7:00:26 PM , Rating: 2
quote:
Being in third place really is not so important, as the volume of consoles sold. With 22 million consoles sold, regardless of market position, and well over 100,000 new consoles sold every month, there is a huge and growing installed base. It's not as big as the others, but it's still really big and getting bigger.


From the perspective of Activision it is not the number of unit's sold but rather the attach rate/game sales. PS3 numbers are skewed because so many are used simply as Bluray players. Even the Wii numbers are skewed since many are bought by casual gamers who only have the bundled game(s) or 1-2 extra.

Keep in mind that as a developer the PS3:
1) Is in 3rd place in units sold
2) Is the most expensive* current gen console
3) Is the hardest console to develop for
4) Was being used to push Bluray

*the PS3 does work out to be cheaper once you factor in years of XBox Live Gold memberships although most believe XBox online play is much better than the PS3


RE: So basically
By Belard on 7/9/2009 12:42:51 AM , Rating: 2
Er... the PS3 works out to be cheaper also because

- It includes wireless networking ($90~100 add on for the 360)
- HD Media playback (blue ray) - when the Xbox HAD the HD-DVD drive, it was a $200 add-on. So when the $500 PS3 (20GB) came out, it went up againt the $380 360-Pro(20GB HD) then add $200 for HD-DVD & $100 Wireless = $680!

- Hard drive upgrades... Today, the 120GB HD upgrade is $150... on the PS3, ANY standard 2.5" HD works... and a 500GB model can be purchased for $90... or the 250GB drive for $60... Hmmmm.

Because of such pricing, its a better deal to BUY the $400 PS3 (80GB) and buy a 250~500GB HD if its to be used for storing movies.


RE: So basically
By mcturkey on 7/9/2009 1:27:52 AM , Rating: 2
Average Joe walks into a store, and sees a 360 for $199 and a PS3 for $399. Joe walks out with a 360 and a few games. End of story.

Value means lowest cost to play current-gen games to a majority of folks in this world, not whether it's got wireless or Bluray or even a hard drive.

If you're just interested in playing Bluray movies, the PS3 isn't the best option anymore when you can buy a regular BR player for half the cost. It might still be the most technically capable one, but that's not going to sway the majority of people out there.

Ultimately, if Activision spends $10 million to port a game to PS3 and gets $20 million revenue from that version, they will look at it and ask themselves if that $10 million could have returned them more revenue by investing in another IP for 360/PC. If they could get $30 or $40 million out of that same $10 million investment, they'd be fools not to pursue it.

At this point, I'm sure development costs for PS3 aren't that much greater than 360, but if you're going to sell half or a third as many units, is that expense still justified vs. some other investment of money? I'm sure a lot of big development houses are willing to continue netting a smaller return from PS3 development because they have the initial funds to invest in it. But smaller studios don't always have that option.


RE: So basically
By Yeah on 7/9/2009 12:34:12 PM , Rating: 2
quote:
Average Joe walks into a store, and sees a 360 for $199 and a PS3 for $399. Joe walks out with a 360 and a few games. End of story.


Except that is not the end of story, I am guessing that the 360's are bought by parents who do not know any better. Kids get the 360 and say hey mom, dad.. I need another x amount of dollars to play online... In this economy, I bet the parent takes that 360 back.. or I can see why I get on Craigslist looking for games to buy and see most 360's being sold or trade for a ps3. People are selling the console and like 10 games for just the ps3 console. What I would like to see the numbers for are how many people are currently subscribed to each network, how many consoles are connected by each company. NOW THAT would be good info to see which console company is doing better.


RE: So basically
By EasyC on 7/8/2009 12:22:25 PM , Rating: 3
Your supporting facts are rather vague. You say it costs more to produce, let's see some numbers shall we? Being a developer myself, I don't see any logical reason as to why a PS3 game would take twice as much capital to produce than an Xbox 360 game. Graphics are graphics no matter which way you look at them, only difference I see (yes with my own eyes) is the 360 requires graphics compression on some games because they have to fit it on the dinky little dvd. On the back end coding, I'm sure the PS3 uses a completely different instruction set.... so you know how to solve that problem??? Dedicate a PS3 development team of people who know how to use it. The actual code logic between the two systems remains relatively the same (or else you'd have two games behaving differently...).

With the PS3 offering the most features and sitting right behind a system that had a significant jump start, I would hardly consider it a burden on the industry.


RE: So basically
By neothe0ne on 7/8/2009 1:39:08 PM , Rating: 2
You may be a developer, but you don't seem to realize how hard it is to program for the Cell.


RE: So basically
By EasyC on 7/8/2009 10:26:23 PM , Rating: 2
Really, just how difficult is it? There are enough games out now to nullify the learning curve argument.

To me when I learn a language, I can reuse that knowledge over and over. Unless you're telling me the Cell changes its instruction set and development after every use... but then again that would defy logical processing all together and render the system useless.

The other route is that the developers who learn this "so difficult" cell processor just forget everything every time they go to develop a new game....


RE: So basically
By Quinton McLeod on 7/8/2009 3:04:50 PM , Rating: 2
quote:
Your supporting facts are rather vague. You say it costs more to produce, let's see some numbers shall we? Being a developer myself, I don't see any logical reason as to why a PS3 game would take twice as much capital to produce than an Xbox 360 game. Graphics are graphics no matter which way you look at them, only difference I see (yes with my own eyes) is the 360 requires graphics compression on some games because they have to fit it on the dinky little dvd. On the back end coding, I'm sure the PS3 uses a completely different instruction set.... so you know how to solve that problem??? Dedicate a PS3 development team of people who know how to use it. The actual code logic between the two systems remains relatively the same (or else you'd have two games behaving differently...). With the PS3 offering the most features and sitting right behind a system that had a significant jump start, I would hardly consider it a burden on the industry.


You may be a developer, but you must realize that software development companies are a business and not a charity. Just because you believe the PS3 is a better system, doesn't mean a company should ignore the fact that it's not making a profit from it.


RE: So basically
By EasyC on 7/8/2009 10:23:29 PM , Rating: 2
Who said they aren't making ANY money off of it? My point is the difference in cost is probably marginal compared to the profit they receive. Both systems sell new software at the 60$ price point to start with. Just saying "you're wrong" doesn't explain why.


RE: So basically
By Samus on 7/8/2009 5:11:32 PM , Rating: 5
BUT IT HAS TEH BLU RAY!


RE: So basically
By theflux on 7/8/2009 12:35:04 PM , Rating: 3
"2-3 times more in development"

You really shouldn't make up numbers based on your bias. The majority of game costs these days are content related, which is the same for both platforms. Second to that is game systems which are largely platform independent. Most game companies are already using some kind of middleware like havoc for physics or Unreal for their engine, and these are all multiplatform.

The CEO's statement is related to the additional money that people will have to buy his games, not the cost of his development.


RE: So basically
By jay0110 on 7/8/2009 10:37:37 AM , Rating: 2
Not only that, but how is Sony's strategy any different than Activision's game sales strategy ?

Activision charges $59 for every new game that hits the market for so long until they can't milk any more cash from it ... then they reduce the price 10 bucks and wait it out ...

It's all about maximizing profits, and not surprisingly, both companies are doing just that.


RE: So basically
By Hiawa23 on 7/8/2009 10:59:24 AM , Rating: 1
Stringer replied, "I [would] lose money on every PlayStation I make [if prices were cut made] -- how's that for logic."

That says it all. I already own a PS3 so I don't care if they lower it or not. Someone said they shouldn't have to reduce the price. Well, that's all fine & dandy but they better come up with something cause any console with the Playstation name should not be bringing up 3rd place in console sales & software attach rates. He said it all in his response. Like many companies, Sony's divisions most of them are getting hammered in this economy, but they need something to get the masses on board.


misquote?
By STILTO on 7/8/2009 11:22:47 AM , Rating: 5
"I [would] lose money on every PlayStation I make [if prices were cut made] -- how's that for logic."

Don't they already lose money on every one?

His original quote made more sense.

"I lose money on every PlayStation I make, how's that for logic."

who adds this stuff in?




RE: misquote?
By Hawkido on 7/8/2009 1:37:26 PM , Rating: 2
I believe that he was asked off the record if he was loosing money on each PS3, and he clarified the statement. But since it wasn't his original statement they had to [sic] it in.


RE: misquote?
By karndog on 7/9/2009 11:15:08 AM , Rating: 2
quote:
"I [would] lose money on every PlayStation I make [if prices were cut made]


Ooooo, he card read good


Hm...
By amanojaku on 7/8/2009 10:50:33 AM , Rating: 2
I think Sony should be a little more clear on the long-term strategy of the PS3. If this thing is being replaced in 4-5 years then I can understand the need to keep the price high per unit. On the other hand, if the PS3 is being replaced in 10 years then it makes sense to drop the price now to recoup it later in game licensing fees. I would guess that for every console sold a person buys 10-20 games and rents 50-100 over its lifetime; that's got to be more lucrative than the profits on the console.

I see the PS3 as being around for 10 years or so. The display technology won't be changing soon thanks to the HDTV switch and wide install base of HD sets; the PS3 satisfies the display requirement. As for processing power I think it's safe to say the PS3 has that in spades and won't be needing an upgrade anytime soon. It has media capabilities and can be software updated, so it's got a lot of functionality. All in all, the PS3 doesn't need a successor any time soon, so just drop the price, increase the sales, and sell/rent more games!

I think the Wii should be the first console to get an upgrade (2-3 years considering the low price) and the Xbox is probably fine for 5-6 years (the PS3's hardware has a slight edge, if I'm not mistaken.)




RE: Hm...
By encryptkeeper on 7/8/2009 11:53:56 AM , Rating: 2
If this thing is being replaced in 4-5 years then I can understand the need to keep the price high per unit. On the other hand, if the PS3 is being replaced in 10 years then it makes sense to drop the price now to recoup it later in game licensing fees.

And the other reason for a ten year lifespan? Development cycles are getting out of control. FF13 has been in development for what, 4 or 5 years now? IF it's released in the spring of 2010 that'll make it a 5 of 6 year project, even though I believe it'll be pushed back to a holiday release slot.


I don't understand Activision position
By inigoml on 7/9/2009 6:07:44 AM , Rating: 2
Everybody know Xbox 360 is easily hacked. So, although installed base is larger, games sold are not.
PS3, however, remains unhacked. So, although base is slower and many people use PS3 as media center, total games sold should be higher that 360.
So, I understand Sony position. If you sold more games with my system, what do you complaint about?




By Tom mc3s on 7/13/2009 5:01:10 AM , Rating: 2
The last I've seen, though, the PS3 was well behind the 360 in attach rates. They aren't selling as many games as their closest competitor.

The 360 is NOT easily hacked. You need to flash custom firmware onto the optical drive to play pirated games and this can result in your system being bricked if you log onto X-Box Live. Certainly Sony has done a better job keeping their system free of piracy but one need only look back to the attach rates to see that piracy is having little to no effect on 360 software sales.

Back to the original subject: Sony bet the farm with the PS3 and its going to take years yet before we see if it pays off. There seems to be somewhat of a general consensus that they need to do something and soon. I think it can still be very successful still, its no lost cause, but I have to agree with a price cut or at least bundling a few games.


Misleading editing
By 91TTZ on 7/8/2009 5:19:33 PM , Rating: 2
Read this passage:

quote:
Stinger was also asked about the logic of not cutting prices on the PS3 console. Stringer replied, "I [would] lose money on every PlayStation I make [if prices were cut made] -- how's that for logic."


The words in brackets were put there by the writer. Stinger (whose name is actually Howard Stringer) actually said, "I lose money on every PlayStation I make - how's that for logic?"

The editor shouldn't have added his opinion to Stringer's sentence. It has long been reported that the PS3 is sold at a loss, so his original quote of "I lose money on every PlayStation I make..." would make sense. From everything I've heard, it wouldn't take a price cut on the PS3 to lose Sony money on every unit sold since it was already sold at a loss.




Change the mgmt
By BoromarlSlight on 7/8/2009 10:34:35 PM , Rating: 2
Sony's problems can be traced directly back to when they adopted the US style of management.

When they operated as a traditional Japanese company their products were good enough to sell themselves at a premium price.

Then they started with their proprietary standards and showing contempt for their customers with their root kit crap.

They need to stop pandering to shareholders and innovate their way back to the top.




Sony = Stupid?
By akugami on 7/9/2009 12:43:55 AM , Rating: 2
Is it really all that wise to tick off the people you depend on to help your product succeed? Instead of sitting down and getting a productive meeting going with a large group of publishers and perhaps explaining to them why you can't drop your price just yet, you publicly go and insult them. Considering the fact that you need their products to help your product succeed, that doesn't seem like a smart move.

If publishers delay games on your system by just two weeks that could be devastating. The PS3 is not so much better (at least from an easily accessible power standpoint) that the Xbox 360 version are really inferior. If you tick off a lot of publishers and they make a concerted effort to release games for Sony's console a couple of weeks later, this would really put a damper on Sony sales. The Xbox 360 would get more sales being out earlier. They could also put little extras into the Xbox version.

I understand why Sony can't drop the price yet. They need the cheaper costing Slim PS3 and if they drop prices too fast, they would just dig that much deeper of a financial hole. I understand that. Publishers understand that. Sony understands that. Publishers don't really care about your problems. They want to make money. Consumers don't really care about your problems. They want to spend less money. Sony dug this hole themselves. They need to balance the cost of the PS3 vs the retail price. But no one gives a crap. They are only looking out for #1.

Back when Sony was king of the hill, it didn't matter if they had "foot in mouth" disease. However, Sony is in second place at best and their competitors are for the large part on equal or better footing. They can't afford to tick anyone off or they will find themselves in 3rd place quite easily. Just look at Nintendo who once was the top console manufacturer. Nintendo may be on top again now, but they were on a downward spiral ever since the Super NES because of their arrogance.




"The whole principle [of censorship] is wrong. It's like demanding that grown men live on skim milk because the baby can't have steak." -- Robert Heinlein

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