Summit News

Activision CEO sees $199 game consoles

NEW YORK (Reuters) - Activision Inc ATVI.O Chief Executive Bobby Kotick said on Tuesday that prices on Sony Corp's 6758.TSNE.N PlayStation 3 and Microsoft Corp's MSFT.O Xbox 360 video game consoles must fall to $199 in the next two years to reach mass-market appeal.

Kotick said the PlayStation 3, whose lowest-priced model costs $400, was a good product, but that Nintendo Co Ltd's 7974.OS wildly popular Wii was leading the way with its $250 price tag. The cheapest Xbox 360 is $280.

“The Wii at its price point is now setting a standard and an expectation, and people say, well, the Wii is less complex technically. I don’t think that really matters as much to the consumer,” Kotick told the Reuters Media Summit in New York.

The key price point for mass adoption was $199, he added.

“In the next 24 months they all will need to be at that $199 price point, and you can imagine Nintendo will be down to the $129 price point over the next few years,” he said.

Activision and other game publishers want console prices to fall since it typically leads to higher sales of those machines and gives them a larger base of potential game buyers.

Faced with lackluster PS3 sales in the year since its launch, Sony has cut the price and tweaked features in a bid to attract more consumers.

Robert Kotick, chairman of the Board, and CEO of Activision Inc., speaks at the Reuters Media Summit in New York, November 27, 2007. REUTERS/Brendan McDermid

Nintendo, meanwhile, has been selling all the Wiis it can make due to its lower price, innovative motion controls and easy-to-learn games, all of which have drawn older and female buyers outside the industry’s core of young males.

The Wii's runaway success has caused many video game publishers, such as industry leader Electronic Arts Inc ERTS.O and Take-Two Interactive Software Inc TTWO.O, to shift resources to creating games for the device.

But Wii game sales are dominated by titles made by Nintendo itself, prompting Activision to take a more cautious approach.

“We realized that, much like Nintendo, the pathway for success and the highest operating margin leverage on the Wii is a relatively small number of titles that really capitalize on capabilities of the hardware,” Kotick said.

“Some of our competitors are doing a lot more talking about how they’re organized than innovating for the Wii and if (publishers) are going to be successful they are going to have to step up to the level of innovation that Nintendo has proven themselves capable of,” he said.

Earlier on Tuesday, Activision raised its quarterly and fiscal-year profit and revenue forecasts, citing stronger-than-expected sales of its hit “Guitar Hero 3” and “Call of Duty 4” video games.

“Guitar Hero” may give Activision a way to crack markets in Asia, where games are mainly Web-based ones played on computers rather than on home consoles as in the United States, Kotick said.

“We’ve never really had any content that would appeal to the Chinese consumer, to the Korean consumer, and this is a kind of content that lends itself very well to commercialization online,” he said.

“It’s a natural thing to add as a different type of social experience within those environments so I think that’s something you can envision us doing over time,” Kotick said.

(Clickhere to see Reuters MediaFile blog)

Additional reporting by Gina Keating; Editing by Braden Reddall