Thursday, November 29, 2007

Activision Chief Exec Calls for $199 Video Game Consoles

Chief executive of Activision, a large game publishing company, said at a media summit on Tuesday that Microsoft Corp. and Sony need to aggressively reduce pricing of their latest game consoles to $199 if they want to find the gaming machines truly popular on the market.

Both Microsoft Corp. and Sony Computer Entertainment Inc. have invested quite a lot into the advanced hardware inside Xbox 360 and PlayStation 3, but Nintendo Wii, who has the least advanced technology under the hood sometimes manages to outsell Microsoft Xbox 360 and Sony PlayStation 3 combined easily, which distracts games developers from the platforms and cause people to bye Wii due to higher popularity overall and due to higher amount of games available.

“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. 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,” said Bobby Kotick, chief exec of Activision, at the Reuters Media Summit in New York, the news-agency reports.

Currently Microsoft Xbox 360 is available for $279, $349 or $449 depending on the version; Nintendo sells its Wii, which is the most successful new-generation game console, in the U.S. for $249; whereas different models of Sony’s PlayStation 3 cost end-users $399 or $499.

Game publishers are interested in affordable game consoles, as more people buy such hardware and then start to get new video games as well. On the other hand, technically-advanced and rather expensive game machines, such as PlayStation 3 and Xbox 360 are acquired by so-called hardcore gamers, who buy massive amounts of software too.

So far both Microsoft and Sony have been relatively reluctant to slash pricing of Xbox 360 and PlayStation 3 since both lost plenty of money on the latest consoles. It is believed that while Microsoft is not losing money on each Xbox 360 sold, Sony is more than likely to subsidize manufacturing of every unit by a substantial sum.

In case of the prior generation game consoles Microsoft had to slash the price of its Xbox from $299 to $199 half a year after the launch due to slow sales in mid-2002, whereas Sony only reduced the cost of PlayStation 2 from $299 to $199 about 1.5 years after the introduction in the U.S. Nintendo GameCube was released with $199 price-tag in November, 2001, and faced $50 price-cut in May, 2002.

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