Activision Wants Sony to Slash the PlayStation 3's Price Too

Activision CEO Bobby Kotick has said he's "concerned" about Sony's PlayStation 3, reports Times Online in an article that reveals the multi-billions game publishing giant is reevaluating its future support for the platform. According to Kotick, the PS3 is losing momentum, it's more expensive to develop for, the Wii and the Xbox 360 are selling better, and "games generate a better return on invested capital on the Xbox than on the PlayStation."

Consequently--if Sony won't cut the system's price--Kotick warns that Activision may have no choice but to "stop supporting" the PlayStation 3. "When we look at 2010 and 2011, we might want to consider if we support the console--and the PSP too," said Kotick, appending Sony's handheld to the exhortation.

But is the PS3 really losing momentum? It depends, as usual, on where you're standing. Since the system launched in late 2006, it's clearly been growing in year over year unit sales. In 2008--the system's best year yet--Sony sold over 10 million PS3s worldwide. And while sales have been down for all contenders recently, Sony's sold nearly as many PS3s worldwide as Microsoft has Xbox 360s so far this year. Of course Microsoft still has more than a third as many Xbox 360s in the wild, but since 2008, Sony's slowly (very slowly) been gaining.

So yes, the PlayStation 3 has lost momentum, but that's just to say so have the Xbox 360 and Nintendo Wii. The only system managing to steer around the recession's gravity well so far has been the Nintendo DS.

That said, Sony's clearly in a pinch. Its game division lost nearly $600 million in 2008, the PS3 consistently lags in NPD's US sales reports, and the system charts the fewest high sales software titles month after month.

If Sony lowers the PS3's price, we've been assuming they'll lose even more money. But if they keep it sky-high, they theoretically stifle sales and by virtue thereof, their growth rate, frustrating publishers, who naturally want to sell to as many customers as possible.

I'm speculating, by the way, that when Kotick says the PS3 is "losing a bit of momentum," he's actually projecting near-future sales, which--if Sony maintains its current $400 price point--could start exhibiting much more serious lag. If the US economy really won't be "healthy" again until late 2010 or even 2011, and digital entertainment sales are in fact truly declining, it stands to reason consumers will probably shop even more frugally during the next two quarters.

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