Activision: Consoles need to be sub-$200 by '09

Publisher's CEO Bobby Kotick believes Xbox 360, PS3, and Wii are in for significant price cuts in next 24 months.

Unit sales and price point seem to have a direct correlation in this generation's console race. After cutting the price of its 80GB PlayStation 3 to $499 and introducing a 40GB model at $399 in November, Sony experienced a significant uptick in sales of its high-tech hardware. Nintendo's $249 Wii, which has been the cheapest of the three consoles since debuting last November, has been experiencing continuously robust sales, despite featuring less technically proficient hardware.

According to Activision CEO Bobby Kotick, the price of all three current-generation consoles will fall below $199 in the next two years if console manufacturers want to continue pursuing mass-market appeal. "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 Kotick at this week's Reuters Media Summit in New York.

The original Xbox dropped to the sub-$200 range six months after debuting at $299 in November 2001. The PlayStation 2, which also retailed for $299 when it launched in 2000, fell below $200 in May 2002, and subsequently has sold more than 120 million units as of its seventh anniversary in October. Nintendo's ill-fated last-generation console, the GameCube, was originally listed at $199 when it first went on sale in November 2001, though that price was cut to $150 by May 2002.

One of the largest multiplatform publishers, Activision is currently riding high off of recent critical and sales darlings Guitar Hero III: Legends of Rock and Call of Duty 4: Modern Warfare. Yesterday, the publisher revised its earnings forecast upward, projecting a company-best $1.2 billion in revenues for the third quarter alone and $2.3 billion for the full fiscal year, which ends March 31, 2008.

200 Comments

  • nemes1s3000

    Posted Dec 1, 2007 10:05 pm PT

    But impulse buying may sometimes do more bad than good.

  • aaronball

    Posted Dec 1, 2007 9:31 pm PT

    Sony's been around since before 1965, You can see their gadgets being used in Godzilla movies of that time. I don't think it would hurt too much if sony cut the price $50-$100. You have to factor the stock market, I think their earnings would increase if they drop the price.

    Say a convience store cut the price of a sandwich from 3.79 to 2.99 they would sell more wouldn't they, that's impulse buying to the consumers.

  • hattorihanzo32

    Posted Nov 30, 2007 7:45 pm PT

    I hardly doubt that sony and ms consoles will drop to under $200 because the cost of production is just too high for them. Sony shot itself in the foot when they made the ps3 so expensive they obviously thought because the ps2 did so well that gamers will automatically buy there next system. This is of course does not happen because gamers are a very objective market look nintendo owned the industry in the early 80's and 90's and looked what happenend to them with the gamecube

  • BarkLikeADog

    Posted Nov 30, 2007 10:22 am PT

    Lolactivision.

  • hbxclo

    Posted Nov 30, 2007 12:33 am PT

    bardkieran,

    Given the high cost of switching to a new system, there has to be a justifiable improvement in the experience in order for consumers to bite the bullet and buy new hardware. I think system developers will always try to incorporate the most advanced technologies available into their latest systems, and given that the latest technologies will always be extremely expensive when first utilized, the production costs will likely be very high for the next generation as well.

    There certainly has to be a balance between the cost of producing a unit, the price consumers are willing to pay for it, and the price the unit is actually sold. Sony made the mistake of underestimating the price sensitivity of buyers. The technology use in the PS3 weighed very heavily on production costs. That in turn drove the retail cost of the system to a point where buyers weren't willing to pay for it....especially when the 360 offers comparable technology and more games for a lower entry level price. This is why Sony is where they are right now, even given superior technology.

    Nintendo very cleverly created a new type of gaming experience using less expensive hardware, but they've gone and segmented their own piece of the gaming market and left MS and Sony to compete against one another (pretty successfully too). As successful as Nintendo's marketing strategy is, however, they've positioned themselves away from the traditional gamer....and traditional gamers are the most prominent pushers of software.

    You can bet that Nintendo, MS and Sony are already evaluating how consumers have reacted to this generation of systems and are already planning where to position themselves for the next-gen. It'll be interesting to see how the process all of this and position themselves next-gen. We've learned a lot about the behavior of consumers in the gaming industry this round. I for one think they all tried too hard to segment the market...but thats the nature of a competitive industry.

  • -Squirrel-

    Posted Nov 29, 2007 9:54 pm PT

    I'd like Activision CEO Bobby Kotick to be right but I'm doubting it. Microsoft won't lower any system below $200 because their gaming devision already took a huge hit with extending warranties and they just finally hit the black with the release of Halo.

    Nintendo won't go below $200 because they don't need to, and probably won't for while yet. And Sony won't drop below $200 because a $600 - $700 deficit for every console would almost kill them.

    If anyone dropped below $200 it would be Nintendo, but thats only cuz they could financially with no real negative consequences. So Nintendo might if they Wii's demand finally goes down ever.

  • Junior_AIN

    Posted Nov 29, 2007 8:50 pm PT

    I hope the price drops soon, one just can't live with only the Wii, too much crappy titles....

  • DiscGuru101

    Posted Nov 29, 2007 8:16 pm PT

    Here here.

  • Ospov

    Posted Nov 29, 2007 7:45 pm PT

    playwithfire17

    the wii is definately not overdue for a price drop. there's a shortage and it's ovbiously not meeting demand (hince the shortage). once the demand starts going down the price will go down to get more sales.

  • Agreb91

    Posted Nov 29, 2007 5:40 pm PT

    Yeah righ. In two years have all the consoles below $200?

  • Simba_Dude

    Posted Nov 29, 2007 5:03 pm PT

    And in other news the sun is bright.

  • playwithfire17

    Posted Nov 29, 2007 3:06 pm PT

    Why does this even deserve to be posted in the news section? Someone says the consoles will have price cuts in the next 2 years? Obviously. It's been one year for PS3, multiple drops. 360 has already dropped. Wii is overdue for a drop.

    This just in, same moron predicts lower price would increase sales? WOW. Astounding. Absolutely amazing. This guy must have half a dozen PhD's, he is simply incredible. I am in awe of his robust brainpower...................

  • blazer215

    Posted Nov 29, 2007 2:12 pm PT

    PS3 can't go any lower than it already is its so expensive to make they will lose money!

  • Merl57

    Posted Nov 29, 2007 1:25 pm PT

    Just watch the Next Gen gaps of hardware be annually, that is when the companies are going to exploit gamers for all they are worth, Honestly who's going to have the money everything is just too damn expensive

  • snakes2solid

    Posted Nov 29, 2007 1:09 pm PT

    consoles need to launce at 299 or less...that's the magic #!!... forget about years after... if they launched at a more reasonable price...the ps3 would be leader right now..... the Wii is cheaper cause it's not packing a graphical punch...it's cheaper to make... it's innovative but the graphics are horrid for a so called " next gen system".

  • razu_gamer

    Posted Nov 29, 2007 12:44 pm PT

    too bad the same thing cannot be said for PC hardware.

  • BoobyUnger posted Nov 29, 2007 12:32 pm PT (does not meet display criteria. login to show)

    BoobyUnger

    Posted Nov 29, 2007 12:32 pm PT (hide)

    wiis the cheapest because it has no new hardware, i dont even see the point of buying one when you could make one for cheaper. XD

  • muffinduck01

    Posted Nov 29, 2007 12:30 pm PT

    i would like to see a lowering of the games prices not the consoles but still....when are systems crap out in the next 3 years we can replace them cheaply

  • Loucetios

    Posted Nov 29, 2007 12:20 pm PT

    SamGriebs

    who needs XBL when i will have home and maybe make actual friends rather than just the guy that killed you the most to be your friend and final fantasy is one of the best selling/best reviewed franchises of all time. Is there a decent RPG made recently that isn't a little based off of the FFVII formula? and i enjoyed bioshock on my PC and will enjoy gears 2 , fanble 2 and mass effect on my pc (past history of the companies say they will go to pc) and i personally don't care for rumble but hey have fun screaming at ppl over XBL, i can only imagine how you would sound if we were in person

  • dcmdream

    Posted Nov 29, 2007 12:12 pm PT

    What is SamGriebs problem?
    calm down there kid

  • lanista

    Posted Nov 29, 2007 12:11 pm PT

    "Ok, that's great to lower the prices of the consoles, but I already have mine. Why don't they lower the prices of their damn games!"

    If they don't make their profit on the hardware - by selling it at a loss - then they have to make it somewhere. The games is where they'll do that...

    Plus we're told next-gen games cost more to develop, so costs as well as profits are at stake here

    Anyway, if it's a $200 sweet spot that consoles need to hit to start selling real fast

    Wii is at $250, then a comparable X360 is today at $280 on Amazon

    then at $400 PS3 has quite a way to go......

  • ski11buzz

    Posted Nov 29, 2007 12:07 pm PT

    @ samGriebs

    If PSN is so bad then why is it that i can play 40/32 players in my games completely lag free? honestly i dont get what is sooo godly about xbox live...the get the exact same experience on all of ps3's games that have good online (warhawk, resistance, etc.) if you like having pre-pubescent children screaming recial slurs into your ear, then by all means...keep on bragging

  • kevin82485

    Posted Nov 29, 2007 11:42 am PT

    Ok, that's great to lower the prices of the consoles, but I already have mine. Why don't they lower the prices of their damn games!

  • dcmdream

    Posted Nov 29, 2007 11:42 am PT

    This just in......According to the Sony CEO, the price of all Activision games will fall below $9.99 in the next two years if the game developer wants to continue pursuing mass-market appeal.

  • SamGriebs posted Nov 29, 2007 11:35 am PT (does not meet display criteria. login to show)

    SamGriebs

    Posted Nov 29, 2007 11:35 am PT (hide)

    Just to add:

    PSN sucks a fat chode and will never be on a comptetitive level with XBL

  • PhilElsen

    Posted Nov 29, 2007 11:21 am PT

    by then PC will be better again. BUT o well

  • RaiKageRyu

    Posted Nov 29, 2007 11:13 am PT

    Yes, lower the darn prices please!

  • Sonicplys

    Posted Nov 29, 2007 11:09 am PT

    The only things that will make me buy a 360 and PS3 are Ninja Gaiden II, Metal Gear Solid 4, and a price cut to $200. But I just dont see it happening so I will just stay with the Wii and play awesome titles like Super Smash Bros Brawl and Mario Galaxy.

  • Cwagmire21

    Posted Nov 29, 2007 11:07 am PT

    I doubt ti would drop that low and if it were its only cuz the next gen would be released - which is further off then that, I hope

  • rbop

    Posted Nov 29, 2007 11:05 am PT

    In two years today's technology will be ordinary, so a $200 price-point is not absurd.

  • Space-Q

    Posted Nov 29, 2007 10:35 am PT

    just to add:

    the ps2 and psp are still selling. yeah sony definitely isn't going to make it.

  • Space-Q

    Posted Nov 29, 2007 10:32 am PT

    "I don't think Sony is going to make it."

    once all the big franchises start rolling in...that's only gonna help. it's not like when GTA4, MGS4, FFXIII, GT5, GoW3, resistance 2, and any new exclusives come out people are gonna say, "oh, forget it now, I'm definitely not buying a ps3 now!"

    you gotta think they've sold like 6 or 7 million WITHOUT a giant abundance of great games.

  • Redsyrup

    Posted Nov 29, 2007 10:30 am PT

    Only the console makers are against sub 200 dollar consoles. EA's man is really saying he needs to sell more software to recoup development cost. My advice to EA is to improve their software quality not quantity.

  • dr_jashugan

    Posted Nov 29, 2007 10:29 am PT

    Sub-US$200? Seeing is Believing.

  • Psycotico

    Posted Nov 29, 2007 10:21 am PT

    This is coming from the man who 14 days before the release of Guitar Hero III decided to jump the price of the bundles. Hey buddy, there's a reason Microsoft, Sony, and Nintendo don't have you on their business
    panels and you just reminded them of why.

  • dj_b02us

    Posted Nov 29, 2007 10:10 am PT

    as much as id like that price point, its ridiculous to expect the inflated cost of development and production to drop enough where 200 a console is feasible. and what does he mean "need". if they dont then what? The Guitar Hero 3 bundle NEEDS to be only 50 bucks total. How bout that bigmouth.

  • jdc6305

    Posted Nov 29, 2007 10:09 am PT

    Price cuts price cuts cool then I'll buy.

  • Judonwanit

    Posted Nov 29, 2007 10:08 am PT

    if a 200 dollar ps3 comes out it will be stripped of everything, you will only be able to play games...nothing else.

  • sturshel

    Posted Nov 29, 2007 9:59 am PT

    amazing! imagine the saving, the fun, and it would be good for gamers the world over

  • thekey

    Posted Nov 29, 2007 9:37 am PT

    I'll tell you all out there what if the PS3 and or 360 were $200 or less the Wii would rust in peace!

  • SemiMaster

    Posted Nov 29, 2007 9:08 am PT

    I can see the Wii and maybe the Core/Arcade 360 at sub 200$, but I doubt the PS3 in any form will be.

  • fntsycloud

    Posted Nov 29, 2007 9:07 am PT

    Yeah that would be cool to have a next gen console for that much, but Kotick clearly has no f*cking clue what he's talking about. The Wii will be below 200 by then, but yeah RIGHT on the 360 and PS3. The equipment that goes into these things is not going to get that cheap in only another two years, it's just not. Money really has driven the Activision CEO crazy if he really believes this load.

  • Kfoss

    Posted Nov 29, 2007 8:49 am PT

    sub 200 on an Xelite...
    im sold..

  • bardkieran

    Posted Nov 29, 2007 8:26 am PT

    @hbxclo - Good points on all fronts. Finding ways to slim things down is pretty normal, especially as time goes on, the price on the hardware needed to make a console drops, thus the costs of development of the unit drops, increasing the profit. I forgot to take that into account. It does make for an interesting point, that the technology will be cheaper in due time. I am curious if it will reach a point where the NEXT generation will allow for equivalent cost ratios to now, but with better technology, such as a Wii 2 with the processing power of XB360/PS3, but at the same perspective cost as it is to build a Wii, for example.

  • MrSickVisionz

    Posted Nov 29, 2007 7:56 am PT

    I can't imagine anyone dropping down to below $200 anytime soon. Nintendo doesn't need to unless someone else does it first. Sony... I don't think they can afford to take anymore of a loss on each sold. Dropping to under would $200 would probably eliminate any profit MS makes on the systems now.

    Well, maybe Sony could. They just got like $500M from that Duba fund or something like that. MS could do it... I guess everyone could, but I don't know why they would. It not like sales are down for the year.

  • Dualmask

    Posted Nov 29, 2007 7:51 am PT

    I think I'd faint if I saw PS3's in a store retailing for $200. I'd probably skip out on a utility bill just to buy it that low. You can't even get a Blu-Ray player ALONE for anywhere near that.

  • hbxclo

    Posted Nov 29, 2007 7:38 am PT

    bardkieran,


    Behind the scenes, this is where production efficiencies come into play. The more able MS, SONY, and Nintendo are able to find methods of producing these systems cheaply, the room they have to compete on a price standpoint. Given that the 360 has been out for longer, is already breaking a profit, and isn't stuck with a blu-ray drive, MS probably has more room to cut prices and compete on price. However Sony is a n electronics powerhouse, and I'm not doubting their ability to find methods of producing PS3's for much cheaper. It'll be interesting to see how this plays out. But if lower prices do continue to push system sales, and Sony and Microsoft keep fighting for more marketshare, we can expect some violent price-warring. If this is the case, we may see 200 dollar price point for all three systems.

  • sieg6529

    Posted Nov 29, 2007 7:37 am PT

    If you really want to move product, drop the price on the games.

advertisement

Hot Stories

Newsmakers

Featured Stories

Tags

09   activision   bobby kotick   consoles   ps3   wii   xbox 360

Submit News

Got tips? Send them in!