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.

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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.

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