Bobby Kotick and a partner bought the once-struggling Activision for $440,000 in 1991, at a time when it was losing $30 million on $10 million in revenues. Now the world's biggest independent computer games company, it has a market value of $16 billion (£10 billion) and operating profits of $179 million in the first quarter on sales of $981 million.
Activision overtook Electronic Arts last July when it was in effect taken over by Vivendi of France in a deal where Vivendi injected World of Warcraft into the company for a 56 per cent stake. With such success, Mr Kotick, who runs the business from Beverly Hills, can probably get away with saying anything, which, soon enough, he does.
The target is Sony, the once-dominant hardware maker. “I'm getting concerned about Sony; the PlayStation 3 is losing a bit of momentum and they don't make it easy for me to support the platform. It's expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation,” he says.
It is not a very subtle hint, although Mr Kotick says his company paid $500 million to Sony in royalties and other goods last year, which “probably still worked out at 400 per cent of the profit they made”. Actually, Sony's games division lost $597 million last year, and Mr Kotick seems to think it may have to risk more losses if the £299.99 PlayStation 3 is to develop.
“They have to cut the price, because if they don't, the attach rates [the number of games each console owner buys] are likely to slow. If we are being realistic, we might have to stop supporting Sony.” Ask when and he says: “When we look at 2010 and 2011, we might want to consider if we support the console — and the PSP [portable] too.” Sounds like Sir Howard Stringer, Sony's chief executive, is going to have to call Mr Kotick pretty fast.
Read the rest here.
This may be a good thing for Sony if they will play their cards correctly. However, Sony messed quite badly with the Blu-Ray platform, even while playing alone in that area for a year now. Then they messed with the internet and their fans because of the supposedly music and movies piracy. Now, they mess with the PS3 developers. Way to go Sony.
/cheer @ Sony
No matter how many bad things I can say about Micro$oft and its business, at least they seem to go VERY aggressively into the gaming markets. Sony please do take notes from M$ ;)
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