So, Activision have threatened to pull support from the PlayStation 3. But what did they really mean?
It's pretty clear what Activision CEO Bobby Kotick said in an interview with the UK's Times newspaper:
“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.
“They have to cut the price, because if they don’t, the attach rates are likely to slow. If we are being realistic, we might have to stop supporting Sony… When we look at 2010 and 2011, we might want to consider if we support the console - and the PSP [portable]too."
Kotick wants a PS3 price cut. And he's threatening to pick up his ball - the largest ball in the industry - and go home unless he gets it.
Activision sells most of its games in the United States and in Europe. Western-focused games like Call of Duty and Guitar Hero sell best on Xbox 360 and Wii, respectively, in those territories. Activision doesn't sell a lot of games in Japan. Sony is languishing in third place in the two territories in which Activision does the vast majority of its business.
So why does Kotick care? If the PS3 has lost momentum and the world's biggest third-party publisher is getting a better return on the other two platforms, why does Kotick want a price cut?
Why doesn't he just do what so many third-party publishers did to the Gamecube last generation and simply walk away?
The PS2 was ideal for third-party publishers. It was the clear winner last generation and it made things easy. You made your game for PS2 and then ported it elsewhere. You made all your sales on PS2. In effect, it was the only platform you had to worry about.
Thing is, Kotick knows that there are still tens upon tens of millions of PS2 owners out there who have yet to upgrade to the current console generation. And these PS2 owners are brand loyal to Sony. When they do upgrade, they'll want a new PlayStation.
Right now, these PS2 owners see the PS3 price tag and say "Hey, I can wait". They don't care about the value of the system - about Blu-ray or wi-fi or free online play - they just see that price tag sitting at two or three times what they paid for their PS2.
Sony responded to Kotick's bold statements with some PR fluff:
“PlayStation has tremendous momentum coming out of E3, and we are seeing positive growth with more than 350 titles slated to hit across all our platforms, including many anticipated games from our publishing partners. We enjoy healthy business relationships with and greatly value our publishing partners and are working closely with them to deliver the best entertainment experience.”
But you can bet that they're worried.
But you can bet Microsoft was also given pause for thought. Kotick clearly doesn't think the Xbox 360 is going to be this generation's PS2. After all, if he did, why would he care about the fate of the PS3?
And there's also doubt over whether the Wii will be this generation's PS2. Even the world's biggest third-party publisher still struggles to sell games that aren't Guitar Hero on Nintendo's console.
Activision has made an aggressive move. It'll be interesting to see if Sony - or even Microsoft - can respond in kind.
What do you think will happen? What price do you think the PS3 needs to hit in order to start competing with the Wii and Xbox 360?