Kotick Brands Budget Pricing 'Irresponsible'

Activision CEO Bobby Kotick has revealed a number of interesting details concerning the company’s plans for the next generation and the new portable formats. Speaking at the Barney Citigroup Entertainment, Media & Telecommunications Conference, his most outspoken comments concerned the pricing of games. He branded Take-Two’s budget-priced ESPN sports titles as “irresponsible” and “disruptive”. Although highly successful for Take-Two and developer Sega, Kotick commented that “we find [the budget pricing] entirely unnecessary, and I think that as you move towards more exclusive content, you will be able to eliminate that as an issue.” When discussing the PSP and Nintendo DS, he noted that the DS had a 25 percent operating margin (the same as home consoles and 7 percent more than the Game Boy Advance), and that plans to sell PSP titles at $10 more would give it potentially the highest operating margin of any format. He also predicted $10 price rises for PlayStation 3 and Xbox 2 titles, something that has not been commented on by other companies as yet. Kotick was also bullish about the future prospect for Activision in general, noting that when EA was a $1 billion revenue company – a milestone which Activision has recently also reached – it had a 9 percent operating margin, whereas Activision currently has a 12 percent margin. Finally, he commented on the disparity between television and games advertising, with $8.5 billion being spent on television advertising and only $20 million on advertising within games – despite both medium have identically sized audiences of 8 to 34 males. As a result, Kotick spoke again of plans to create an advertising rate card that can be verified by Nielson and thereby encourage greater investment from advertising.