Activision CEO forecasts drop in game console prices

Kotick says move is necessary to reach mass audience

By Ned Randolph -- Video Business, 11/28/2007

NOV. 28 | A day after raising forward guidance on the success of Guitar Hero III: Legends of Rock and Call of Duty 4, Activision CEO and chairman Robert Kotick said videogame console makers will have to lower prices to reach a mass audience, which he expects will happen in the next couple of years.

Among next-generation consoles, Nintendo’s Wii is the cheapest, averaging about $250, which is much less than Microsoft's Xbox 360 and Sony’s PlayStation 3.

The latter two each double as high-definition DVD players.

"The Wii is at a very attractive price point today," Kotick said during a TV interview with Reuters.

"With PlayStation, you get a Blu-ray DVD player for high-definition in addition to the play system, and with Xbox you get all those online capabilities, so they're all differentiated quite well," he said. "But I think next year, they could benefit greatly from price reductions. And I think you're likely to see them in the next couple of years, and it will certainly broaden the audiences."

Activision on Tuesday raised its guidance for the upcoming fiscal quarter and for 2008, which boosted its shares by more than 14%.

Kotick said Wednesday that the current economic downturn is not expected to dampen game sales this holiday season. On a per hour basis, videogames offer better dollar value than other forms of entertainment, he said, citing theatrical movies, DVDs and music.

"We're seeing a shift in audience participation from other activities to our own," he said.