Activision Blizzard CEO Bobby Kotick.

JUNE 19, 2009 • Activision Blizzard chief executive Bobby Kotick took Sony Computer Entertainment to task for not reducing the price of the PS3. “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,” Kotick told The Times in the U.K. “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.” Sony Corp. CEO Howard Stringer responded via Bloomberg News on July 8: “He certainly likes to make a lot of noise. I lose money on every PlayStation I make.”

Impact: When looking at the overall picture, Kotick’s statement seems less a threat than a tactic to start an argument inside Sony as to why the price of the PS3 needs to be lowered.  In the bigger picture scheme of things it indicates how the traditional console model is broken.  Companies like Activision Blizzard have relied on the hardware manufacturers to spend billions to subsidize development of the marketplace into which they sell their products.  However, for Sony and Microsoft this business model no longer works as they sell their hardware at a loss and do not have a way to make up for it on software.  Long term this is the biggest issue facing the established game industry.