Activision’s Kotick: Game prices are OK; demand will come
Video game executives are some of the most optimistic you’ll ever meet. But you have to think they dream of the good old days (of only one year ago) when the industry was called “recession resistant”, thanks to the idea that “cocooning” consumers would, ad infinitum, plop down $60 for games.
Those days may be gone — just ask Nintendo. Now game makers are eyeing the holiday shopping season, with a lot on the line. Still, many are upbeat. Activision Blizzard Chief Executive Bobby Kotick, for one, says that at its core, the industry slowdown is about the wicked recession, not a shrinking appeal for games.
Reuters: Has the appetite for games dwindled?
Kotick: I think the reason why the take-up rates over the last 6 or 7 months have been what they have been, as compared with where they were, has much more to do with macroeconomics than fatigue in the category. Once you are getting to that gift giving (season), my sense is that you are going to see a change in consumption.
One thing you won’t see this the holiday season: a drop in prices from the standard of $60 and up for top shelf games such as Activision’s highly anticipated “Call of Duty: Modern Warfare 2″ and “DJ Hero Renegade Edition” ($199). Kotick says that the price is right, given the rising cost of development, and the fact that that prices have been steady for a long time compared to that of other entertainment forms.
Reuters: Any chance for price movement?
Kotick: Not that I’m aware of. If you look at the cost of development ten year ago to today and the cost of marketing, our ability to hold prices firm over ten years (is worth noting). If I told you that we had a 4x increase in 10 years in production expenses and even more than that in marketing and selling, we are still holding firm on those low price points.
Reuters: So prices could have been even higher?
Kotick: Yes — (even) if you just added some inflation adjustment. We have tried to maintain no-price-increases and making sure that the products we are delivering are always the highest quality.
Photo: Reuters Archive