$60 video games? Do the math, says Zelnick

How do entertainment retailers come up with the prices they charge? Why is a movie theater ticket $10, a music CD $15, a rental DVD $3-$5 and a top video game $60?

We asked Strauss Zelnick, executive chairman of game publisher Take-Two. He says it’s simple math, based upon the value of that experience.

Prices are determined by the marketplace — if folks stopped buying stuff, prices would fall, etc. (Think gasoline). Balance that with cost. A game like Halo or Grand Theft Auto takes years to develop and costs as much to make as a Hollywood film.

Here’s Zelnick in his own words:

The reason the consumer is willing to pay $60 for front-line product is because they are going to get 20-plus hours of game play out of that product.

I’m a big believer that there is an equation for the pricing of front-line entertainment products, which is: The hours of expected consumption times the value per hour, plus the catalog value.

from DealZone:

Shane Kim’s crystal ball: videogame deals, new content

Microsoft's videogame chief Shane Kim came by our New York office this morning for the Reuters Media Summit and shared his thoughts on XBox 360 sales ("cautiously optimistic") and the outlook for the gaming industry amid the economic doom-and-gloom ("Who knows, maybe flat performance will be considered a remarkable achievement").

He also gazed into his crystal ball and served up some insights on the trends shaping the gaming business.

Consolidation is going to continue, he thinks, especially among the smaller videogame publishers as they search for hit games while keeping costs in check.

Video game console obituaries premature – Microsoft

Gaming insiders who have given consoles the death sentence, get a life!

Shane Kim, VP of Strategy and Business Development at Microsoft Corp’s Interactive Entertainment Business, said it’s too soon to write off the Xbox.

“This console generation will have a long life cycle. I think it’s way premature to say there will never be another Xbox,” said Kim at the Reuters Media Summit.

Industry veterans like WildTangent Chairman Alex St. John and Sandy Duncan, who set up and ran the European Xbox business for Microsoft, believe that consoles as we know them are doomed. Duncan said they will “die out ” in the next five to 10 years, according to an interview published in

Sony offers big PS3 price cut, if you can get the credit

With Black Friday only a few days away and projections for the holiday shopping season bleak, it’s not surprising that Sony is making a price cut move on its PlayStation 3 video game console to lure cash-strapped shoppers.

Now, you can get a hearty $150 price cut on the PlayStation 3 console. The caveat: you’ve got to sign up for a shiny new PlayStation credit card first.

There’s two ways to take advantage of the deal, it just depends how badly you want the PS3.

from DealZone:

Chief Yahoo

Back in July, when Microsoft walked away from Yahoo, conspiracy theorists surmised that the software giant would eventually come back to bid again at half the price. The Chief Yahoo - that's the title Jerry Yang is reclaiming after saying last night he would step down as CEO - is no longer in a position to block a deal, so it's fair to assume Microsoft and its bulging mound of cash could return for another bite. 
Yang has been talking with the board, which includes activist investor Carl Icahn, about stepping down since before Google pulled out of a search advertising deal with his company earlier this month, according to a person familiar with the talks. 
Yahoo's share price jumped after the news on Yang. That could just be relief that he is going, or it could be renewed hope of a deal. So a dealmaker could take the reins of the Internet company, which has already seen great swaths of its brain trust flee in the months since the initial Microsoft bid failed. 
A source said the process of finding a successor to Yang could take anywhere from four to 12 weeks, and analysts have suggested a star-studded cast of candidates, including former AOL chief Jon Miller, News Corp President and Chief Operating Officer Peter Chernin, former eBay Chief Executive Meg Whitman, former Yahoo COO Dan Rosensweig, and Yahoo President Sue Decker.
  Will Microsoft formally announce an offer for Yahoo?

Deals of the day:
* French warplane maker Dassault Aviation is in exclusive talks with Alcatel-Lucent to buy the telecoms equipment maker's 20.8 percent stake in radar maker Thales for about 1.52 billion euros ($1.92 billion).
* Britain's Carphone Warehouse may split off its telecoms arm to focus on its retail venture with U.S. group Best Buy, it said as it warned of tough trading. 
* British publishing and exhibitions group United Business Media, which abandoned a planned merger with UK peer Informa earlier this year, said it was buying Xinhua PR Newswire, China's largest corporate announcement service, for $6 million in cash.

Zuckerberg, edition Web 2.0

Facebook CEO Mark Zuckerberg may have traded in his Adidas flip-flops for tennis shoes, but he was as coy as ever when it came to talking about the social network.  On stage at the Web 2.0 Summit in San Francisco, host John Batelle asked Zuckerberg about Dubai, referring to rumors that Facebook CFO Gideon Yu was in the Middle East seeking financing from the sheikhs.

“I’ve never been to Dubai,” Zuckerberg said. “I’m told it’s nice at this time of the year.”

Never one to give up easily, Batelle dug deeper: “Gideon must have told you that.”

Yahoo rejected again (and again)

Yahoo: Shun me once, shame on you. Shun me three times in one day, shame on… uh, shame on all of you.

First, Google walked away from their search advertising partnership, saying that it had enough with interference from U.S. antitrust regulators. That’s no surprise — remember the deal was originally conceived as a way for Yahoo to fend off Microsoft’s takeover ambitions? On that score, Google can certainly say: mission accomplished.

Then, investors and bloggers started speculating that Google’s withdrawal could make room for Microsoft to return to the negotiating table. Shares of Yahoo jumped as much as 11 percent on rumors that the companies were in advanced talks … before several people familiar with the situation roundly denied that Microsoft was close to making an offer.

Microsoft looks past Vista at Windows 7

Microsoft finally lifted the curtain on Windows 7 to an enthusiastic audience of developers at the company’s Professional Developers Conference in Los Angeles.

Here are some details that didn’t make it into our story.

    Touch – It’s probably the most eye-catching new feature. You can use your finger to click on different programs, scroll through documents, flick to and from various Web pages and sift through photos. It’s also multi-touch — so feel free to use both hands. HomeGroup – Who likes setting up home networks? This feature finds and connects all Windows 7 computers on your home network. If you have one computer that holds all your music but want to play songs on a separate PC, HomeGroup lets you play music on any computer in your network regardless of whether the music is actually on that machine’s hard drive. It also lets all the computers on the network easily share printers without having to install drivers on each machine. New Taskbar – Any open window on the taskbar presents a quick snapshot of what is open. If you hover over those snapshots, it will provide a full screen preview. Also, anything on the taskbar can be moved and “pinned” to specific locations.

(Photo: Reuters/Fred Prouser)

Ballmer still dreaming of a Yahoo acquisition?

ballmergartner.jpgHere’s Microsoft’s Steve Ballmer during a keynote interview at a Gartner’s ITXpo, where — in case you somehow missed the news, the chatter, and the stock market reaction — he reportedly said a deal with Yahoo may still make economic sense.

His comments sent Yahoo’s stock up as much as 12 percent before a Microsoft spokesman clarified to say that there were no current discussions between the companies. Furthermore, “Microsoft has no interest in acquiring Yahoo.”

So what’s the story? It seems the notion of a deal is still simmering in Ballmer’s mind, but there is, of course, the overwhelming question of price.

More Boo-Hoo in Yahoo shares

yahoo-sign.jpgWho was it that wrote about the “The Road Not Taken”? Robert Frost?

That’s somewhat ironic, because you have to figure Yahoo shareholders are feeling pretty frosty toward Yahoo’s management now that its stock price is wallowing around $13 , near five-year lows, amid a weakening display advertising outlook.

The road not taken? Microsoft’s offer of $33 a share for Yahoo. That deal died in the summer, before the global banking crisis had reared its ugly head. What was once a $47 billion deal would be worth significantly less today. 

Yahoo’s premium display business is getting roughed up by a slow-down by advertisers such as financial companies and automakers, and caution among online advertising customers.