Sony
Sony Corp., Nintendo Co. or Microsoft Corp. should have used this weeks Electronic Entertainment Expo trade show in Los Angeles to lower prices of their systems, Activision Chief Executive Bobby Kotick, whose company makes “Guitar Hero,” “Call of Duty” and “World of Warcraft,” said in an interview yesterday. Such a move would spur industry growth, he said.
“I was disappointed not to see any sort of aggressive price cutting,” Kotick said. “Of all the things that the hardware companies need to be doing right now, its recognizing the difficulties of the economy and pricing their hardware appropriately.”
Kotick joins GameStop Corp.s Daniel DeMatteo, head of the worlds largest video-game retailer, in saying prices are too expensive to attract consumers during the global economic slump. Worldwide shipments of game consoles and handheld players will probably fall more than 7 percent in the year ending March 2010, the first annual drop in six years, according to UBS AG.
“As the macro economy gets worse this year compared to last year, its hard to boost sales of game consoles without a price cut,” Eric Lee, a Tokyo-based analyst for Barclays Capital said by telephone today. “Expectation for an announcement of price cuts had risen before the E3 show.”
Sony Price Cuts
Sonys games-division chief, Kaz Hirai, on June 3 ruled out any immediate cut to the $400 price of the PlayStation 3, whose sales lag behind Nintendos Wii and the Microsofts Xbox 360. Nintendo President Satoru Iwata said that there are no plans to reduce the Wiis $250 price. The least expensive Xbox costs $200.
“Were very happy with the price point that we have,” Kazuo Hirai said during an interview at the E3 show. “We will move when we think its appropriate at some point in time.”
Sony, based in Tokyo, may not have much room to cut prices. The companys games division posted a 58.5 billion yen ($605 million) loss in the 12 months ended March 31 and Sony forecasts the business will probably incur a fourth straight annual deficit this fiscal year. Nintendo has maintained the Wiis price at $250 since the products debut 2 1/2 years ago.
Still, Grapevine, Texas-based GameStop, forecast last month that prices of Sonys PlayStation 3 and Nintendos Wii will be lowered this year.
Prices Too High
“The hardware price points, where they are right now given this economic environment, are too high,” GameStop Chief Executive Officer Daniel DeMatteo said on conference call. “If the platform holders are going to make the numbers that theyve forecasted for the year, those numbers will have to change.”
“The day that they hit $199, or ultimately $149, you are going to see a very sizable pickup,” Riccitiello said in an interview last month.