The head of video game company Activision (ATVI) has good reason to see the prices on video consoles Microsoft (MSFT) Xbox 360 and Sony (SNE) PS3 come down. If they sell more units, his company should sell more games.
And, Activision is telling Reuters that game console prices will have to drop to $199 if they hope to have mass appeal. The more expensive models currently run over $400.
The success of the Nintendo Wii is almost certainly tied to its price. "The Wii at its price point is now setting a standard and an expectation, and people say, well, the Wii is less complex technically. I don’t think that really matters as much to the consumer," the Activision CEO Bobby Kotick told the news service.
But, it is not as easy as all that. Even with rising production, the cost of game console components will only come down so fast. Sony cannot afford to lose more per unit. Investors are already concerned that it will never make money at it game device division again.
Microsoft has just made money at its device division for the first time. Sales of the Xbox 360 are being driven by the popular game "Halo 3". The world’s top software company may have no reason to bring down prices quickly.
No point waiting for the $199 PS3. It is not coming. Not in this lifetime.
Douglas A. McIntyre
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