Activision CEO Predicts Next-Gen Price Cuts Sooner in the Cycle

By | 3 years ago 

While many gamers will be lining up on day one to pick up their shiny new Xbox One or PS4 console, a lot of gamers feel they are better served waiting. Some choose to wait in order to see what intriguing titles might become available in the future, while others feel it best to wait until Sony or Microsoft announce a price drop to swoop in and make a purchase.

However, considering neither console has launched yet it’s hard to speculate as to when the PS4 or Xbox One might drop in price. Yet, that’s just what Activision‘s Bobby Kotick did during his company’s quarterly earnings call – the same earnings call that revealed Call of Duty: Ghosts‘ $1B in sales.

Although Kotick did not say when exactly gamers might see a price drop for the next-gen consoles, he did say that discounts should occur sooner rather than later. For comparison, the PS3 saw its first price cut about eight months after its release, and the Xbox 360 saw its first price cut about 20 months after release.

As far as a reason for his thinking, Kotick believes an improved manufacturing process will help Microsoft and Sony lower costs quicker than in years past. He presumes that with a more efficient manufacturing process, both companies will be able to cut, or lower, overheads to the point it costs them substantially less to build each unit.

“They’ve made more investments in the back office than ever before. Lots of efficiencies in manufacturing that could drive hardware prices down sooner in the cycle.”

At the same time, just because Microsoft and Sony “can” cut costs and in turn lower the price of their next-gen systems, that doesn’t mean they will. After all, most price cuts these days happen out of necessity — to help strengthen the appeal of a device.

Take the PS3, for example; Sony slashed its price because the high $600 tag wasn’t proving appealing to gamers, and they were slowly surrendering market share to Microsoft. Same thing with the 3DS: Nintendo wasn’t hitting high numbers out of the gate, and so they sought to try and make their handheld more appealing. In other words, as long as the systems are selling, there’s no reason to think a price cut is in the future.

However, since neither console has hit store shelves it’s hard to predict whether or not they will need a price cut within the next year or two. Both consoles have their advantages, and disadvantages, but it’s hard to predict what the overall turnout will be, even with pre-orders selling out across most retailers.

From Kotick’s perspective, however, both consoles should enjoy a very successful lifecycle that lasts some “7-8 years.” So maybe we will see price cuts simply because manufacturing is so efficient.

Do you think that the PS4 and the Xbox One will see price cuts within the first year? If not, when do you think Sony and Microsoft might discount their consoles?

The PS4 releases November 15, 2013 and the Xbox One releases November 22, 2013.

Source: IGN