Activision’s concerned about next-gen cost

Ouroboros

In rather extensive document to be found at the US Securities and Exchange commission, Activision has detailed to stockholders its worries about the rising costs of the next generation – and believes that it will take a sizeable hit in profits.


“If we are unable to sustain premium pricing on current-generation titles, our operating results will suffer,” the publisher stated in the SEC filing

“If we are unable to continue to charge the same prices we have historically charged for current-generation titles for Microsoft’s Xbox 360, Sony’s PS3 and Nintendo’s Wii, as well as for next-generation consoles, whether due to competitive pressure, because retailers elect to price these products at a lower price or otherwise, we may experience a negative effect on our margins and operating results.

“Further, we make provisions for price migration and channel protection based upon certain assumed lowest prices and if competitive pressures force us to lower our prices below those levels, we may experience a negative effect on our margins and operating results.”

Now you might expect that this is all just a ploy by the company to push for higher game prices – but Activision seems to be acutely aware that the games market will only stand for inflated prices to a certain degree – and will crumble after that point.

So, like the other Mega-Publisher, they’ll be looking to monetise their games and services through the joyous future of microtransactions, and a push for dispensing with the middle-man by way of digital distribution. 

“If we fail to successfully manage our new product development, or if we fail to anticipate the issues associated with that development, our business may suffer,” Activision continued.

“Our business model is evolving and we believe that our growth will depend upon our ability to successfully develop and sell new types of products, including free-to-play games which are monetized through in-game microtransactions rather than an up-front fee, and to otherwise expand the methods by which we reach our consumers, including via digital distribution.

“Developing new products and distribution channels will require substantial up-front expenditures. If such products or distribution channels do not achieve expected market acceptance or generate sufficient revenues upon introduction, whether because of competition or otherwise, we may not be able to recover the substantial development and marketing costs associated with those products and distribution channels.

“In addition, expanding our business model will add complexity to our business and require us to effectively adapt our business and management processes to address the unique challenges and different requirements of any new areas in which we operate, which we may not be able to do, for lack of institutional expertise or otherwise. If any of these occur, our revenues, margins and profitability could decline.”

With EA and Activision both looking to microtransactions to save them, expect a lot more DLC, paid-for in-game cheats and aesthetic guff in the future.

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Author:Geoffrey Tim

I'm old, grumpy and more than just a little cynical. One day, I found myself in possession of a NES, and a copy of Super Mario Bros 3. It was that game that made me realise that games were more than just toys to idly while away time - they were capable of being masterpieces. I'm here now, looking for more of those masterpieces.

  • http://twitter.com/DanielKeevy Daniel Keevy
    • Purple_Dragon

      Yes, and then they will keep blaming gamers for not buying games. Like those twats who did that recent James bond game complaining that no one bought it. No one buys shit.

      • http://twitter.com/DanielKeevy Daniel Keevy

        Yeah. Or the whole broohaha around Colonial Marines. There’s just so many examples of awful consumer practices in the games industry.

        And the worst part is it’ll take concrete consumer intervention to fix, but many gamers just shrug their shoulders and carry on.

  • Deon Steyn

    New Micro-transaction idea for COD. Players need to buy ammo for their guns.

    • http://twitter.com/DanielKeevy Daniel Keevy

      Shhh! You never know who’s reading this? Mass Effect where it costs you a dollar everytime your armour is damaged? No! Stop!

    • http://www.idontlikegamingiloveit.com Tateboetie Malaaitie

      Hey shudapp, you never know who’s reading these comments.

    • http://twitter.com/ClericZA Kobus Nel
      • Deon Steyn

        LOL

  • Sir Rants-a-Lot Llew

    Hold on just a minute there sparky. I thought developers were over the moon that the new PS4 is using a kind of PC architecture because “what would usually take months can now be done in a matter of days”

    Excuse me for maybe being ignorant, but doesn’t shorter dev times result in lower production costs? Meaning that if they stick with the current prices they will in fact make BETTER profits?

    I’m sorry but they keep changing their stories every day. One day they are going to suffer the next they are going to score because of shorter dev times.

    They really need to decide what is what now.

    • AndriyP

      Every time they want to “decide what is what now.”
      Another COD comes out between the butt cheeks
      =
      Proof that when they think too hard they just shit themselves

      • Sir Rants-a-Lot Llew

        Oh my soul! I just laughed so hard right now!

        • AndriyP

          When im very tired my brain works in mysterious ways :/

      • http://www.facebook.com/profile.php?id=715862632 Johan Troffel Fourie

        I’d rather Activision not think anymore.

      • http://twitter.com/DanielKeevy Daniel Keevy

        We keep using the word “think.” I always just thought Activision copied pages out of a Tom Clancy novel.

      • Admiral Chief Erwin

        EPIC.comment.is.EPIC

    • http://twitter.com/mathuthe Mathias

      They’ll tell you anything to sell you a console :) People should be aware of this already.

  • http://twitter.com/D4RKL1NG Martin du preez

    What happened to Bobby Kotdick? I miss him ;(

  • Admiral Chief Erwin

    header lulz
    NOMNOMNOM

  • iPrimal

    I don’t mind in game stuff so long as they don’t take away from the story or gameplay if you opt out. So extra side missions, skins, weapons, etc. are ok by me.

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