Activision Blizzard chief executive Bobby Kotick said in an analyst call today that he thinks the prices on the next-generation video game consoles will come down faster than in years past because of investments made by the home console makers and efficiencies in manufacturing.
That may be wishful thinking on Kotick’s part, as it’s in his interests to urge console makers to lower prices so that he can sell more of his own games. But he noted that Sony and Microsoft have been investing more heavily in their backend infrastructure, or servers for handling online interactions, more than ever before.
“You’ve got lots of efficiencies in manufacturing that could drive hardware prices down sooner in the cycle,” Kotick said.
It isn’t clear if Kotick has more knowledge on the subject, but that’s what he said on the company’s conference call.
Sony is selling its PlayStation $400, rather than $600 for the PlayStation 3 at launch. Microsoft is selling the Xbox One for $500, $100 above the cost of $400 for the main Xbox 360 at launch.
One big difference this time is that both Sony and Microsoft are using PC-based x86 technology from Advanced Micro Devices. In the past, the microprocessor and graphics were separate chips, and they were the most expensive components in the older systems. But AMD’s “accelerated processing units” combine both graphics and processor in the same chip, eliminating an expensive component. That could be what Kotick was referring to.
You also see this in the prices of many other consumer devices — smartphones and tablets, for example.
Microsoft has added additional costs by building its Kinect motion-sensing system into the platform, but Sony did not do so with its camera. Over time, based on history and the Moore’s Law, the costs of the systems will come down and the hardware makers will cut prices. But it’s interesting that Kotick thinks that process can happen faster now.