A month ago, the CEO of Activision, Bobby Kotick, complained about the high cost of Sony’s PlayStation 3. Kotick’s threat to Sony, to lower the price of the PS3 or Activision stops making games for the console, is covered here.

Yesterday, in an investor call, Sony CEO Nobuyuki Oneda revealed that manufacturing costs of the PS3 are down by 70%.

Sony reported the company’s first annual loss in 14 years when it released its fiscal first quarter earnings yesterday. Further, the company is projecting over a $1 billion loss through March 2010. Sony may be blaming poor sales on the state of the economy, but people like Bobby Kotick would be sure to argue the price of the PS3 is to blame.

Why does Sony’s PS3 cost so much?

The cost of manufacturing each console is roughly $800. The price to buy a PS3? $399. While it may be the highest priced console against its competitors, Microsoft’s Xbox and the Nintendo Wii, Sony is taking a hit for every PS3 sold.

Sony saw some relief in January when it announced that the cost of manufacturing had dropped by 35% to $450. Though a 70% drop in cost seems to be just what the company needs, which would allow, as rumored, Sony to drop the price of the PS3. But will Sony really want to eat into its new profits, especially after a first quarter in the red and a poor outlook for the rest of the fiscal year?

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In an interview with the Times of London, Activision CEO Bobby Kotick threatened to stop making video games for Sony’s PlayStation 3. Kotick blames the high cost of the PS3 and the company’s poor sales of the No. 3 video game console. To the Times, Kotick said, “I’m getting concerned about Sony; the PlayStation 3 is losing a bit of momentum and they don’t make it easy for me to support the platform. It’s expensive to develop for the console, and the Wii and the Xbox are just selling better.”

The No. 1 video game console in the United States, the Nintendo Wii, has a price tag of $250. The cheapest version of Microsoft’s Xbox costs $200.  But Sony’s PS3 goes for a staggering $399, causing complaints among many of Sony’s game publishers.

Unfortunately for Kotick, who is calling for Sony to make some price cuts before losing more business, Sony refuses to do as such. Despite reporting a $1 billion loss last quarter, Sony insists that the PS3 is losing momemtum in the mark.  In response to Kotick’s threats, Sony issued this statement, “We enjoy healthy business relationships with and greatly value our publishing partners and are working closely with them to deliver the best entertainment experience.”

Kotick may give Sony until 2010-2011 to make a price cut before reconsidering Activision’s support of PS3 and the PSP.  But with a market value of $16 billion as the world’s largest independent video game developer, we’re pretty sure Activision has no qualms about cutting Sony out.

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This may come as a surprise, but for the past 5 weeks straight the PS3 has been outselling the Wii…in Japan!  Nintendo sales are hurting in Japan, despite the fact they continue to boom here at home. Apparently Nintendo is not putting out the software needed to keep its fans faithful.

A Nintendo spokesperson has said “We hope to line up strong software to support hardware sales in the second half of the year.”   The boost in PS3 sales have been attributed to the quality titles they have been releasing, something Nintendo is not doing.

” It is still the first few months of the year when sales are slow for the industry, so we are not particularly concerned.”  From what I have been hearing they should be! Some economists are saying Nintendo’s stock will soon drop and now is the time to sell.

I think that it all comes down to putting out quality games, and Sony has done an excellent job of that.  Last year, we had Metal Gear Solid 4, Little Big Planet, Resistance 2, just to name a few titles.  I honestly can’t remember the last time Nintendo put out a title I was even remotely interested in (aside from Resident Evil 4), and I am not being biased - just realistic. Unless Nintendo starts releasing some innovative games, I foresee this trend continuing.

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It’s no surprise that the PS3 has not been doing to well in terms of sales. There are a number of factors working against Sony’s console, one of them is its bulky size. When matched against a console like the Wii that is compact and easy to move, it doesn’t stand a chance. Another factor is its price. With the sagging sales we can’t help but wonder when Sony will be making a price cut.

OK so you have heard all this before and you are wondering where this is going! Well…according to some new marketing stats from EEDAR, it appears we can expect a sales rebound for the PS3 next year. With the help of a price cut, EEDAR believes PS3 could seriously bounce back. As of now we have heard no official statement from Sony on this, but maybe with this news we will.

I think bottom line it comes down to the games. We have seen good games sell consoles before, this was certainly the case with Resident Evil 4 and the Gamecube. Sony has a good line up of games ahead, and cutting the price now could mean a pretty nice sales boost.

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A new development in the Little Big Planet Recall Saga.

Just in case you have been living in a cave for the past few days here is a quick recap. Sony has had a world wide recall of the platforming title Little Big Planet due for release today, because quotes from the Qur’an can be heard in the background music of the game.  The recall was announced on Friday and Sony released a statement that same day.

In recent news American Muslims have responded to the recall in an interview with EDGE and have stated that they are not offended by the use of the Islamic text in the game, but are offended by restriction of freedom of speech. M. Zuhdi Jasser M.D.; head of the American Islamic Forum for Democracy was quoted as saying “Muslims cannot benefit from freedom of expression and religion and then turn around ask that anytime their sensibilities are offended that the freedom of others be restricted.”

Dr. Jasser also went on to say that Mohammad himself “defended the rights of his enemies to critique him in any way even if it was offensive to his own Islamic sensibility.”

The composer of the offending musical track of interest, has also shared his two cents. He has been stated as saying “it’s quite normal to play music and be inspired by the words of the Prophet Mohammad. It’s my way to attract and inspire people towards Islam.”

Keep in mind Dr. Jasser and the AIFD cannot speak for the entire Islamic world. None the less If the Islamic community as a whole shares the same view as the group than this recall may have never been needed at all. The damage though has already done the game has been recalled and the revised version will be hitting the shelves next week.

For a full interview with Doctor Jasser on this recall mayhem, and the views of the American Islamic Community Hit up this link Edge Interview