Activision Blizzard Expects Development Costs for Next-Gen Consoles to Rise

Due to “Unique Capabilities” of PlayStation 4 and Xbox Next Development Costs Will Rive – Activision Blizzard

by Anton Shilov
02/08/2013 | 12:40 PM

Despite of the fact that the forthcoming next-generation video game systems from Microsoft Corp. and Sony Corp. are based on microprocessors and graphics adapters derived from PCs, the game development costs are projected to rise again with their arrival, believes Activision Blizzard, a major publisher. In a bid to take advantage of the unique capabilities of the next-gen PlayStation and Xbox, investments have to be made.

 

“In every single console transition we have seen an increase in development costs. Over long periods of time it gets smoothed out, I would say this is not a transition where that is going to be an exception. We are going to have to figure out how to take advantage of the unique capabilities of new hardware, and that requires new skills and investment in tools and technology and engines and so yes, [increase in development costs] is likely,” said Bobby Kotick, chief executive officer of Activision Blizzard, during the most recent conference call with financial analysts.

The head of one of the world’s largest video game publishes did not reveal which unique capabilities of the new game consoles will require major investments. Moreover, the executive did not reveal whether the increased development costs will affect final prices of video games.

Quite unsurprisingly, but just like many maker observers, the management of Activision Blizzard was disappointed with slow launch of Nintendo Wii U. Activision launched record four titles for Wii U, including Call of Duty: Black Ops II, Skylanders Giants, Transformers Prime and Wipeout 3, on November 18, and prepped three more for release shortly, including Cabela’s Dangerous Hunts 2013, Rapala Pro Bass Fishing and 007 Legends. Quite naturally, Activision Blizzard could barely be satisfied with three million consoles shipped so far. Moreover, with slow Wii U launch, the game publisher is unsure what console will be used by children in the coming years.

“We were somewhat disappointed with the launch of the Wii U, and I think it is a challenging environment this year. One of the things we are concerned about is what the installed base of hardware will be like for 6- to 11-year-olds,” said Mr. Kotick.