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Kotick: Beware the ides of the upcoming console transition

Ben Parfitt
Kotick: Beware the ides of the upcoming console transition

Activision has again beaten financial expectations, but that hasn’t stopped boss Bobby Kotick issuing a number of blunt warnings about the challenges ahead.

There’s a certain irony in the fact that earlier this week EA reported weaker than expected results and then went on to hype up next-gen’s potential. Now we’ve seen Activision do exactly the opposite.

In short:

  • Companies will have to spend more to achieve the same
  • Kotick is uncertain about consumer appetite for next-gen console hardware in the face of emerging markets like tablets and smartphones
  • Wii U has had a slow start and question marks remain about its ability to reverse its fortunes

Here are the quotes in full:

“While we had a solid start to the year, as we've mentioned on previous conference calls, we believe the back half of 2013 could prove more challenging than we previously thought for a few reasons,” Kotick stated in last night’s investor call, as transcribed by Seeking Alpha.

“First, the competitive landscape. This year, we expect a number of well-established video game franchises and well-capitalized new entrants to compete directly for our consumers' time and attention, particularly as certain of our competitors have moved their launches into the back half of the year.

“Our Skylanders franchise will face much more direct and substantial competition than it has in the past. And our next Call of Duty game will face a more competitive environment than last year. The competitive landscape will likely require us to further increase our sales and marketing investments for our three largest franchises, especially in the important holiday season.

“Two, we continue to face the uncertainties of the console transition. There are still many unknown factors, such as pricing, launch dates and quantities, the level of first-party support and, importantly, consumer purchase intent in a world where consoles are no longer just competing with each other, but also with new platforms, such as smartphones and tablets.

“In addition, the newest console, the Wii U, has had a very slow start. All of these factors further heighten our concerns heading into the back half of the year, particularly during the very competitive fourth quarter.

“Regardless of the near-term volatility in our industry, our focus and our disciplined approach to our business have served us well in the past and we expect will enable us to continue delivering shareholder value over the long term, as we have for the last 20 years.”

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Tags: Activision , warning , kotick , Next-gen , ides of march

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