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As sales sag, Activision hints it could quit making games for Sony

(Read caption) The Activision booth on the closing day of E3.

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Sony, you just got served.

In an interview that's sending tremors through the ailing video game industry, the head of the world's largest third-party game manufacturer, Activision Blizzard, said the company might stop creating products for Sony consoles. Robert Kotick, Activision's CEO, told reporter Dan Sabbagh that Sony had to cut its price on products such as the PlayStation3, a high-powered machine which retails for upwards of $400.

The Nintendo Wii, by comparison, sells for $250.

"The PlayStation 3 is losing a bit of momentum and they don’t make it easy for me to support the platform," Kotick said. "It’s expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation… If we are being realistic, we might have to stop supporting Sony."

Bad news all around

The video game industry has weathered slumping sales over recent months, although Sony has been hit especially hard. Some critics identify the problem as one of market: while the Wii is snapped up consistently by casual gamers, Sony continued to target the smaller circle of hardcore fans. And the big price tag on the PS3 may be too steep for many consumers, especially at a time of recession.

According to NPD Group, a business tracking firm, the video game industry tumbled 23 percent from $1.12 billion last May to $863.3 million in May of 2009. The real winner continued to be the Nintendo DS, a relatively affordable hand-held gaming system. The DS Lite and DSi systems sold 633,500 units in May, more than the Xbox 360, PS3, PSP, and PS2 combined, Red Herring reports.

A ray of hope

Kotick's comments certainly look bad for Sony. Still, the company is betting that a string of big new summer and fall games – and a very cool-looking motion sensing device – might buoy sales. (There are also rumors the gaming giant could finally drop prices on the PS3.) At this year's E3, Sony unveiled a wand which seemed to mimic much of what made Nintendo's Wiimote so successful. It could be exactly what the ailing PS3 needs.

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