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Kotick explains how to screw $500 out of a $50 game

2009-09-15 23:00:00·  2 minute read   ·  Jim Sterling@JimSterling
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It seems lately that every time Bobby "Possibly Had Sex With Hitler's Ghost" Kotick opens his venomous mouth, he says something thoroughly disgusting. The evil CEO of Activision has laughed about charging high prices for videogames, pushed for a lack of fun in videogame development, and now has demonstrated the joys of squeezing $500 from a $50 game purchase.

"In the last cycle of videogames you spent $50 on a game, played it and took it back to the shop for credit," said the redheaded recidivist at the Deutsche Bank Securities Technology Conference. "Today, we'll [charge] $100 for a guitar. You might add a microphone or drums, you might buy two or three expansions packs, different types of music. Over the life of your ownership you'll probably buy around 25 additional song packs in digital downloads. So, what used to be a $50 sale is a $500 sale today.

"And the best of all margins -- the 25% operating margin business -- has the potential as we can see with World of Warcraft to be a 50% operating margin business. What used to be a low 20s return on invested capital business is now growing to a plus 40% return on invested capital business."

You can almost hear his sense of perverse glee, can't you? 

Of course, Kotick is telling investors what they want to hear, but his attitude toward the game industry and public disregard for his customers has been frankly appalling. He is clearly a man who knows that he's a hated, underhanded individual, and seems to actively revel in it. Of course, the gullible fools paying $500 per Guitar Hero installment don't get to hear Kotick's disdain for them, so they'll just keep paying him until he eventually crashes the market.




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