Kotick turns $50 into $500

With increasing development costs putting upwards pressure on new releases to maximise their sales potential, Activision Blizzard boss Bobby Kotick has explained that modern releases can now make ten time the revenue that they used to.

In the last cycle of videogames you spent $50 on a game, played it and took it back to the shop for credit,” Kotick told attendees at the Deutsche Bank Securities Technology Conference in San Francisco, as spotted by Spong.

Today, we’ll sell you for $100 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 harking back to yesterday’s comments about a possible console-less future for the Guitar Hero brand, Kotick also foresees a future where publishers can command a greater share of its total sales.

And the best of all margins – the 25 per cent operating margin business – has the potential as we can see with World of Warcraft to be a 50 per cent operating margin business.

What used to be a low 20s return on invested capital business is now growing to a plus 40 per cent return on invested capital business.”