Activision And Capcom Warn Of Uncertainties In Transition To Next-Gen Consoles

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During their quarterly earnings reports this week, both Activision and Capcom took a moment to warn their investors about potential pitfalls in the upcoming transition to Sony and Microsoft’s next-gen consoles, the PlayStation 4 and Durango.

Activision Blizzard CEO and President Bobby Kotick pointed out several”uncertainties” that his company has about the next-gen consoles during an earnings call yesterday afternoon. As transcribed by Seeking Alpha, Kotick noted the following:

“… 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.”

Capcom issued a similar warning to their investors this week about the competition that next-gen consoles are going to face from social/mobile gaming, but also added an additional word of caution about “soaring” development costs.

“Even though a full line-up of new home video game consoles will eventually be released, the industry is likely to be in a period of scant new product releases over the near future, awaiting the full-scale launch of the next generation machines.”

“In the meantime, development costs are projected to soar as advanced and multiple functions are added to hardware. Business alliances and consolidations may therefore occur in increasing numbers.”

With both Activision and Capcom clearly aware of some troubled waters ahead, it is interesting to contrast their approach towards the next-gen consoles against statements made by EA and Ubisoft. Electronic Arts has often expressed that they are looking towards the PlayStation 4 and next Xbox to play a big role in pulling them out of their financial slump. Ubisoft, on the other hand, is of the belief that we are long overdue for the next-gen consoles, as the current-gen has been holding back new IP and ideas.

Personally, I fall more in line with Activision and Capcom when it comes to the launch of Sony and Microsoft’s next-gen consoles. There is far more potential for disappointment and disaster, than for a smooth console transition. Initial sales to “core gamers” will likely end up being okay, however, that group is not big enough to support the increased costs associated with the next-gen consoles. Sales to non-core gamers are going to be more important than ever, and this is where social, mobile, and the general terrible state of the economy are going to come into play.

Granted we don’t have all the facts about the next-gen consoles from Sony and Microsoft at this point, but if I had to guess, I would say that Nintendo is not going to be the only company struggling under the financial weight of unsold next-gen hardware later this year.