I am pretty sure that poster is being facetious...

Was the sarcasm in the post that subtle? lol

But the PC has such a massive userbase, I guess that compensates?

41% of PC software is pirated. Dont you remember the thread about it?

That's what he's saying, but it's not his true stance.  Activision clearly makes plenty on the PS3.  If it didn't then what difference would a cheaper PS3 make?  None.  If he's unprofitable now on PS3 he'd be unprofitable on more PS3s - his unit sales would simply be higher.

The thrust of his argument - I want a cheaper PS3 so it sells more - reveals something different IMHO : that he believes PS3 sales would rise a lot on the back of a price drop, giving him and even bigger install base to make a profit out of.  That means he is making a profit on PS3 right now, and he wants more volume sales (and associated profits).

If he really felt that development costs, etc. prevented making profit on PS3 title's he'd pull support no matter what price the PS3 was - after all why sell 5M unprofitable SKUs vs 3M unprofitable SKUs?

So unless I'm missing something his own statements make it clear he's really trying to push Sony to eat margin to allow him to make more.

I think you are missing something. The profit from making a PS3 game is the profit from shipping all the copies to retailers, minus development costs, minus marketing costs.

Of course Activision (and every developer) makes profit from shipping a copy of a game, as the disc, box and manual cost next to nothing... but the real costs are in developing the games, not making and shipping the Blu-Ray disc and the instruction manual.

The question is whether the added profit from all the copies is greater than the development and marketing costs, and how much greater. That's what determines the profitability of making PS3 games for Activision.

You have to consider variable and fixed costs.

So it is possible that a certain number of units have to be sold in order to achieve profitability.

It's really not black and white. There are lots of factors in determining profitability per unit sold.

@jcp234: Of course a certain number of units has to be sold for profitability. The number is said to be around 1 million for the average PS360 game (which tells us a publisher gets around $20 per shipped copy after eliminating retailer and licensing fees, shipping and manufacturing costs).

Right, I realized I probably did not do a good job of verbalizing what I intended.

The post I responded to communicated something to the fact that if Activision was selling products at a loss for the PS3 platform, that Activision would just sell more products at a loss if the PS3 install base increased (or did I misinterpret that?)

Products are usually priced to cover variable costs...and after a certain number of units sold, fixed costs are eventually covered as well. So it is possible that if Activision did hypothetically take a loss on certain PS3 projects...it could have made a profit if more units were shifted...

I hope that made more sense? If not, I give up...lol

@jcp234: Yeah I realized you were saying that, and I agree. I was just furthering (is that even a word?) your point.

The fixed costs are the most important part for game development, as the cost per unit is very small (unlike in other businesses such as electronics manufacturing).

Oh ok. Cool. Sorry, I misinterpret things sometimes.

Thanx