Can activision really sell that many CoD's and GH's on the 360 alone to offset the loss of the PS3 platform. I think that is the reall question.
Sure one considers ROI but I would like to think that those games can more than pay for themselves after selling millions.

Sony will be doomed if Activision stop supporting the PS3 confirm!

Activision can easily talk trash about the PS3, both 360 and Wii not only have much larger bases, but are also cheaper to develop for, Activision probably won't dump Sony, but you'll probably see a scaling back on games that they announce for the system in the future

Anyone notice that the Activision CEO got all mouthy, basically the day that the new PSP-3000 Rock Band Unplugged bundle came out?

I think their feelings were hurt. Those mean Rock Band guys again! First they "copy" Guitar Hero (anyone remember that comment?), and now this better business dealing by the Rock Band folks too!

As much fun as it would be to watch this happen, as a non-PlayStation owner, I actually think it's pretty empty posturing from a company that isn't as powerful as it thinks it is.

First of all, their status as "largest third-party publisher" includes Blizzard. Without Blizzard and WoW, I think they are about as big as EA. And they are dependant on Guitar Hero and CoD/MW. DJ Hero is probably not a game that is going to provide another hit of that size, and Tony Hawk Ride certainly is not... And in the meantime, Guitar Hero is a franchise in decline. Even if there is a long term future for music games, GH is wearing out it's mindshare grace period over Rock Band, which has the original GH visionaries behind it.

And in the meantime, EA has hit bottom and is plotting it's return, and Ubisoft's underdog status hasn't changed, and both of those companies are taking Wii more seriously, looking for new growth opportunities, because they don't think they're sitting pretty.

Basically, I think Activision could yet have the troubles that EA, THQ and Take-2 are going through in store for them in the future. And this statement, more than anything it says about Sony, sort of shows that they are in the same place EA was during the later PS2-era, where they think they are the kings of the world, but don't have a long term plan, and don't even know it.

Why should they care?  Compared to what they make off Guitar Hero on DS, and what EA is going to get off of that Rock Band PSP game, there is no reason ffor them even to care. 

Basically a whatever from Sony which is good... as long as Activision Blizzard is bluffing.  More than likely they are trying to scare Sony but Sony doesn't seem to be budging.  But Sony better well know this is a capitalist market and they have nothing that requires them to support them.  Hell I'm sure they could get a long just fine with 360, Wii, DS, and PC and make well enough off those.  But it is better business for Activision Blizzard to continue to invest in the PS3 to make sure they still have a large stake and ability to gain profits and support for their products.  Sony shouldn't have much to worry about... but no time to get cocky when the biggest third party developer in the world tells you to get your shit straight. 

Excuse me sir! If the royalties were lowered, wouldn't it mean that in the longer term the razor blade model was being threatened so therefore the quantity of future royalty revenue per PS3 would be lower and they couldn't borrow so heavily against future and present royalty earnings which would put price cut plans in jeapordy?

both these companies are bluffing. Activision cannot afford to not sell atleast their high tier games on SONY platforms and SONY cannot afford to lose even more of their high tier popular games. This is a lose lose situation for everyone. At "worst" Activision stops making their crap shovelware games on the PS3!! Oh no im trembeling at the thought!

Why couldn't it happen?

Infact it probubly will happen if Sony doesn't announce a price cut or drastically improve third party sales on their platform (PS3). It is very expensive to develope a game on the PS3 or even to port a 360 game to the PS3. With Sony lagging far behind Microsoft's 360 sales and way further behind Wii's sales a dropout from Activision Blizzard is pretty possible if not even probuble.

Microsoft is catering hard to the third parties. Example the new Tony Hawk skate board periferal coming only to the 360.

Why is it not to hard to believe. Just look at what happened when EA dropped out of DreamCast and how quickly the DreamCast died off. Activision Blizzard is as big if not bigger then EA was at the time. If a big publisher like EA would pull off a platform entirely then I can't see why Activision Blizzard would hold off cutting support for PS3.

I say Activision Blizzard starts the ball rolling and other publishers follow suit. Remember how long it took many of the big publishers to support PS3? Example Atari , Midway , Majesco, D3 , CodeMasters ...etc...etc... many of them still don't develope for PS3 its just to costly and they can't sell enough copies to make it profitable!