Price cut needed to drive PS3 sales, says SCi

Eidos parent company SCi Entertainment has said that a further price cut for the PlayStation 3 is necessary to drive sales to meet Sony's current forecasts.

The Hitman and Tomb Raider publisher had originally set aside GBP 4 million (EUR 5.7m) against expenditure on PlayStation 3 development, but has now increased that sum to GBP 13.8 million (EUR 19.7m).

"The Board continues to believe in the long-term commercial success of PlayStation 3 but believes this may take more time than originally forecast by Sony," said Jane Cavanagh, chief executive of SCi.

"The Board is of the opinion that the key driver to the acceleration of the installed base of PlayStation 3 will be a further hardware price cut.

"Until such time that such a price move is announced by Sony, the Board believes that it is prudent to increase our provision to £13.8m against the carrying value of certain capitalised development costs," said Cavanagh in the company's latest financial results.

SCi's total revenues for the year ended June 2007 were down 20 per cent to GBP 144 million (EUR 205.9m), although after taking into account exceptionally large price protections charges of GBP 14.5 million (EUR 20.7m), revenues were GBP 158.5 million (EUR 226.6m), down 12 per cent compared to 2006.

Profit for the full financial year was GBP 57 million (EUR 81.4m) compared to 103.8 million (EUR 148.3m) in 2006.

Just Cause, Tomb Raider Anniversary and Battlestations: Midway were key software titles for the period, with Just Cause passing one million sales. Sequels to Just Cause and Battlestations: Midway are currently in development.

SCi praised the success of the Wii and DS, and noted that in 2008 it will release 20 titles for Nintendo formats, as well as ten titles due before the end of this year.

Having announced that Tomb Raider: Anniversary will be available to Xbox 360 users in episodic form earlier this year, the company also said that there are more opportunities for extending product life cycles through digital content delivery models.

"We believe that the growth and success of broadband and mobile infrastructures will present many opportunities including extending the life span of our products, enabling us to offer new content and sell to consumers through online micro-transactions and extending and continuing our game-play across different devices," noted SCi.

The company also confirmed recent reports that a number of suitors were in talks to buy SCi Entertainment, and that negotiations are ongoing.