Age of Kotick

[Erick.S]

This is one excellent article.

The fact that I now consider not buying products, just because they are being published by Activision, shows the sort of effect their treatment of customers has.
This isn't about pricing and ridiculous public declarations, but service. If I can't trust a company to publish a quality product, or at least support it later if the initial launch was less-than-stellar(TM), then I'd rather save my money.
Bobby Kotick could've been the biggest bastard in the universe, as much as I care, if he made sure us, the customers, were getting a bang for our buck. Instead, he's looking for the cheapest, dumbest ways to exploit a medium that he doesn't even understand (like the article mentioned).

Sure, Activision may be making short-term money by capitalizing on the reputation of established franchises (AKA sequels), but at the same time they are ruining the reputation of aforementioned franchises, and of their entire company, for the future.
A sound business plan? Maybe, if you're trying to go out of business.

 

[antipunt]

Nice, honest article.

 

[TurtleBay]

I don't blame Activision's downfall on Kotick at all. Kotick has been there since 1991, his influence is nothing recent and Blizzard has always been run correctly. I think that the blame lies with the chain of command above Kotick. He reports to shareholders, and the controlling 52% shareholder is Vivendi. Kotick works because Vivendi allows him to. Vivendi doesn't know the media business because they didn't enter it until they bought Seagram in 2000.

Vivendi is run by some high-leverage, squeeze every last drop of profits, private-equity guys. Look at the deal they did with Universal Studios, it nearly sank their company. After selling Universal in 2004, Vivendi looked for more acquisitions. So in 2005 they bought a French TV station and in 2007 they bought Activision to form Activsion Blizzard. From my experience in finance, guys like this who buy and sell companies frequently don't care about developing intellectual property. They care about "monetizing assets" and increasing revenues. Look at private-equity funds - they talk about lay-offs to reduce redundancy and monetizing assets and exploiting new markets and all of the things that Kotick has been talking about. Kotick is saying what his bosses (at Vivendi) want to hear so he can keep his job.

edit:

I just thought of another great example. Blizzard has been under Vivendi since 1998. How many creative games has Blizzard made since 1998? They have made Warcraft III (a sequel), WoW (expanding an existing IP to a new market), WoW expansions (squeezing blood from a turnip), Starcraft 2 (sequel) and Diablo III (sequel). Pre-vivendi their new IPs were Warcraft (1994), Diablo (1997) and Starcraft (1998). Seems like the point in history where Vivendi gets influence over a company has a big impact.

edit #2:

Vivendi also acquired Sierra as part of the 1998 deal. After the acquisition Sierra had mass layoffs and cost cutting. Sierra went on to not produce anything special (after being a front-runner in the early 1990s) and eventually was dissolved.

 

[Brainst0rm]

Hmmm,

I think you've got some of it wrong. There is a differance between capitolism, and being ridiculously greedy.

Pardon my rudeness, but I find it hard to take your post seriously when you've spelled 'difference' and 'capitalism' wrong in the very first line.

Don't take this wrong, but I'm guessing you must be new to the Internet (the greatest system of tubes ever devised!).

I only say this because if that got your attention, your in for an experience as your going to run into some of the most extreme mutilations of the engrish language evah conceived! Some (like in my case) coming from speed typing and writing long messages, others done intentionally as part of net speak, or whatever.

I know lots of people like to be grammer nazis, and speak passionatly in the defense of the engrish langrage but it's really a lost cause. If you can figure out what someone is saying, that's usually all you can count on.

Until later, umop apsidn!

Well, sir, I shall indeed take your post the wrong way. I do not believe the amount of time I have been prowling the interwebs is of any relevance to us, nor do I believe 'everybody else is doing it' to be a valid defense for your errors.

First, yes, I am a grammar Nazi - but only as far as it is helpful. I pointed out your error, hoping you would correct it and perhaps allow another intelligent mind to engage you in discussion, instead of turning away within two sentences since, if the author cannot be bothered to spell correctly, how then could he be bothered to form a cohesive and logical argument?

So that you might not dismiss my plea out-of-hand: I've been using one forum or another for more than six years. I know precisely what it is like, and what the standards are. This fact excuses nothing. I hold to my values, and shall always endeavor to help others when I might.

 

[BloodSquirrel]

Hate to break it to you, but nobody in any organization is "worth" $15 million per year.

If a company takes in 1 billion dollars in revenue a year, a CEO who can boost it by 10% is bringing in 100 million extra dollars. That's easily worth $15 million a year.

 

[Nocturnus]

If he wasn't good at what he does, he wouldn't be there. It's that easy. Is he a PR Nightmare? Yes. But that doesn't change the fact that he is able to take in a lot of money and has turned Activision into a company that could near eat Electronic Arts for breakfast when it comes to profit margins anymore.

Where's the problem? Well... it's not Kotick. It's us.

We -buy- their products. We -pay for- their services. When they release a rehashed game, we dish out the full 60 dollars for it, and then some for the map packs. When they cut a game into three parts, we eagerly slap down the full price for the product and give it rave reviews.

If this doesn't change, what reason does he have to change? It will be the same thing with Call of Duty: Black Ops. I'm sure, somewhere, it will get game of the year, and no matter how many people hate Kotick and hate his business practices, they will buy it and increase the bottom line of that company.

If you want to make a statement, vote with your wallet. Don't buy Call of Duty: Black Ops, and if they release the expansions for Star Craft with 60 dollar price tags, don't pay for them. Only then will a true message be sent.

 

[gamer_parent]

I disagree with Shamus in that I actually don't think Bobby Kotick is that bad at his job. I currently work for a company owned by a group with a very similar mentality. These guys view companies primarily as a financial holdings, that's all. Nothing more, nothing less. And from a corporate point of view, it makes absolute sense. They are fundamentally detached from the actual particulars of the business, and focuses mostly on the bottom line. That is what they are supposed to do.

All of their decisions essentially trickle down through the pipeline as a result of this. The CEO while often can guide the company in many different directions, their directive is often quite clear cut.

Bobby Kotick, in my opinion, is not a brilliant businessman, but to say he's outright terrible at his job? I would disagree. Sure, he's made a lot of missteps ranging from losing Schafer, IW, and a bunch of smaller missteps like his PR and mishandling scandals. That is, all the stuff that's been going on with him in the recent years.

But at the core it all? Bobby Kotick has managed to make a single stroke of brilliance that pretty much gave Activision that much more firepower, and that's partner with Blizzard. And the ability to make that happen alone buys you a metric ton of brownie points with investors.

Let's also not forget all the stuff that happen BEFORE this.

In 1991 when he took over, Activision went from doing all sorts of other stuff and decided to focus completely on gaming development. Maybe it wasn't a Kotick decision, maybe it was. We will never know. And then from that point on, all we saw from them were multiple partnerships with other media giants to bring about new games. A lot of them were in fact, new IPs.

Say what you will about the quality of the IPs, they were not all terrible decisions. A lot of them were terrible, in my opinion, which is why they get buried and you never hear about them. But the stuff that's good? they earned the company a nice mint.

When you look at the numbers over the years (which is really the only way to truly judge a CEO's performance), under his reign Activision has been constantly growing fairly steadily over the past 20 years. 20 years of profit and growth is nothing to sneeze at, guys. From that perspective, he was a good CEO.

That whole thing about exploiting existing franchises? Guys, they've been doing that for years. Mech Warrior series anyone?

Now, am I saying that I think all of his decisions were good? fuck no. Yeah, I'd even go as far as to say that he's no longer in touch with his customers... the same way that a LOT of CEOs are no longer in touch with their customers. It's the corporate structure at work. I would dare say that Actiblizzard is about to commit the one cardinal sin of all corporations, and that is to grow large and become stagnant, which is what happened to EA. I think Kotick is trying to find ways to navigate AWAY from being the next EA, considering their rather public downfall in the early 2000s. That's a large part, I believe, as to why he's talking about trying to monetize everything. When you add current video game industry trends to that pressure, this pressure to monetize everything is compounded. (i.e. distribution becoming more and more difficult, economic pinch, etc) Add a dash of personal insensitivity with lots of money, and you have the current jerk-ass Kotick. Previliged, powerful, but all to aware that the ride may end sooner than he thinks. People in that kind of position tend to flail and buckle a little under the pressure.

 

[nipsen]

The question isn't, "Are they making money?" but "Would they be making more money with someone else's ideas and leadership?"

Oooh. I know this one. Americans arguing about "socialism" versus "free market enterprise". Should one adhere to the free market principles while being benevolent and likeable, or should one be a complete jerk while doing the exact same things - and broadcast it when you do it to prove you have the guts!

...

:/

 

[Lyinar]

Personally, I loathe Bobby Kotick, but I'm not about to cancel the account I have for WoW, a game I *LIKE* playing, nor am I going to refuse to buy Diablo III, or Cataclysm, or the rest of Starcraft II, just to hurt him. I'm not going to stop supporting Blizzard, a company I have loved since the original Warcraft: Orcs and Humans, just because the company that bought their stocks up is run by a complete asshole. If I were going to do that, I'd have stopped supporting them when they got bought up by the assholes who murdered Sierra Online, the company that got me into gaming to begin with.

Now, that's not saying that I'd not cheer at news that Activision's board of directors finally dumped Kotick under the pretense of some scandal or another. The fifteen bajillion dollars a year they make off WoW subscriptions alone would allow them to take risks and back new IPs and potentially good one-off games with a hell of a buffer if something doesn't quite come together, but they're not doing it because of that fething git. That, to me, is the REAL tragedy of this.

 

[FieryTrainwreck]

A lot of people give Kotick a hard time for being "greedy." By greedy I assume they mean he wants his company to make more money. This is not something we should be angry about. As the chief executive officer of a muiltibillion-dollar company, it's his job to be greedy. That's why they hired him. Being angry about a CEO being greedy is like getting mad at a heavy metal band for playing electric guitars and being loud. Do you think Valve software puts games on deep discount because they love us? They do it because they can make more money when they occasionally go after the cheapskates and bargain hounds. And that's fine.

This is system logic with no regard for content. By this reasoning, I've no right to be mad at the devil for corrupting the hearts of men. A spade is a spade, and a shithead is a shithead. That it is your job to be a shithead doesn't excuse your behavior in the slightest. Also, the legality of it doesn't hold nearly as much water as people seem to think; being an insanely greedy asshole is only legal because society doesn't seem to recognize the obvious long-term damage such behavior causes to the market, the environment, and people at large.

Businesses should be run by people with passion for product. If your one and only goal is to make money, your one and only loyalty is to the shareholders. You will fuck over your employees. You will fuck over your customers. You will do whatever it takes to generate maximum profit for one small group of people - even at the expense of the people who work for you or supply your revenue.

All modern business philosophy has done is given people license to be destructive assholes. I'm not going to lose myself in the circuitous and fluid "logic" of the business world only to wind up justifying the sort of greedy/evil behavior we see from today's business leaders. A lot of them are simply fucking horrible people, and they deserve every ounce of derision they get.

With Kotick, we're seeing what happens when a modern day, "meat-and-potatoes industry" guy (i.e. he'd be right at home in arms production or cellular) gets his hooks on an entertainment industry. The end result is diminished product for greater prices, which makes zero fucking sense in what amounts to an "optional expense" market. His practices aren't sustainable in the slightest. They're short-term cash grabs, at best. Naturally, he's a huge success. That's how modern business works, apparently. Get in, get the money, get gone. Somehow, these people think they're better than gang-bangers running similar games.

 

[FieryTrainwreck]

The question isn't, "Are they making money?" but "Would they be making more money with someone else's ideas and leadership?"

Oooh. I know this one. Americans arguing about "socialism" versus "free market enterprise". Should one adhere to the free market principles while being benevolent and likeable, or should one be a complete jerk while doing the exact same things - and broadcast it when you do it to prove you have the guts!

...

:/

The older I get, the more I realize that debates over systems/philosophies of government/economy are almost completely meaningless. Everything hinges on the people in the system; a capitalist society with horrible leaders will always be much, much worse for the people than a socialist society run by competent ones - and vice-versa. There's nothing inherently wrong with Kotick's position or the structure of his company. He's just a fucking awful person.

 

[Upbeat Zombie]

And that's why we need to stop buying Activision crap. I did, you can't imagine they freedom of bitching about SC2 being cut into three parts when you didn't buy it, and so you're immune to return fire from fanboys

Also, I'm GLAD I skipped MW2, watched a mate play and BOY does that thing suck.
And you couldn't PAY me to play Guitar Hero, I still think of a guitar as a piece of wood/plastic with metal strings that make sounds while you pluck them.

Aaaaand I think I just ran out of everything ActiBlizz puts out these days, or am I missing something?

Oh, btw, I cancelled my WoW account a week before the merger came through

Ok, thats scary. I did the exact same things. I did not buy a Call of Duty since the first one, i did not buy a Guitar Hero or anything else Activison published in the last 5 years and i even cancelled my WoW sub. a week before Blizzard was bought. And yes i even avoided SC2 for the same reason.

The only thing we need is approx. 15 million clones of us to make a change.

For a while I was thinking of boycotting Activision for how blatantly greedy they seem.
But then I remembered that their games are really fun, even if their all just sequels. And that I didn't want to miss out on some fun games just to try to prove a point.

 

[sunpop]

Desk lamp has my full support

 

[asterismW]

On an almost unrelated note. Where I come from (New Zealand) we *are* charged for shopping bags at the grocery store.

I remember that from my visit there two years ago. I thought it was the most ridiculous thing I'd ever heard. But then I thought it might be a rather effective save-the-planet effort: "Use reusable bags or pay for plastic ones" kind of thing. I thought it would be brilliant to institute that in the States, as it doesn't seem like the reusable bag movement has really caught on here. (I personally don't use reusable bags because I just haven't been bothered to buy them yet, but you can bet I would in a hurry if I was forced to pay for what I now get free.) I would be most upset if I learned it was just a ploy for the grocery stores to make more money.

I've seen places that had a deposit for shopping carts, but you got your money back when you returned it. I can see that being instituted as a theft-deterrent. I've also seen places that charge rental fees for shopping carts, a practice which could have no other reason than to rip off the customer.

 

[Kelorin]

I tell you what Kotick got hired for and that is to increase Activision retained profit. The shareholders feel, quite rightly, that a company with a $4 billion turnover should be making more than 120 million in profit. That's only around 3% profit so its hardly being greedy. Kotick is there to do the unpopular things, to cut costs and to increase revenues from the existing business. There is no amount of PR is going to disguise this, so he will ignore it all the hate until he steps down to spend more with his share options. He will stay there for about 3 years and the next guy will be all touchy feely and have the shiny PR. His replacement wont have to do the nasty things and will have freedom to do the things that is suggested in the article.

Hey, I'm not saying what Bobby's doing is wrong for Activision(it is in the long term, but that's beside the point I'm trying to make).
I'm saying that those PR guys are getting paid to spin stuff like "We want to charge extra for multiplayer" so that it sounds GOOD.
Bobby should do what every good CEO does, shut up and only show his face in public to promote new products.

Look what I'm saying is that Kotick wants all the flak to be aimed at him. He wants to be Mr Nasty so all the blame attaches to him and not the company. If all the hate is focused at Kotick it makes his successors job much easier of changing the image of the company. That's the strategy what the PR guys are getting paid the big bucks for.

So Bobby Kotick is the Video Game industry's answer to BP's Tony Hayward?

 

[Albino Boo]

Look what I'm saying is that Kotick wants all the flak to be aimed at him. He wants to be Mr Nasty so all the blame attaches to him and not the company. If all the hate is focused at Kotick it makes his successors job much easier of changing the image of the company. That's the strategy what the PR guys are getting paid the big bucks for.

So Bobby Kotick is the Video Game industry's answer to BP's Tony Hayward?[/quote]
Pretty much. The stupid thing is such an obvious strategy is working in both cases. Most are too busy jerking their knees to step back and see the play. Just look at all the Kotick hate in this thread and I bet in a few years time when he steps down they will cheer. As KotiCk steps on to his private jet he will be thinking "Just as Planned!"

 

[Mysnomer]

Experienced Points: Age of Kotick

Sure, everyone knows Bobby Kotick is a jerk, but do you know why he's a jerk?

Read Full Article

Sorry Shamus, but greed is not good, and I'm getting tired of people flaunting basic capitalist theory acting like they somehow have a deeper understanding of how the world works than those who naively decry someone for being greedy. Ambition is good, greed is bad. There's no problem with wanted to grow and be successful, but greed is a desire for more and more and more, with no sense of equilibrium, and no definition of success other than profit margins.

The rest of your article is great, but I'm really getting tired of people thinking a catchy phrase from some movie* amounts to an absolute truth. The capitalist system is not about rampant money-making. It's about knowing what the customers want, and being able to provide that better than a competitor. Capitalism is about success through service. Robber-barons, monopolists, Bobby Kotick, these people aren't capitalists, they're tyrannical despots, bending the capitalist system to their benefit.

*Admittedly, Wall Street is a good movie and important piece of film.

 

[gkpama00]

Amusingly, the piece undermines some of its own points due to the author's limited business experience. Any experienced business manager knows that getting people to pay for things that were previously provided for free is, in fact, one of the most difficult things to do in business. Just ask the New York Times, or the hundreds of dot.coms that failed en-masse because they were unable to monetize the page views that the content and services that they were giving away attracted. Attempts to charge for previously free content usually result in consumers leaving for still-free alternatives. Anyone that can pull off charging for previously free content, without losing large numbers of customers, is literally worth his weight in gold to a large corporation; even at today's gold prices.

By the same token, no one goes after down-market sales as their first choice. There is a reason why Apple Computer has the largest market capitalization of any consumer products company. They have consistently shown that they can get large numbers of people to pay premium prices for technology that doesn't even really have leading-edge capabilities. Steam goes for the down market to generate cash flow because it has to. Digital downloads still account for a relatively small fraction of game industry revenues, even as it accounts for a majority of unit sales. Kotick is doing his job by staying away from down-market sales. Activision's shareholders don't want the company to be there. No company's shareholders do.

Also, it isn't the CEO's job to come up with great business ideas. There are lots of people working at Activision trying to come up with great business ideas, just like at every other company. It is the CEO's job to decide which of the many business ideas that are presented to him are great ones that deserve major investment, which are good ideas that deserve some investment, and which are not particularly good ideas that shouldn't receive any investment. Activision's financial statements suggest that Kotick is earning his $15+ million dollars per year at that job as well.

Young claims that Kotick doesn't understand the industry, but Activisions acquisitions suggest otherwise. Kotick paid what at the time was considered a stupid amount of money for Blizzard, but it turned out to be a cash machine that was a bargain at the acquisition price. The Vivendi games acquisition worked out well also, especially after Kotick cut loose the dead weight. What ever his stated reasons, Kotick made the right call on games like Brutal Legend. Everyone that gives Tim Schafer a big development budget loses money whether the game is good or not (just ask Majesco), and spending more money on marketing the game is just throwing good money after bad. How many of the games that Kotick dumped, but were later published, became big hits? I rest my case. It isn't Kotick's fault that only a small minority of gamers are willing to venture $60 on a new IP, instead of spending it on an established franchise offering a predictably good, if unremarkable, entertainment experience. But it is his job as CEO to notice that fact, and adjust the company's product strategy accordingly; which is exactly what he has done. He overdid it a bit with the music fantasy games, but they weren't going to last long anyway. Those boxes of plastic instruments just take up too much space on store shelves to be anything more than a fad for a couple of years.

Lastly, as for the public relations stuff; the real problem is that the publishing of all news and press releases online has made it very easy for information that is intended for one audience, to be picked up and presented to a different audience. When a company is talking to stock analysts and institutional investors they quite often do, in fact, triumphantly announce the fact that they have been raising prices. Raising prices isn't easy to do these days, and CEOs don't keep it a secret from investors when they succeed at doing so. Kotick isn't some arrogant fool cluelessly boasting to customers about charging them more. Kotick made relevant comments to a small audience, that were picked up by Internet "journalists" looking for page views, and distributed to an audience that Kotick never intended the comments to reach, in order to generate controversy. It is very hard to control the distribution of information these days. Just ask the Pentagon. It isn't just Kotick's problem.

All in all Activision is getting a lot more value for its millions of dollars than most US corporations are. Kotick became CEO of Activision because he was the largest shareholder at a time that the company was on the verge of bankruptcy. Kotick built Activision into what it is today from almost nothing. Why is Mark Zuckerberg, a man that has never generated a dollar of net profit in his entire career as a CEO, worth a billion dollars; while Kotick, who has helped to create billions of dollars in real revenues for the company he leads, is considered a waste of money? That is what doesn't make sense.

 

[ArekExcelsior]

"Possess", Shamus.

I think that you're confusing, as some are wont to do, greed and self-interest. Greed is not only desiring money, wealth, power, or whatever else, but having so much of that sensation that it controls you, or causes you to behave anti-socially or evilly. Self-interest is arguably okay, as long as society provides roles that let people's self-interest match social self-interest. Greed isn't.

Now, I'm not a big fan of capitalism, or markets, and I do agree with you that it is absurd to point to someone who is maximizing profit and say "Greedy!" First of all: "Greedy corporation" is like "violent murderer", it's redundant. That's what corporations are: Amoral profit generators. The hope is that this can somehow, through competition, some regulation and law, etc., be made to produce generally socially beneficial results. Secondly, it's not about individuals, at least not all the time. When we see corporations polluting, or laying people off, it's not really about one or two guys but about the whole board.

That having been said, Bobby seems like such a jackass that he has jumped over the line from corporate greed to regular old Seven Deadly Sins greed.

 

[nipsen]

The older I get, the more I realize that debates over systems/philosophies of government/economy are almost completely meaningless. Everything hinges on the people in the system; a capitalist society with horrible leaders will always be much, much worse for the people than a socialist society run by competent ones - and vice-versa. There's nothing inherently wrong with Kotick's position or the structure of his company. He's just a fucking awful person.

..sure. But in this case (as almost any other) we're really talking about image, not method.