Activision: Business Is Good, And Getting Better
June 23, 2010 Page 3 of 4
If you could just completely get rid of the used market magically, would that be the ultimate goal for you? Then you guys would get paid straight up for your work.
TT: I don't know. I wouldn't say that that's the ultimate goal. If you step back and think about the fact that there are other parties that can [leverage] our intellectual property without us getting properly compensated for that, that should make you pause and think, "Does that make sense?"
Obviously, you guys are very into online. You've got DLC, and World of Warcraft of course, and digital downloads. But what about social gaming? Your competitor bought Playfish for a whole lot of money recently. Is that market something that you're examining right now?
TT: If we were, I wouldn't be broadcasting this, just to get that out of the way. We always look at opportunities, but we are very thoughtful about our investments.
Right now, I would say we've got about seven opportunities that we are pursuing that are massive. Those are Call of Duty, Guitar Hero, World of Warcraft, StarCraft, Battle.net, Diablo, the unannounced MMO for Blizzard, as well as the Bungie relationship.
Those are huge opportunities. Any single one of them, we believe, is a bigger opportunity than whatever social gaming company you may want to look at.
When you have all those huge profitable existing brands like that, what's your take on new IP? And how often do you want to be introducing those?
TT: It's very challenging to successfully bring new intellectual properties to market, and that's why we are very selective about doing it. Usually, we only do it if we believe we have a great concept that's appealing to consumers and if we can find a broad audience for it, so that it's not a niche, but it's a broad market.
And then we have great developers who are able to deliver a great game against those consumer products. And when we have all those pieces in place, then we greenlight it, make an investment, and make sure it's as great as it can be, then support it from a marketing perspective and make sure it's distributed broadly.
But, you know, 99 percent of new IP introductions fail. And this is not just unique to video games, by the way. This is the same in consumer products. If you look at brand introduction with consumer products, 99 percent of them, a year after they're introduced, you won't find them on the shelf. It's just generally a very difficult thing to do.
And in our view, if you're not very selective about the way you do this, it's very unlikely that you'll be successful. So, our approach is to be focused, think about what can be big, and make sure we have all the pieces of the puzzle that are required to be successful.
Guitar Hero: Warriors of Rock
What about franchise fatigue? That's something a lot of people talk about.
TT: Yeah, this is something that I have not bought into. I think it's an excuse for a lack of innovation. If you have a great franchise and you get complacent and you stop innovating, then yes, you will lose your fan base. But if you think about it, if you have a large fan base on a property, that provides you with the opportunity to communicate directly with fans, to really understand what they love about the game and what they would like to see in the game.
And if you think about a franchise of the scale of Call of Duty, the ability that allows you to bring development resources and investment against making that great game better.
And then lastly, you can market it much more strongly than a new IP because you've got a huge scale that you can work off. So, all these things allow you to make a much better product than if you start it from scratch.
You don't know if you're going to be able [to move] five million units or not. In most cases you don't. In which case, that means I have only X for development and Y for marketing, and then I have to compete with Call of Duty that has 10 times [that] for product development and 10 times that for marketing. It's a very, very difficult thing to do, and that's why we do it but extremely selectively.
There's so much that our Call of Duty fans tell us they want that we are not providing yet, that we see many, many years of innovation ahead of us for Call of Duty and we will keep that fan base very, very happy and even more excited than they already are today.
And you know the last thing I always like to say, coming back to, since you brought up the Procter & Gamble experience, when people come and tell me, "Well, how can you possibly make another Call of Duty?" I always tell them, "Look. I used to work for a company that every year is to figure out how to make a white shirt whiter". And they've been doing that for 35 years on a product like Tide.
If you're telling me that with all the opportunities we have from a technology, from a content perspective, the story, the gameplay modes, the characters we can develop, that we can't innovate on a franchise for ten years, then we are just not doing our job.
ML: I think Blizzard is a good example of that.
TT: Exactly. Look at Warcraft, right. They go from strength to strength, but it's because they innovate all the time. They improve the customer experience all the time. They improve the gameplay modes all the time. You can't be lazy. You can't get complacent.
You've got to continue to reinvest. You've got to listen to your consumers. You've got to do a lot of research. You've got to try different things. Not everything will always work, but I think you're in a much better position to innovate on the basis of a strong fan base with a lot more investment behind it than starting from scratch all the time.
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