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Activision: Business Is Good, And Getting Better

June 23, 2010 Article Start Previous Page 4 of 4

You mentioned Black Ops earlier. How has Treyarch been holding up? I hear they're under a lot of stress with everything that's happened and morale has been low; that's it's been challenging over there.

TT: Morale couldn't be higher. They are so excited. They are going to blow everybody's mind with Call of Duty: Black Ops.

I was really bothered by the labeling that was going on between who's the A team and who's the B team, and I don't think there will be any discussion about the label that we will have after Call of Duty: Black Ops. That product is phenomenal.

This is the first time that we've enabled them to have the whole team against one product development effort, and they're doing a phenomenal job. This November 9th is going to be a great day for the Call of Duty fan community because they're going to get a phenomenal product.

And with everything that happened with Infinity Ward, management came under criticism for not respecting the talent that you guys have.

TT: Yeah. I don't agree with that statement at all. Unfortunately, because of litigation, I can't go into a lot of details. Have you read our cross-complaint?

I've read some of it.

TT: I think that and the actions that they've taken since then speak for themselves. It's very unfortunate and it's very unique.

It seems rather personal.

TT: You know, we've been in this business for 20 years, and we've had 17 different developers join us over that period of time, and we never had an issue like that. That alone probably provides a pretty good perspective.

What do you think that Activision is doing right that other publishers are just not seeing or not recognizing? What are you doing that other less-successful publishers aren't doing?

TT: Focus is probably the biggest difference. We are very focused, and we don't try to be everything to everybody. That means we have the best talent against the biggest opportunities, which allows us to make great products, and then we bring those products to the broadest possible audiences.

The second thing I'd say is we've over the years continued to bring great talent to the company, whether it's on the development side or whether it's on the marketing side or whether it's on the retail execution side. We are very focused in getting the best talent from a development perspective but also from a corporate perspective.

That's why we look outside the industry from time to time and bring in talent from companies that are best in class in marketing, best in class in retail, or best in class in hardware manufacturing. We set our standards to try to be the best. Blizzard brings customer service talent from Virgin or American Express that have best-in-class customer service, full stop. Not [just] in video games. Anywhere, any industry.

You know, Bobby has always been visionary in that sense. He never felt constrained by only looking at video games. He always set his sights to be the best not within a small field but the best, full stop, in anything we do. We don't always accomplish it, and we still have a lot to go in many areas, but that is our aspiration, and that's how we got to where we are today.

Five years ago, I joined the company. We had a business plan for $1 billion in revenue and $70 million dollars in operating income. And four years later, we were at nearly $5 billion in revenue and $1.2 billion operating income. So, the strategy of focus in terms of what we do and operational discipline and bringing in constantly great talent and making sure it's clear to everybody that nothing is ever good enough and there's no room for complacency, that's a big part in success.

It was interesting when Kotick said that Activision's new goal is to become is the most profitable entertainment company, including the areas of film and TV.

TT: That doesn't mean, by the way, that we're going to start making movies or TV shows. It's just the fact that today, video games only have a 5 percent market share in a $1.6 trillion media entertainment market, which just underlines the opportunity. Consumers are migrating to interactive entertainment.

New technologies are coming along that allow for social type of gameplay, which is very, very appealing. New technology of facial animation allows you now to tell stories that create an emotional bond between the character and the player. There's so much happening on the technology side that allows us to provide an entertainment experience, whether that's storytelling, whether that's music, or whether that's in social networks that is just much better than you can find in traditional forms of media.

Again, Bobby is great at setting unreasonable objectives. So, one of the things you always have to be comfortable with if you work for Activision Blizzard is the fact that you will always be going for unreasonable objectives, and the next thing you know, you're saying "Holy shit. We did it!"

Article Start Previous Page 4 of 4

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Michael Arnold
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"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?""

Only if you buy into the madness that is current-day IP.

Dan Felder
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I think that if you consider buying a game as buying the rights to that particular piece of hardware (not the IP, just the hardware) then it makes sense that you could lend it or sell it at your discretion. But that does require a different perspective.

Ultimately, I like to believe that videogame companies achieve a broader impact thanks to used games. Effectively, the games are made cheaper for their consumers - which makes them able to buy more games, and more likely to buy your title in the first place. In fact, it seems quite similar to Activision's earlier demand for Sony to lower their prices on the PS3. If the objective is to reduce the prices and therefore create more room in a consumer's wallet and lower the cost of buying your products... The used game market could be a blessing in disguise. If you want to combat it, creating DLC activation codes for each game seems like a solid way to go about it. Fighting the used game market is futile. If they want to encourage more new sales, they need to add value to buying unopened games.

Benjamin Marchand
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- " You don't start with your product and you don't start with the technology. You start with the consumer and really understanding what the consumer wants and what satisfies the need either through getting their shirt cleaned or getting a great entertainment experience. So, that's where you start, and that's universal. "

That's an honorable point of view. But please don't forget that every fresh, new, cool videogame idea didn't come from the consumer. It always came from the studios. If your studio needs consumers opinion more than internal brainstorming to know what would be new and worthy, then it means you didn't hire the right creatives.

It's a creative's duty to keep informed about trends and consumers needs.

Then he mixes it with his own imagination and the studio's technical constraints to product an understandable concept.

edit : Oh, this is a very important clarification imho :

- " It was interesting when Kotick said that Activision's new goal is to become is the most profitable entertainment company, including the areas of film and TV.

TT: That doesn't mean, by the way, that we're going to start making movies or TV shows. It's just the fact that today, video games only have a 5 percent market share in a $1.6 trillion media entertainment market, which just underlines the opportunity. Consumers are migrating to interactive entertainment."

David Hughes
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I'm not the type to be advocating boycotts or anything like that, but the first thing that came to mind when he mentioned the amount of cash reserves on hand was: settle the West/Zampanella suit out of court! It would take a fraction of their cash on hand, and turn a negative PR debacle into (at the very least) a neutral conclusion.

Bob Stevens
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David, standard practice in lawsuits from what I gather is to ask for much much much more than you actually want and hope for the best from the court or jury. It would take a fraction of Activision's cash to just give everyone involved in those suits what they're asking for, but obviously they feel it would take a significantly smaller fraction of their cash to fight it.

But the likely outcome is that it will be settled out of court with confidential settlement terms. That's how these things always go. We'll never know who "really" won, just like the Brutal Legend suit, the 7 Studios/DJ hero suit, etc. If it helps you out, once this is over you can pick the side you wanted to win and pretend they won, that's what everyone else does.