Activision Blizzard CEO Bobby Kotick has developed something of a reputation as the industry's newest big, bad executive -- but he says he's always felt like more of a rebel on board the Millennium Falcon.

And yet, "suddenly I wake up and I'm on board the Death Star," he joked. In fact, as part of Kotick's whimsical, personal keynote at this year's DICE Summit, he mounted a defense of his alleged Machiavellian ways -- he says that keeping passion in game development is something that's important to him. He also announced a $500,000 independent video game competition for small indie developers working with new platforms.

Kotick joined Mediagenic 20 years ago, after paying over $400,000 for 25% of a bankrupt company that wasn't even yet called Activision. He did this, he says, because he loved the earlier Activision games, from KaBoom! through the Infocom titles, and liked the heritage of the company's founding -- that "developers get to make the games they want to make."

Kotick is himself a former developer, he reminds -- he created Apple II games for companies like EA starting in 1983, and "the idea that we could restore Activision" was really appealing to him.

He said pointedly of taking over Activision in 1990: "These were properties that I really had a great affection for… [and there was a] great amount of opportunity, both financially and creatively."

The exec also revealed that in 1987, he tried to buy Commodore in association with a hedge fund partner. He believed that taking the Amiga 500 and removing the keyboard and mouse would create a dedicated video game console that "would have eclipsed anything being sold at the time" -- even Nintendo's NES. Although it didn't work out, it made Kotick passionate about building a video game company.

The Activision boss also talked about his love of the early game industry from the perspective of a player. That love, he said, underpinned his two-decade career at Activision. Now, as the company has grown, he "can't really get too involved" in individual games, he says, because he needs he game creators to have ultimate control.

But, on the other hand: "When you're 50,000 feet above what's going on... you get insulated from that creative passion," he adds. In fact, Kotick says not being engaged with the creators on that level has cost him and the shareholders lots of opportunities.

For example, Kotick recalls the sale of Maxis; although Sim City 2000 was the big company focus, Will Wright was quietly at work on Jefferson, which eventually became The Sims. The Activision execs never went to look at it, and ultimately passed on the deal.

Kotick's also made another significant miss: choosing the wrong acquisition among the Guitar Hero co-creators. "We knew about Harmonix... [who had] lots of good ideas, but nothing that was really commercially viable," he said. Activision instead acquired RedOctane in 2006.

According to Kotick, Activision believed if they gave the franchise's development to Neversoft, great games would result. But he said that if they had also gone to Boston to talk to Harmonix, things might have turned out differently, and "it would probably be a profitable opportunity for both of us."

It's vital for Activision to be "respectful of the independent cultures" of individual developers within a company, he adds. Creating a culture that "fosters independent thought" will result in great games games -- although he agrees that it's not always possible when balanced with the needs of a public company.

"You can't always do what you'd like to," he says -- but there is a middle ground.

In two deals, ex-Activision execs, perhaps fighting against the creative/financial balance, formed new companies -- JAMDAT and Pandemic -- both of which were sold to Electronic Arts for large amounts of money. The exec joked, to much mirth in the DICE audience: "We're a great mother ship... if you want to sell out and move on, there are definitely other companies to talk to."

Aware of recent criticism of some of his remarks to investors -- remarks about taking the fun out of making video games and working in an environment of skepticism, pessimism and fear, to name a few -- Kotick says that too much brashness means "you can come across as being like a dick."

He particularly addressed his 'taking the fun out of video games' comment: "I wanted to somehow come across in a humorous way that... it wasn't some Wild West lack of process exercise." Nonetheless, he says, he regrets how it was misconstrued.

For investors, Kotick thinks that a history of high-profile industry failures, from Atari's first '80s fall through more recent companies like Spectrum Holobyte and GT Interactive, have soured some institutional investors on the whole market.

So, to help both re-imagine that early passion and potentially fund smaller creators, Activision is announcing a $500,000 independent video game competition for small developers "using new platforms and technologies", hoping to create or honor "super-compelling and engaging" titles.

[UPDATE: Activision has released preliminary guidelines (PDF link) for the game competition, noting that more concrete information will be issued in March.

Entrants will be required to submit a two-page game proposal, including defining features, along with a short video depicting development materials like concept art, animatics, previsualization, or the game itself.

Potentially conflicting with Kotick's statement, the official release values the grand prize at $100,000. It is possible the $100,000 figure refers to the grand prize amount, while the $500,000 figure refers to the total value of all the competition's prizes.]