 |
|
|
| |
Kotick: Activision Aims To Become Most Profitable Entertainment Company
by Kris Graft [PC, Console/PC]
|
|
| |
|
June 15, 2010
|
| |
Activision’s Bobby Kotick is CEO of the most profitable video game publisher today, but that’s not enough -- he now wants to make Activision the most profitable entertainment company in the world, and that includes film and TV companies.
In an analyst presentation this week during E3 in Los Angeles, Kotick said over the past 10 years, Activision’s mission was to break new ground in interactive entertainment and provide a return for shareholders.
But he updated the company mission: “The change today is now to become the world’s most profitable entertainment company,” he said.
One overarching way to reach that goal is through an “unwavering culture of financial discipline; a recognition that in order to continue to create the most compelling interactive entertainment, we have to provide a return -- a superior return -- to our shareholders," he said.
Activision already lays claim to the best-selling game of 2009 in Infinity Ward-developed Call of Duty: Modern Warfare 2, and the most profitable MMORPG in Blizzard’s World of Warcraft, among other popular, commercially successful series.
“If you continue to have the kind of rigorous commitment to excellence in our product development processes, and capitalize on these changing dynamics in the marketplace, what you’re likely to see five or 10 years from today is Activision becoming the most successful, profitable developer of entertainment,” said Kotick, who argued that the video game industry is where the most successful franchises are being born today -- not in TV or film.
Kotick, an admitted non-gamer, is a savvy businessman who is always eying ways to expand Activision’s business. One way to expand the company’s margins is to find ways to become active in the lucrative used game market. Retailer GameStop generated $2.4 billion in revenues in used video game product sales (video games, hardware and accessories) last fiscal year. It's a market in which publishers see no revenue.
“Today there’s a $3 billion used games market that we do not participate in, in any way,” Kotick said. “There’s roughly a $500 million opportunity for us in used games. It’s highly margin accretive.”
One way that Kotick said Activision can participate more in the used games business is to find ways keep games from hitting used racks in the first place. The exec said this is achievable by creating “better, deeper games that provide persistent engagement that make people actually want to keep those games longer.”
Downloadable content also is a way to keep consumers engaged for a longer period of time, he said, and Activision is highly active in providing post-release DLC for its games.
A more direct way to participate in the used game market, Kotick said, is to “partner with our retailers to implement new technology solutions that allow us to continue to provide value to their customers through lower-priced products, but where we actually get to participate in the revenue stream.”
|
| |
|
|
And in fact, he seemly does not understand that being most profitable != being the best... Also he does not understand that giving most return to shareholders != treating well your clients...
But, this paragraph alone, make this time, I take my hat off.
"
One way that Kotick said Activision can participate more in the used games business is to find ways keep games from hitting used racks in the first place. The exec said this is achievable by creating “better, deeper games that provide persistent engagement that make people actually want to keep those games longer.”
"
If he understood that himself, that is a GREAT start. Maybe, we will see in the future, a Activision that champion what is good, like the past Activision, without having to get rid of Kotick at all.
Oh but Jacob, they DO have Blizzard, including its $1b cash cow World of Warcraft. And with Starcraft II launching, ATVI will continue to dominate. Not to mention they have Tony Hawk, Bond, X-Men, Spiderman, Transformers, the list goes on and on. Please check your vitriol at the door next time, as it is blatantly obvious and fails to advance any form of discussion other than merely trolling.
1. CoD
2. Hero - Ok, so it had a bad year but they have not given up on it and the story line Quests is a great idea to turn it back into a game.
3 .WoW – Warren Buffet business
4. Starcraft 2
5. Diablo
6. New Mmo in production – never been seen before
7. Bungie
You'll have the non commercial emotional type saying silly things like CoD is is decline or "ooh they are such horrible people" - well I bet right here Black Ops sells more than MW2. To be blunt a business has to be run by commercial people. Not the creative/ arty types who make the games. If the latter are allowed to run the business the games are late if they ever arrive and over budget. And they normally go bust or get bought out. The game is changing. It's about managing brands and franchises and for that you have to be commercial. ATVI do it with ruthless efficiency to astounding success. Bungie knew what they were doing when they got in bed with the devil. The difference to Bungie will really be $100's of millions in revenue. I have not heard the EA call yet but ATVI really is a class apart. Best in class. You name it. Rather than fight it you should embrace it. They will win and they will be "world’s most profitable entertainment company".
http://www.gamasutra.com/blogs/ThomasBuscaglia/20100612/5356/Some_Thoughts_on_th
e_Activision_Independent_Game_Contest.php
Also don't get lost with this "better, deeper, longer kept games". It only means they want to capitalize on DLC, which is the easiest way to make an already sold gamer open his purse again. Minus the effort of creating REAL new content.
But here, ATVI keeps talking about finance, profit, shareholders, and milking franchises. We could say it's just a bad public communication, though, but when I look at their titles, they're nothing near innovation. Next sequel of Guitar Hero is half-baked, and Black Ops looks like a "Rambo 17 - the great angry come back". Even WoW is starting to adopt this recycling policy with Cataclysm (they even cut down all the initially announced few original ideas lately).
When you're mixing those anti-evolution game sequels with that finance/shareholder/profit/expansion constant talk, you end up with a strong impression of being in front of a brainless giant mass-production factory, like the ones we have in the movie industry.
I guess their next step is to create a game auto-generator.
*insert penny*
- "Hello user, here is your fresh auto-generated sequel."
Maybe it's only a bad impression, but it's been a while now since the whole internet has put this etiquette on ATVI, and they do not seem to care about changing it :/
I understand this milking strategy will always have its audience, but with so much money in the purse, it's not like they couldn't care a bit much about trying out new ideas.
A lot of big companies are doing it (EA, Sony, Capcom, etc)
IW bussiness aside, its shoddy from both ends, he runs a company so he is profit driven or the company dies. Anyone with half a neuron understands this. You want inovation in AAA, well EA tried to do that in 2008 and had one of its worst years, taking the profit road once again. You want innovation go to the indie scene, you want numb entretaimnet stay in the AAA. Once in a while both worlds touch and stuff like ICO and SotC comes to life, but even ICO was profit disaster, so what do you expect of him.
You have to live and let live, he wants to do the same games over and over, let him dont buy and shut the hell up. His company sells millions, perhaps his games (I dont have any GH, CoD, recent Blizz related stuff) have done something right??? Or are you saying that all activision game buyers are stupid? Are you the sole owners of all that's fair and correct? Jeessshhh... ITS A BLODDY bussiness, dont want to make profit, dont swim in the AAA scene, go as I did to the indie.
Also remenber there is no indie scene if there is no AAA scene...
You misunderstood my post. I was trying to say that I just don't like what I see in Activision's financial future based on active franchises and current trends (guess I should write my posts better). I see a guitar hero franchise that is losing its selling power due to over saturation, a call of duty franchise bound to do the same thing with its main devs gone and slew of other games that will not innovate or be the best in any way, they will be the same as their predecessors. Blizzard and Bungie should be able to keep them rolling since WoW makes so much and Starcraft 2, diablo 3, cataclysm and a new Halo pending release. All I was saying is that Kotick is kidding himself if he thinks Activision can be the most profitable company with current trends. Yes, they will continue making a good amount of money but most profitable is not within their reach...yet.
Also, you don't get the point, what is hurting Activision image (and not only Kotick) is their OBSESSION for profit.
Come on, they have ones of the best franchises in their hands (WoW, CoD, GH, ...). It's just that passionate gamers like me are just fracking scared by this money gluttony to kill our favorite games. Nothing more. Because we all know how greediness can kill just anything, right ?
A bit of humour : If they are so much priorizing money over videogame, why don't they just become a bank ? ;)
@Jacob : you couldn't express my feelings better.
One way that Kotick said Activision can participate more in the used games business is to find ways keep games from hitting used racks in the first place. The exec said this is achievable by creating “better, deeper games that provide persistent engagement that make people actually want to keep those games longer.”
That may be the smartest thing Ive ever heard come outta this guy. Usually he just make me want to punch him.
Nintendo says Hi
@Benjamin: Different oppinions sure (or not), but I dont see how you demand respect for your opinions and then bash the guy for his, never the less I apologize if my words disrespected you. Sure, I dont like some of the stuff he does(like I said IW stuff is creepy), he is the reason I dont buy anything Activision related (Im really gonna miss Diablo 3 and Starcraft 2 but I wont sell my morals that easily). I just dont buy it, and then I shut the hell up... because my actions say something stronger than my words. The same way I did back when EA was considered the monster of gaming.
I respect your opinions as much as I respect Koticks, Im just sick and tired of seeing people all fired up bashing him (and other people in the industry) has if he has any type of obligation to make games you like (in your point of view ofc). I just choose not to bash him for everything he says, even if I believe he is wrong.
If something is wrong with the industry is just not one guys fault, all of us are to be blamed and all of us need to take action to improve that situation.
I'm not convinced that Kotick is responsible of all recent ATVI discussable decisions, indeed.
Also, Why does anyone think that ACTIVISION will not launch new IP's when some of the established ones start to die (GH, CoD, etc)?
I cant really believe that a company this big doesnt known what its doing, anyone thinking that they do not understand the AAA market are just lying to themselves. They know the market and they exploit it very well...
Activision is just as bad or just as good as any other company in the industry, we just grew found of bashing the company/kotick.
You hit the unpopular nail right on its uneven head: "If something is wrong with the industry is just not one guys fault, all of us are to be blamed and all of us need to take action to improve that situation."
I reference a similar sentiment at the tail end of a 6-part marathon article I wrote back in late 2008 entitled "Transforming the Games Industry into a Well-Oiled Machine."
http://www.emscharf.com/blogosphere/genuinearticle/genuinearticle_2008/genuinear
ticle_2008_0005_06.htm
Any business that I would choose to invest in I would ask the question what is your goal. If they say "to make money" I would say how do you make money. This speech comes across as saying "we are going to become the biggest company in the world by making money. How do we make money? By making money." Underpants gnome syndrome. When you set profitability as your number one priority you are neglecting the fact that money comes to those who have the markets needs as a number one priority. When people argue that the point of business is to make money they miss this fundamental point...money does not make itself. This speech sounds like 5 years ago Sony "We are the biggest company in gaming and now we are going to make some money". We have seen how that turned out. A great quote I once heard form former Nintendo president Hiroshi Yamauchi is "We make money by making people happy". The accepted interpretation is that "Nintendo" should focus on making people happy and thus the money will come. You could argue that you don't like Nintendo or their products don't make "you" happy but the philosophy still stands and their current market position supports the philosophy.
Now for my second mind, I can see from some of his comments that Kotick perhaps does understand this. He talks about ways to achieve profitability through quality etc etc. So perhaps his direction is the right one. The only thing that makes me not sure is he shows through his obsession with talking about the profit side of things that although he might on some level understand that profitability is achieved through giving the market what it wants, in reality he is looking for the profits before doing the work and maybe the talk of quality is lip service.
Time will tell, I suppose.