Activision Blizzard goes indie after CEO Kotick buys back the company
massively.joystiq.com
massively.joystiq.com
This story is less about independence, and more about allowing Vivendi to cash out on its 2007 merger of Activision and Blizzard. Basically, Vivendi transferred Blizzard to Activision in exchange for 52% of the combined entity (Activision Blizzard). While A-B has been doing well over the years, Vivendi has not fared as well. It wants some to capture some of the upside through the buyback.
I don't know if this makes them "independent," but it doesn't seem to make them owned by a conglomeration of other parties either.
The post-split cap table looks something like this (from what information has been made public at this point): Bobby Kotick & associates (including Brian Kelly and Tencent, among other unnamed parties) own 24.9%. Vivendi's share drops to 12%. A-B itself buys back the majority of shares. Technically speaking, yes, A-B becomes an independent company (in as much as the majority of outstanding shares are publicly owned).
My phrase "I'd hardly call that independent" was probably an overstatement worth correcting. My bad on that one. Because the word "independent" (and especially the derivative "indie") has a very industry-specific meaning in this case, I found the headline a bit misleading.
[1] http://kotaku.com/5559201/a-delightful-chat-with-the-most-ha...
Do you really want a university educated, never used a tool to make a living in his life, deciding he gets to dictate how to frame, roof and side your new house, maybe use less nails to cut down on costs? Is that a company you want to invest in?
I work in construction, my boss climbed to the top but he still only gives suggestions on how to do things because it's been over 20 years since he's actually done it. Our tools aren't dictated to us, our set ups aren't. We do our job, he does his.
For a company producing games your executives don't need to be the creative brains or anything of the sort, they've got tons of that below them. They've got entire departments of artists, developers, writers, etc. Why the hell would anybody think its financially prudent to get the CEO in on what would be a good story when you've got a career writer, or what cinematography style you should use when you've got artists on staff.
You want the management to be coordinating all the little guys so that everyone hits the goal posts and finish lines at the right times and make those judgement calls to either delay the project or drop something to make the deadline.
People who manage game developers don't necessarily need to be good at developing games- they need to be good at managing people who develop games, which is related but not the same.
While it's /possible/ for a CEO influence effective strategy without using or thoroughly understanding their product, it does not exactly inspire confidence.
E.g. movie studios CEO might suck at writing, acting and never know which end of a camera shoots but, unlike their game industry colleagues, the do watch movies.
Steve Ballmer might be an awful coder and would not know how reinstall Windows from an OEM disk but, I have no doubt, he uses Windows and other MS products every day.
Elon Musk might not know how to change a tire or adjust wheel alignment, but he does drive cars.
The video game industry is really standing out with the most management, not just C*Os, having absolutely no idea what are the products their minions are producing.
That's several examples of CEOs that are obviously at least superficially familiar with the products their respective companies make.
An effective CEO has at least a theoretical understanding of what the various employees in his company do, that while they may not know how to program they at least know what programming entails.
To not use the products your company produces is arrogance if not idiocy. How can you lead except by numbers in that situation?
Remember when the CEO of Motorola got their email printed out by their secretary? Ignorance like that reduced them from the dominant force in the industry to a pet of Google.
He may not be a gamer, and he may receive a lot of flak for his brazen "I just crank out IP; I'm not trying to make art" attitude. But as a CEO, it's hard to argue with his track record over the last 20+ years. As to whether he's qualified to lead Activision in the post-mobile world, well, that remains to be seen. Innovator's Dilemma.
The biggest threat is that they'll run out of franchises to ruin.
It's really hard to tell if someone like Kotick is running the business in a sustainable fashion, or if he's just beating all the value out of the company, getting in a good run, and then dumps the company in someone else's lap when it's exhausted.
Those 439 shares must have one hell of a preference.
Their big screw-up is perhaps the Diablo III auction house. The idea is good, but it has spiraled out of control. The auction house is now the only viable way to acquire gear. Playing only serves to rack money, but reselling is as good a way to make money. Gear serves to play, to rack more money, to buy better gear. The auction house is now the game. You can do very well at the game without ever playing the "real" game. Not to mention that shelling a few euros on the real money auction house will save tens of hours of farming, and real money continues to appreciate wrt in-game currency.
* no RMAH (and as such, all the good items are on sell for gold)
* and huge moneysink in the form of dying characters (as such, less gold inflation)
Also, when you play HC, leveling up your new character is so much less painful with AH. Besides, I'd just by something @ d2jsp.
Since the merger, Blizzard has aggressively moved towards in-game real money transactions including one high profile fuckup where they irreparably ruined the economy of an entire game, ruining the game itself for many players (especially their older and more devoted fans).
They've scrapped their major next MMO, pushing it back and folding much of the staff into other projects while this one goes back to the drawing board.
They predictably released StarCraft 1.5, the graphics update, but StarCraft is a known commodity and they didn't have the leeway to make substantial changes without massively disrupting the playerbase.
I can't find a single product of theirs that screams character and love and devotion to video games like their classics do, but every single product does appear to be a financially calculated move to extract as much money as possible from gamers.
From this long time (and no longer) Blizzard fan, modern Blizzard looks more like Zynga than the company they once were. More interested in ARPU than making wonderful games.
I also enjoyed Guild Wars 2 -- the latest game by a team of ex-Blizzard staff.
Another few years of that and they'll merely be ... well, still the largest subscription MMO ever...
However, WoW simply is more playable than its competitors. I played a few of them, and WoW was still better. The next MMO to carefully build itself to be super playable will be quite a hit, I think. Note - when WoW was released, mobile wasn't here. If most casual gamers have moved to Facebook/mobile instead and won't get a desktop to play their MMO, the market will have shifted such that there won't be another WoW.
> korean cybersport is finally transitioning to SC2
Yes and no. Proleague finally switched from Brood War and KeSPA players are doing excellent in the WCS leagues, esports in Korea are way down from where they've been, with MBCGame dead. Even then, almost everyone is playing LoL.
In fact, in PC Bangs, Starcraft 1 is STILL more popular than Starcraft 2.
> diablo is fine
Again, yes and no. It sold well, and the initial sale of a Blizzard title is where almost all its revenue comes from. But many, many of the most hardcore fans were disappointed, and most won't buy the next Diablo property 'sight-unseen' like the last one.
> wow is probably holding record for the most living / profitable mmo
True, WoW has been the most profitable MMO ever. But their numbers have declined over the last few years, and every attempt they've had to "give it the paddles" and reignite growth hasn't been too successful.
Almost all my friends who played WoW call it a shadow of the game that it was, citing the HUGE differences in skillsets and builds, how easy it is to get rewards, etc.
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All that said, SC2 was a HUGE part of eSports rising worldwide, and still sports a pretty healthy audience. And one has to expect their next MMO will be spectacular, if they can ever abandon WoW.
Speaking here as someone who has played WoW since vanilla, that's sort of a self-selecting sample. Your friends who used to play WoW are people who selected into enjoying it when it was a (by modern standards) relatively hardcore game. It makes sense that they might be turned off by its new "everyone can see all the content!" approach.
It wouldn't surprise me if their current subscription "woes" (quotation marks because they're still the biggest MMO around) stem from the more-casual userbase running through, seeing everything, and not having any really reason to stick around, instead canceling their subscription until the next big content drop.
Am curious why you put that qualifier in. Is it just that you think people have to play MMOs to become bored of them?
On the other side are those who define indie as your level of freedom to do what you please with your product. In that case, even though they may be large and successful, being privately owned and without a 3rd party (ie. publisher) gives them the freedom to take their games in whatever direction they choose.
It's a meaningless distinction, IMHO.
In any case, ActiBlizzard is very very far from being indie. They don't innovate, they have loads of money from some of their cash cows and probably every member of their team is easily replaceable like a standard cog in a machine. And when you're listed on NASDAQ and your employee count is in the thousands then you're practically a corporation.
And by the way, "gaming" industry refers to gambling industry.
I think you took the definition a tad too far.
Most indies don't have teams of engineers, artists, designers, marketers, or musicians to polish their turds into blockbuster gems. Because of this, an indie had better hope that their project begins as shiny as possible, which is why innovation (especially in gameplay) is crucial.
http://www.businessinsider.com/amazons-letter-to-shareholder...
The problem with the stock market is that it is optimizing for a different thing than most companies, and even society at large. If the minimum holding period for an asset was, say, 20 years, the subprime mortgage crash would have been much less likely. (One could make a similar argument for democratic office. But I digress.)
Shareholder value theory induces a sort of hysterical myopia, where ideas and results are evaluated in these Q2Q or Y2Y window. Growth is only evaluated within the context of the company, which creates perverse incentives wrt externalizing costs. Furthermore, if growth initiatives require no additional external funding, then the public stock market -really- makes no sense, and that is likely the case for Blizzard and Dell.
Getting away from shareholder value theory's myopia is the surest way to begin a sustainable recovery of our capital markets.
One wonders what rules Microsoft stockholders are playing by. They seem to have the patience of a Zen master. Are their dividends enough to justify another 'lost decade' with Ballmer in charge?
It also opens the possibility of deferring sales figures to fudge the numbers, for example sales in 2011 haven't "finalized" so they show up in 2012's reports, but those sales actually happened in 2011. It's effectively kicking the can down the road to buy time to fix whatever the reason sales figures are being deferred.
Still requires internet and battle.net accounts.