By the end of 2020, the company had exceeded analysts’ expectations and generated $ 8.1 billion in revenue, up nearly 25% year-over-year.
Much of the success has come from the company’s ability to keep players engaged with core franchises such as “Call of Duty” and “World of Warcraft” while deriving value from its collection of intellectual property, such as “Tony Hawk’s Pro Skater” and “Crash Bandicoot” (both franchises got a sequel or reissue in 2020).
Most of these game franchises were developed under the leadership of Bobby Kotick, who became CEO of Activision in 1991 and oversaw the company’s merger in 2008 with Vivendi Games, owner of Blizzard Entertainment.
Kotick spoke with The Business Journal about the company’s adjustments during the pandemic, its esports and free-to-play strategies, and lessons from its three decades in the video game industry.
There is a story that the video game industry was pandemic-proof. How much were people stuck at home and what was the share of behind-the-scenes adjustments by companies like Activision Blizzard?
I’m not sure if we’ve really seen the data that suggests all video game companies have been successful during the pandemic. I would say that having people at home and trying to find ways to be entertained has probably had some benefits, but I think our success last year was the result of changes in strategy over the past few years. , then very good execution. I think it was this very good execution that resulted in what we considered to be an outperformance.
How does your success from last year frame the future?
The only thing that is likely is that, especially for our free games, more people were busy playing games than ever before. I think that will accelerate what has been a very positive trajectory for the game. More people in more places than ever are playing games, and I think that will continue.
Were free games part of the strategies you implemented before the pandemic?
Yes. We have increased the number of free games and where they are available – be it on a console, PC or phone. We have increased the number of free games, especially with a game like “Call of Duty”, which has actually generated a lot of excitement and enthusiasm for this content.
What has changed with the industry that has made free-to-play games an important part of your strategy?
I think there are several things. Perhaps most importantly, over the past 10 years, phones have become such an important delivery device for games. And for the past 30 years, the cost to get into gaming was expensive because you had consoles and PCs, and those were really expensive, especially for a single-purpose experience like video games. And you will only find them in countries with middle classes and developed economies. Now phones let you play games anywhere. It really widened the possibilities.
Are Activision Blizzard’s core franchises a big plus when it comes to free titles because they have brand awareness?
I think brand recognition has a lot of value, but I think the key is to create content that is really compelling and fun to play. It is much more of an essential element of our strategy. “Call of Duty” (“Warzone”) is a prime example. It became available for free on consoles, PCs, and phones, and because it was awesome and compelling gameplay, it allowed us to have a much larger audience of gamers. The number of monthly active users has increased from 30 million to over 100 million.
What were the biggest challenges during the pandemic?
For us, the most important thing is that you want to have a working environment where inspired and creative people can collaborate with each other. Finding ways to have creative collaboration where you are not physically present is not an easy thing to do.
How could you have done this without face-to-face gatherings?
We had some very inventive teams who went out of their way to figure out how to engage with each other on Zoom. For example, we had people playing animations rather than in person where you maybe had a screen that everyone was looking at. I can’t say there was one thing that was a redefining moment on how to inspire creativity, but people managed to pull it off with a lot of ingenuity. And there was more time. Less time (spent) for commuting, but more time spent on video. I can’t tell you yet what the long-term implications of this change in the way you handle creative processes are, but I think many of our most inspired creative teams are eager to return to the office.
So, you are not considering a hybrid office / telecommuting situation?
Oh, we are. What I’m saying is people want to go back to the office. That doesn’t mean all the time, and I don’t think we’ve figured out yet what the implications will be for the creation process. We have handled something new, which is a hybrid work environment. We had a lot of collaboration between countries and between studios before there was a pandemic. So we’ve put a lot of tools in place to allow people from different time zones and different studios who work on the same franchise to be able to collaborate.
You gave your phone number to employees during the pandemic, so they could call for health concerns. Did someone accept this offer from you?
Oh yes. It was not only my phone but also my email. Hundreds of people reached out. What we said was that we have a very young employee population, and I wanted to make sure that not only our employees but their parents (were healthy). We didn’t have a lot of Covid-19 cases, but we had people whose parents were sick, so we wanted to make sure everyone had access to the best health care and that included family members of the people.
You have downsized for live events. Is it temporary?
We have long term hope that we can get back to the live events because they are a really important part of the experience and what brings our communities together socially. We have recognized that over the past year we obviously could not host live events, and it is unlikely that at any point in this calendar year we will be able to host live events. In the long run, it will be important to get to a place where we can once again have live events.
The franchises in the “Call of Duty” and “Overwatch” leagues are tied to specific cities and even locations. Why is it important to link teams to specific regional fan bases?
I think when you look at the history of the sport, local loyalties like urban loyalties, state loyalties, country loyalties – these really form the bonds that become multigenerational. Growing up in New York, my grandfather was a Mets fan, my father was a Mets fan, I became a Mets fan. I think it happened in part because of the experience of traveling to the site, of being able to have some type of physical experience. That’s not to say you can’t get some of it from online experiences, but I think the destination experience really improves loyalty, enthusiasm, and engagement locally. Our point of view was that having these events locally was going to be really critical for a successful and largely engaging esports experience.
You’ve been in the video game industry for decades. Is there something you wish you knew when you started?
I don’t think we fully understood from the start the power of the social nature of our experiences to have a positive impact on culture. In 2016, we launched “Overwatch”, and 50% of the heroes were female even though we knew it was likely that 80% of the players would be male. We had a very high percentage of heroes from under-represented minorities. We had the first openly gay hero and the first autistic hero I know of in a game. There was no particular purpose to the design other than this view than due to audience size and quantity. engagement that games could be used as a tool to foster a shift in stereotypes and encourage inclusion and break down the barriers to connection that so much in society creates.
With this as a foundation, what is the opportunity for the future?
Having a much more conscious understanding of the impact of our games from this perspective, we can do much more as a medium to encourage inclusive views, voices, behaviors and thoughts. If you think about our mission, which is to connect and engage the world through epic entertainment, the lens through which you connect people is all fun, joy, and accomplishment. It’s very different from what you see on traditional social media.
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