The CEO of Activision Blizzard, Bobby Kotick, explains why he felt it was right to sell the gaming company to Microsoft. He says: Even if one had decided to acquire Electronic Arts, one would still have been too small to compete in the new world of Tencent, Apple, and Facebook.
This is the situation:
- Yesterday, it became known that Microsoft has made a takeover offer for Activision Blizzard for nearly 70 billion US dollars. The deal shocked the gaming world, and people were stunned by what was happening.
- This deal still needs to be finalized. One needs the “okay” from the authorities. The deal is supposed to be completed by mid-2023 if everything goes smoothly.
- The current CEO of Activision Blizzard, Bobby Kotick, will oversee the business until the deal is through. Then he will report to Xbox chief Phil Spencer. Kotick has been under heavy criticism since at least November 2021, since the sexism scandal hit Activision Blizzard. Thousands of Blizzard employees demanded his resignation.
Even if one had acquired EA, one would not have been large enough
This is what Kotick says about the sale: Kotick says in an interview with Venturebeat that ultimately, they decided to sell the company because they simply were not large enough to compete in the new world:
You might think: Okay, we are this big company and have these vast resources. But when you compare us to companies worth trillions or 500 billion US dollars, you realize that we were perhaps a large company in gaming, but in today’s landscape, with our competitors, it is a different world than before. […]
Even if we had consolidated with EA, we wouldn’t have had what we needed to move forward. So we needed a larger partner to do what we want to do.
Bobby Kotick
Activision Blizzard is selling due to Guitar Hero, Skylanders, Candy Crush
What did Kotick want to do? A big vision for Kotick seemed to be selling games with related items. He specifically laments:
- He wanted to release a new Guitar Hero, but he would have to establish a distribution line and quality control for the equipment. That didn’t work – plus, the chip shortage is a real problem.
- Moreover, he wasn’t able to execute Skylanders as well as he wanted.
- Kotick would have liked to develop Candy Crush into a “social experience.” However, that didn’t work with Activision Blizzard’s resources as he envisioned.
Skylanders is sold with gaming figures. The last game was released in 2018.
In the new world, Activision Blizzard competes with huge companies
Whom does he mean by the competition? Kotick specifically lists who he sees as competition in the new world:
- Tencent
- NetEase
- Sony
- Amazon
- Apple
- Microsoft
- Netflix
This is what he says about the sexism scandal: Kotick is asked in the interview whether the sexism scandal contributed to lowering Activision Blizzard’s stock price and thereby made the takeover possible.
Kotick downplays the significance of the scandal for the stock price. He says that Call of Duty did not perform well, and especially the delays of Overwatch 2 and Diablo 4 lowered the price. But ultimately, stock prices rise and fall for various reasons.
They achieved a “very good price” for the shareholders.
In response to a later inquiry about how he deals with the personal criticism directed at him, Kotick states: From his perspective, even a single case of harassment in a company is too much. They have been working for three years to improve the climate and have made that a priority since they became aware that the California authority was investigating Activision Blizzard for sexism.
For him, it is a priority to provide the best possible workplace.
This is what is behind it. What Kotick describes here is the “endgame” of the gaming industry. That is what he means by the “new era” that has dawned.
It is no longer a battle for the players’ money, but for the players’ time. Therefore, he suddenly sees Netflix as a competitor. The trend is shifting towards “subscription services” and cloud gaming. People should no longer place a console in their living room, but should instead play as many games as they want through a subscription service via their television.
Just like people now only get Netflix for movies and no longer need a “Blu-Ray” player, Activision Blizzard is now becoming part of Microsoft’s “Game Pass” and cloud gaming.
Kotick had declared a few years ago the goal of reaching one billion players worldwide with Activision Blizzard – he apparently saw his opportunities for that dwindling.
It is unfortunately noticeable that he downplays the criticism of himself and the management during the sexism scandal. However, things had apparently been brewing in the company for months.
The acquisition of Activision Blizzard could have significant implications for gaming:
Microsoft buys Blizzard – Will Overwatch 2 and Diablo 4 no longer come to PS5?
