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Bobby Kotick and a partner bought the once-struggling Activision for $440,000 in 1991, at a time when it was losing $30 million on $10 million in revenues. Now the world's biggest independent computer games company, it has a market value of $16 billion (£10 billion) and operating profits of $179 million in the first quarter on sales of $981 million.
Activision overtook Electronic Arts last July when it was in effect taken over by Vivendi of France in a deal where Vivendi injected World of Warcraft into the company for a 56 per cent stake. With such success, Mr Kotick, who runs the business from Beverly Hills, can probably get away with saying anything, which, soon enough, he does.
The target is Sony, the once-dominant hardware maker. “I'm getting concerned about Sony; the PlayStation 3 is losing a bit of momentum and they don't make it easy for me to support the platform. It's expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation,†he says.
It is not a very subtle hint, although Mr Kotick says his company paid $500 million to Sony in royalties and other goods last year, which “probably still worked out at 400 per cent of the profit they madeâ€. Actually, Sony's games division lost $597 million last year, and Mr Kotick seems to think it may have to risk more losses if the £299.99 PlayStation 3 is to develop.
“They have to cut the price, because if they don't, the attach rates [the number of games each console owner buys] are likely to slow. If we are being realistic, we might have to stop supporting Sony.†Ask when and he says: “When we look at 2010 and 2011, we might want to consider if we support the console — and the PSP [portable] too.†Sounds like Sir Howard Stringer, Sony's chief executive, is going to have to call Mr Kotick pretty fast.
Activision is pretty fortunate in that it has ridden the trend away from traditional “shoot 'em up†titles to family-oriented, interactive games such as Guitar Hero, which grossed more than $1 billion last year. “It was as big as Titanic [the film] with better marginsâ€.
DJ Hero, with its own turntable, will follow this year, although Activision will have to endure its main competitor, Viacom's Rockband, launching a Beatles-themed game.
But it is a trend that, unlike Nintendo, which practically reinvented gaming with the Wii, Sony has been slow to react to. To illustrate the point, Mr Kotick stands on a plastic skateboard that turns out to be the controller for Tony Hawk: Ride — the company's attempt to reignite the well-worn franchise. Using motion and infra-red sensors, the board detects movements in both the player's body and feet, and speed is generated by swiping a foot on the floor next to the board. It is hoped the title will be a blockbuster later this year.
“Such a physical interface could be ideal for Sony,†he says, building up the sales pitch, before he warns that he will “generate better returns on invested capital†on the Wii and the Microsoft console. If he can persuade Sony to bend to his will, then it will be a sign of how far the power in the computer games industry has changed.
Activision overtook Electronic Arts last July when it was in effect taken over by Vivendi of France in a deal where Vivendi injected World of Warcraft into the company for a 56 per cent stake. With such success, Mr Kotick, who runs the business from Beverly Hills, can probably get away with saying anything, which, soon enough, he does.
The target is Sony, the once-dominant hardware maker. “I'm getting concerned about Sony; the PlayStation 3 is losing a bit of momentum and they don't make it easy for me to support the platform. It's expensive to develop for the console, and the Wii and the Xbox are just selling better. Games generate a better return on invested capital on the Xbox than on the PlayStation,†he says.
It is not a very subtle hint, although Mr Kotick says his company paid $500 million to Sony in royalties and other goods last year, which “probably still worked out at 400 per cent of the profit they madeâ€. Actually, Sony's games division lost $597 million last year, and Mr Kotick seems to think it may have to risk more losses if the £299.99 PlayStation 3 is to develop.
“They have to cut the price, because if they don't, the attach rates [the number of games each console owner buys] are likely to slow. If we are being realistic, we might have to stop supporting Sony.†Ask when and he says: “When we look at 2010 and 2011, we might want to consider if we support the console — and the PSP [portable] too.†Sounds like Sir Howard Stringer, Sony's chief executive, is going to have to call Mr Kotick pretty fast.
Activision is pretty fortunate in that it has ridden the trend away from traditional “shoot 'em up†titles to family-oriented, interactive games such as Guitar Hero, which grossed more than $1 billion last year. “It was as big as Titanic [the film] with better marginsâ€.
DJ Hero, with its own turntable, will follow this year, although Activision will have to endure its main competitor, Viacom's Rockband, launching a Beatles-themed game.
But it is a trend that, unlike Nintendo, which practically reinvented gaming with the Wii, Sony has been slow to react to. To illustrate the point, Mr Kotick stands on a plastic skateboard that turns out to be the controller for Tony Hawk: Ride — the company's attempt to reignite the well-worn franchise. Using motion and infra-red sensors, the board detects movements in both the player's body and feet, and speed is generated by swiping a foot on the floor next to the board. It is hoped the title will be a blockbuster later this year.
“Such a physical interface could be ideal for Sony,†he says, building up the sales pitch, before he warns that he will “generate better returns on invested capital†on the Wii and the Microsoft console. If he can persuade Sony to bend to his will, then it will be a sign of how far the power in the computer games industry has changed.
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