By the end of 2020, the company had beaten analyst expectations and generated $8.1 billion in revenue, up nearly 25% year over year.
Much of the success came from the company’s ability to keep players engaged with core franchises like “Call of Duty” and “World of Warcraft” while wringing value out of its collection of intellectual property, such as the “Tony Hawk’s Pro Skater” and “Crash Bandicoot” (both franchises got a sequel or rerelease in 2020).
Most of those game franchises have been developed under the leadership of Bobby Kotick, who became chief executive of Activision in 1991 and oversaw the company’s 2008 merger with Blizzard Entertainment owner Vivendi Games.
Kotick spoke with the Business Journal about the company’s adjustments during the pandemic, its esports and free-to-play strategies, and lessons from his three decades in the video game industry.
There’s a narrative that the video game industry was pandemic proof. How much of that was people stuck at home and how much of it was behind-the-scenes adjustments by companies like Activision Blizzard?
I don’t know that we’ve really seen the data that would suggest that all video game companies were successful during the pandemic. I would say that there probably was some benefit that came with people being at home and trying to find ways to entertain themselves, but I think our success last year was the result of strategy changes over the last few years and then very good execution. I think it’s that very good execution that resulted in a lot of what we saw as overperformance.
How does your success of the past year frame things going forward?
The one thing that’s likely is that, especially for our free-to-play games, more people were occupying themselves playing games than ever before. I do think that’s going to accelerate what has been a very positive trajectory for gaming. More people in more places than ever before are playing games, and I think that will continue.
Were free-to-play games one of the strategies you had been implementing prior to the pandemic?
Yes. We have increased the number of games that are free and where they are available — whether on a console or a PC or on a phone. We increased the number of games that were free, and especially with a game like “Call of Duty,” that actually caused there to be a lot of excitement and enthusiasm for that content.
What’s changed with the industry that’s allowed free-to-play games to become a big part of your strategy?
I think there are a few things. Probably the most important is that over the last 10 years, telephones have become such an important delivery device for gaming. And in the last 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’d only find them in countries with middle classes and developed economies. Now, phones enable you to play games everywhere. That’s really broadened the opportunities.
Are Activision Blizzard’s core franchises a big asset when it comes to free-to-play titles since they have brand-name recognition?
I think the brand recognition has a lot of value, but I think the key is creating really compelling, fun-to-play content. That’s much more of a critical part of our strategy. “Call of Duty” (“Warzone”) is a great example. That became available free to play on consoles and PCs and phones, and because it was great and compelling gameplay, it enabled us to have a much broader audience of players. The number of monthly active users went from 30 million to over 100 million.
What were some of the biggest challenges during the pandemic?
For us, the most important thing is you want to have a work environment where people who are inspired and creative are going to be able to collaborate with each other. Finding ways to have creative collaboration where you’re not physically present is not an easy thing to do.
How were you able to do that without in-person gatherings?
We had very inventive teams that did their best to figure out how to engage with each other over Zoom. For example, we had people acting out animations instead of in person where you might have had a screen everyone was looking at. I can’t say there was any one thing that was a redefining moment about how to inspire creativity, but people managed through it with a lot of resourcefulness. And there was more time. Less time (spent) commuting, but more time engaged on video. I can’t tell you what the long-term implications are yet in this change in the way you manage creative processes, but I think a lot of our most inspired creative teams are looking forward to going back into the office.
So, you’re not considering a hybrid office/remote work situation?
Oh, we are. What I’m saying is there’s a desire for people to get back into the office. That doesn’t mean all the time, and I don’t think we’ve figured out quite yet what the implications are going to be for the creative process. We managed something new, which is a hybrid work environment. We had a lot of cross-country and cross-studio collaboration before there was a pandemic. So, we have a lot of tools in place for people in different time zones and different studios who are working on the same franchise to be able to collaborate.
You gave out your phone number to employees during the pandemic, so they could call with health concerns. Did anyone take you up on that offer?
Oh yeah. It was not just my phone but my email also. Hundreds of people reached out. What we had said was we have a very young employee population, and I wanted to make sure not just our employees but their parents (were healthy). We didn’t have a lot of cases of Covid-19, but we did have people whose parents were sick, and so we wanted to make sure everybody had access to the best health care and that included people’s family members.
You made staffing cuts for live events. Is that temporary?
We have a long-term hope that we can go back to live events because they’re a really important part of the experience and what brings our communities together socially. We had a recognition that in this past year, obviously, we couldn’t host live events, and it’s unlikely that any time this calendar year we’ll be able to host live events. For the long term, it will be important to get to a place where we can have live events again.
The franchises in the “Call of Duty” and “Overwatch” leagues are tied to specific cities and even venues. Why is it important to tie teams to specific regional fan bases?
I think when you look at the history of sports, local-level loyalties like city loyalties, state loyalties, country loyalties — those 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 that happened in part because of the experience of traveling to the venue, of being able to have a certain type of physical experience. That’s not to say you can’t get some of that from online experiences, but I think the destination experience really enhances local-level loyalty and excitement and participation. Our view was that having those local-level events was going to be really critical to a successful, broadly appealing esports experience.
You’ve been in the video game industry for decades. Is there something that you wish you had known when you started?
I don’t think we fully understood early on 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 underrepresented minorities. We had the first openly gay hero and the first autistic hero that I know of in a game. There wasn’t any special purpose to the design other than this view that because of the size of the audience and the amount of engagement that games could be used as a tool to foster a change in stereotypes and encourage inclusion and break down the barriers to connection that so many things in society create.
With that as a foundation, what is the opportunity for the future?
Having a much more conscious understanding of how impactful our games can be from that perspective, there’s a lot more that we can do as a medium to encourage diverse views, voices, inclusive behaviors and thinking. If you think about our mission, which is to connect and engage the world through epic entertainment, the lens by which you connect people is just fun and joy and accomplishment. It’s very different from what you see in traditional social media.
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