Taking a Look Into Activision Blizzard Part 1

July 2007 – July 2008: Activision and Blizzard merge in an 18 billion $ deal into Activision Blizzard, with Activision as the dominant partner. They get to appoint “Robert A. Kotick” as the new CEO (Chief Executive Officer) of the Holding company while Vivendi remains majority shareholder with 52%.

Notice, that while it might be true that Blizzard gets to remain “independent” in decisions as how to make their games or put together their teams etc., they both now share and have to please the same stakeholders, investors and have to ultimately answer to the same Board of Directors and Corporate Management.

http://www.activisionblizzard.com/corp/ml/aboutUs/boardOfDirectors.html

http://www.activisionblizzard.com/corp/ml/aboutUs/corporateManagement.html


A nice article detailing some of the details of the merger from a business perspective:

http://www.marketwatch.com/story/bobby-kotick-changes-game-activision

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March 06, 2008: Even before the actual deal was finally approved by every party involved, Kotick started dreaming aloud of what could be done with StarCraft 2 and the new Battle.Net:

Activision CEO Robert Kotick has briefly mentioned his company's plans for maximizing profit from Blizzard's upcoming PC strategy sequel StarCraft II.

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"On the Blizzard side, [we need to] really be figuring out things like the StarCraft business model for the future, with in-game advertising and sponsorship, [which have] really not been something that has moved the dial for anybody in the videogame industry, but that we think presents tremendous opportunity for the future," said Kotick, according to Next-Gen.

"[Blizzard] has been thinking about how StarCraft, because it is a short-session experience, can actually be the model for in-game advertising and sponsorship and tournament play and ladder play for the future."

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Source:http://www.shacknews.com/onearticle.x/51641

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2007-2010+: In the meantime Blizzard introduces more and more “pay-for” features to World of Warcraft, like the “Name Change” for 10$, “Character Re-Customization” for 15$, the “Character Transfer” for 25$, “Faction Change” for 30$, Blizzard Mobile is getting made for phone sounds and pictures: http://mobile.blizzard.com/ , a mount for 25$, several pets, additional protection with the Blizzard Authenticator, so you’ll be safer against hackers for 6.50$ instead of for free or the latest, an Internet interface for the World of Warcraft AH called the “Remote Auction House” as a “Subscription-based service” for cash (2.99$/month).

July 18, 2008: Some of the first signs of things to come in an Interview with Activision Blizzard’s new CFO (Chief Financial Officer) Thomas Tippl:
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How much autonomy is Blizzard going to retain – and is there scope to use Activison and Vivendi’s licences within that division?

Blizzard has established the most successful business in all of video games. It’s not like we need to go there and fix something. Blizzard will continue to operate as they have done in the past – fairly independently.
They have a top notch management and development team and we have a very high degree of confidence that they know how to run the business and a track record to prove it. In addition, they have an extraordinarily strong product pipeline, with Starcraft, Wrath of the Litch King and Diablo 3.

It’s tremendous, and it would be a big mistake for us to distract them with new ideas. But there are some opportunities we will be exploring, especially relating to their expertise in Asia. If you consider that Guitar Hero is not in Asia yet and that the only way to create a business there is figuring out ways to work in internet cafes, etc., we hope to benefit from their expertise.

Is there a message you want to send the European staff of Activision and Vivendi about their future prospects? Are you planning to reduce headcounts at these HQs?

We don’t have a formal plan at this point. With every merger, there is overlap and redundancy, and so the same will be the case here. Of course, we’re going to go to our customers with one face. We obviously don’t need two sales forces.
There will be overlap that we will have to address. Having said that, if you look at our industry, it’s rapidly growing – last year it grew 30 per cent. And we’ve been growing more than three times that speed. In fact, over time I fully expect our headcount to grow. But in the short term we will exterminate some of our overlap through redundancy – but we will treat people fairly and respectfully in that process.
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Source:http://www.develop-online.net/news/30184/QA-More-on-how-Activision-Blizzards-merger-impacts-its-studios
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October 10, 2008: Only 3 months later, Blizzard decides that StarCraft II shall become a Trilogy, with its 3 parts “Wings of Liberty”, “Heart of the Swarm” and “Legacy of the Void” being sold separately
Link:http://kotaku.com/5061980/starcraft-ii-single-player-is-a-trilogy

For the people that don't know it yet, the 3 parts will function similar to WarCraft 3/TFT and StarCraft/Brood War for the multiplayer part e.g. they add new units and buildings and split the community between people owning them or not.

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How will the expansion sets impact multiplayer gameplay?

The expansion sets will add new content to each race for use in multiplayer matches. This could include additions such as new units, abilities, and structures, along with new maps and Battle.net updates.

If I buy StarCraft II but don't buy any of the expansion sets, will I still be able to play online?

Yes. This will work similarly to Warcraft III and the original StarCraft, which maintained separate online gaming lobbies and ladders for expansion set players and players with the base Warcraft III or StarCraft.

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November 6, 2008: One can see actual changes in the corporate policy relatively early, Activision Blizzard drops titles like Brütal Legend, Ghostbusters, Riddick: Assault on Dark Athena, WET and a few others, because they do not fit the new business model. Shortly after that, SIERRA Entertainment also gets shut down with an impending sale of the company remaining.

Kotick regarding this:http://www.gamasutra.com/php-bin/news_index.php?story=20984

With respect to the franchises that don’t have the potential to be exploited every year across every platform, with clear sequel potential that can meet our objectives of, over time, becoming $100 million-plus franchises, that’s a strategy that has worked very well for us.





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September 16, 2008: Soon after, Kotick even believes, that with Activision Blizzard now being so big, he seems to have the right to dictate future consoles hardware design:

"Now that we have the weight of being the largest payer of royalties to the first-parties of any third-party company, I definitely see us as starting to influence hardware design, and they're thinking about the evolution of the next generation of hardware," said Robert Kotick, Activision CEO, speaking to industry analysts.
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April 30, 2009: Valve sues Activision Blizzard, because they chose to pay 1 million $ less royalties than was agreed:
http://www.gamespot.com/news/6208985.html


As reported by GamePolitics, Valve has filed suit this week in the US District Court for the Western District of Washington, claiming that Activision declined to pay out the whole award. Specifically, the Half-Life 2 developer claimed that the Guitar Hero publisher is withholding some $424,000 of the payment, saying that it previously overpaid royalties to the studio.
Valve also said that Activision threatened to file a separate suit seeking that aforementioned overpayment money if the publisher's short-changing on the arbitration award was challenged in court.


This is one of many lawsuits against or initiated by Activision in dispute with (former) business partners and employees… for more examples see the bottom of the linked GameSpot article above, which would ultimately later lead to the claim that Kotick would “prefer to pay his lawyers instead of his employees”.
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June 4, 2009: Just shortly after, Activision decides to sue “Double Fine” (the developers of Brütal Legend, a game they dropped themselves almost a year ago and was now being published by EA). After the title got high recognition at that year’s E3 Activision wants to prevent the release of the game and claims the developers missed important deadlines and did not manage to complete the game on time. They also claim they never handed over the contract for it in the first place. It ended with a settlement.
Source:http://www.joystiq.com/2009/06/04/activision-sues-double-fine-over-brutal-legend/

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June 19, 2009: Kotick threatens SONY to drop the price-point of their console(s) or he could drop the support for those platforms
Source:http:http://www.gamasutra.com/php-bin/news_index.php?story=24118
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"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," Kotick told the UK Times Online, adding that the return on investment is "better" on the Wii and Xbox 360.

"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," said Kotick. "If we are being realistic, we might have to stop supporting Sony."

"When we look at 2010 and 2011, we might want to consider if we support the console," he said -- and also included the PSP as an area to re-examine.
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June 28, 2009: A few more details of the new Battle.Net 2.0 get out, for instance that StarCraft II and Diablo III will not offer a LAN-mode anymore (so everyone that wants to play with you, including friends and family HAS to buy a copy of the game and all Add-Ons and give Blizzard them $$) and that it might contain a few “monetized features” and micro transactions.

Clarification for the above statement: StarCraft I, WarCraft II and Diablo had a feature called "Spawn installation", with which you could legally install the same game with the same CD-Key on a friends or family members PC, with the restriction that the SinglePlayer couldn't be played from the "Spawn version" and they could only join Multiplayer games, you, with the Original CD-Key and Installation were in. While the feature wasn't there specifically for WarCraft III, LAN games with the same CD-Key were still possible, this helped people try out the game with friends and buy it if they liked it, I personally know of at least 3 sales by friends attributed to this feature.
The new version of B.Net 2.0 works in such a way, that even when living under the same roof and another person only wanting to try the game or play with you casually, they still have to own a full second copy of the game + all Add-On keys to be able to do this.

Source:http://www.incgamers.com/Interviews/190/StarCraftIIDevelopersInterviewed

So what's Battle.net all about and how is it different?

The new Battle.net will completely revolutionise the current version, but Blizzard is still looking to making this experience free for anyone buying StarCraft II or future games that use Battle.net. One idea which has been discussed in different iterations is microtransactions, meaning the service is free, but added value services like starting a custom tournament, league, or the like would cost a small amount of money.

He mentioned WoW as an example, where "value added services" like server transfers are paid for, but "you can get the full experience of Battle.net with all the features just from buying the box."

Another example being the “map-marketplace”, where Blizzard maps and “Premium” user-maps can be sold alike with a portion of the revenue going to the map creators :>http://kotaku.com/5343006/blizzard-you-may-sell-your-starcraft-2-maps-on-battlenet-eventually


Blizzard wants to foster the best mod community in existence, and to that ends they've unveiled plans to single out premium custom-created maps for sales on a StarCraft 2 marketplace. Maps will be split into two categories - normal and premium - with the former free and the latter for sale, with a portion of the proceeds going to the map's creators. Blizzard hopes this will lead to more choice for StarCraft 2 players, and more innovative and creative custom maps fueled by the potential financial rewards.

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Additionally, a few concerns regarding said marketplace and privacy are being raised, considering the Battle.Net 2.0 Terms of Use:>http://us.blizzard.com/en-us/company/about/termsofuse.html

User Content.
"User Content" means any communications, images, sounds, and all the material and information that you upload or transmit through a Game client or the Service, or that other users upload or transmit, including without limitation any chat text. You hereby grant Blizzard a perpetual, irrevocable, worldwide, paid-up, non-exclusive, license, including the right to sublicense to third parties, and right to reproduce, fix, adapt, modify, translate, reformat, create derivative works from, manufacture, introduce into circulation, publish, distribute, sell, license, sublicense, transfer, rent, lease, transmit, publicly display, publicly perform, or provide access to electronically, broadcast, communicate to the public by telecommunication, display, perform, enter into computer memory, and use and practice such User Content as well as all modified and derivative works thereof. To the extent permitted by applicable laws, you hereby waive any moral rights you may have in any User Content.

Content Screening and Disclosure.
We do not, and cannot, pre-screen or monitor all User Content. However, our representatives may monitor and/or record your communications (including without limitation chat text) when you are using the Service or playing a Game, and you hereby provide your irrevocable consent to such monitoring and recording. You acknowledge and agree that you have no expectation of privacy concerning the transmission of any User Content, including without limitation chat text or voice communications. We do not assume any responsibility or liability for User Content that is generated by users. We have the right, but not the obligation, in our sole discretion to edit, refuse to post, or remove any User Content. WE ALSO RESERVE THE RIGHT, AT ALL TIMES AND IN OUR SOLE DISCRETION, TO DISCLOSE ANY USER CONTENT AND OTHER INFORMATION (INCLUDING WITHOUT LIMITATION CHAT TEXT, VOICE COMMUNICATIONS, IP ADDRESSES, AND YOUR PERSONAL INFORMATION) FOR ANY REASON, including without limitation (a) to satisfy any applicable law, regulation, legal process or governmental request; (b) to enforce the terms of this or any other agreement or Blizzard policy; (c) to protect our legal rights and remedies; (d) where we feel someone’s health or safety may be threatened; or (e) to report a crime or other offensive behavior.

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July 9, 2009: The Blizzcon prices for 2009 are being raised from 100$ to 125$ (they have been raised to 150$ for 2010 by the way), also Blizzard in a partnership with DIRECTV (and with increasing desire for more $$) provide Live Streaming of the Event for only 39.95$, although Streams from such events as the E3, Tokyo Gameshow or GamesCom are usually free…
:>http://www.sk-gaming.com/content/25054-BlizzCon_video_stream_not_free_3995_pay_per_view

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August 5, 2009: Shortly after Activision Blizzard announced, that it is going to raise the prices of games, starting with Modern Warfare 2 and games with additional Hardware like “Tony Hawk: Rider”, “Guitar Hero” and “DJ Hero”, Kotick mentions to an Analyst, that if it would be up to him he’d raise the prices even further:>http://www.destructoid.com/kotick-i-would-raise-game-prices-higher-if-i-could-143049.phtml

"And Tony, you know if it was left to me, I would raise the prices even further."

Same day, a few more details about StarCraft II get out, for instance that StarCraft II got delayed because of Battle.Net 2.0, and that’ll be “like XBOX LIVE:http://www.gamasutra.com/php-bin/news_index.php?story=24732

"This will begin with World of Warcraft and StarCraft II," Kotick added, calling the planned service, built by the Blizzard team, "similar to Xbox Live."

"There is no better opportunity to launch this strategic initiative than through the launch of StarCraft II," said Kotick on the call. "The Battle.net platform is an investment in the future of gaming, and an opportunity that we are uniquely positioned to capitalize on."
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September 15, 2009: At the “Deutsche Bank Security Technology Conference”, Kotick holds his best public speech yet:

In the last cycle of videogames you spent $50 on a game, played it and took it back to the shop for credit. Today, we’ll (charge) $100 for a guitar. You might add a microphone or drums; you might buy two or three expansions packs, different types of music. Over the life of your ownership you’ll probably buy around 25 additional song packs in digital downloads. So, what used to be a $50 sale is a $500 sale today.


Most of the 20 years, that I have provided for growth at Activision, we were content to make products that are attractive to the 16-35 year old guy who has gotten no date for Saturday night.


As he works himself up to his personal masterpiece…

Kotick noted that in the past he changed the employee incentive program so that it "really rewards profit and nothing else." He continued, "You have studio heads who five years ago didn't know the difference between a balance sheet and a bed sheet who are now arguing allocations in our CFO's office pretty regularly. ... We have a real culture of thrift. The goal that I had in bringing a lot of the packaged goods folks into Activision about 10 years ago was to take all the fun out of making video games."

Yes, he just said that.

Ultimately, Kotick doesn't want his employees to take anything for granted. They should always be aware of "skepticism, pessimism, and fear" in the midst of the global economic downturn. "We are very good at keeping people focused on the deep depression," he said.

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November 12, 2009: A Call of Duty title based on monthly subscription fees is being announced by Activision Blizzard’s CFO (Chief Financial Officer) Thomas Tippl:

"It's definitely an aspiration that we see potential in, particularly as we look at different business models to monetise the online gameplay," he said, according to IGN. "There's good knowledge exchange happening between the Blizzard folks and our online guys.

"We have great experience also on Call Of Duty with the success we had on Xbox Live and PlayStation Network. A lot of that knowledge is getting actually built into the Battle.Net platform and the design of that. I think it's been mutually beneficial, and you should expect us to test and ultimately launch additional online monetization models of some of some of our biggest franchises like Call Of Duty."

Tippl also said that he wasn’t concerned about how gamers would react to having to pay for additional features.

"Our gamers are telling us there's lots of services and innovation they would like to see that they're not getting yet. From what we see so far, additional content, as well as all the services Blizzard is offering, is that there is demand from the core gamers to pay up for that.”

How that “subscription fee” could look is shown in a few images from a survey concerning the payment model:

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SOURCE:[url=http://bulk2.destructoid.com/ul/135924-rumortoid-activision-creating-a-service-for-call-of-duty/CoDsubscrip01-noscale.jpg ]http://bulk2.destructoid.com/ul/135924-rumortoid-activision-creating-a-service-for-call-of-duty/CoDsubscrip01-noscale.jpg [/url]<<<<>>>>

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SOURCE:[url=http://bulk2.destructoid.com/ul/135924-rumortoid-activision-creating-a-service-for-call-of-duty/CoDsubscrip02-noscale.jpg ]http://bulk2.destructoid.com/ul/135924-rumortoid-activision-creating-a-service-for-call-of-duty/CoDsubscrip02-noscale.jpg [/url]<<<<>>>>

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SOURCE:http://bulk2.destructoid.com/ul/135924-rumortoid-activision-creating-a-service-for-call-of-duty/CoDsubscrip03-noscale.jpg<<<>>>>

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To Be Continued....

Man this is a must read for any gamer or anyone who buys Acmevision Blizzard games. Some may think it's too long, but it is a good read. Fight back with your money.

Good post as always
+1 rep from me

By the way, just look at Call of Duty. It hasn't been made for the PC since World at War. Dedicated servers don't make those games any better if they still carry the same player limitations and restrictions as consoles. THIS has got to be the worse merger in video game history (besides some of the EA ones).