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.
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
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:http://www.shacknews.com/onearticle.x/51641
Activision CEO Robert Kotick has briefly mentioned his company's plans for maximizing profit from Blizzard's upcoming PC strategy sequel StarCraft II.
"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."
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: http://www.develop-online.net/news/30184/QA-More-on-how-Activision-Blizzards-merger-impacts-its-studios
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.
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: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: http://eu.starcraft2.com/faq.xml
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.
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.
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.
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”.
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.
June 19, 2009: Kotick threatens SONY to drop the price-point of their console(s) or he could drop the support for those platforms: http://www.gamasutra.com/php-bin/news_index.php?story=24118
"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.
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.
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.
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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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…
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," saidKotick 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."
September 15, 2009: At the “Deutsche Bank Security Technology Conference”, Kotick holds his best public speech yet: http://www.geeks.co.uk/7282-activision%E2%80%99s-bobby-kotick-hates-developers-innovation-cheap-games-you
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.
October 18, 2009: It gets confirmed, that Call of Duty: Modern Warfare 2 will not support Dedicated Servers or Mods anymore, and that it will require Steam. The most likely reason for this is for Activision to be able to have total control over content (like Blizzard is trying to do with the Map Publishing System) sell their internal map packs instead of having people play maps made by Modders for free, and it seems to have succeeded:http://www.pcworld.com/article/193808/modern_warfare_2_download_shatters_sales_records.html
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: http://www.edge-online.com/news/activision-looking-at-paid-online-models-for-call-of-duty
"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:
February 10, 2010: After modest sales of their new “Guitar Hero” (about ~25 titles in only 4 years) and “Tony Hawk” titles, Activision does a sweeping blow:
Radical Entertainment (Prototype, Scarface, Hulk: Ultimate Destruction) – they fire over 90 employees (about half the staff),
Luxoflux (True Crime, Kung Fu Panda, Transformers: Revenge of the Fallen) – closed down,
Neversoft (Guitar Hero, Tony Hawk, Spider-Man) – fire over 50 employees,
RedOctane (Guitar Hero and Plastic Instruments) – closed down,
Underground Development (Guitar Hero: Van Halen, BMX XXX, Freestyle BMX, X-Men) – closed
The very same day this was decided, later Kotick mentioned in an Interview as if to spite those fired:http://kotaku.com/5468976/activision-boasts-156-billion-better-than-expected-q4
Our significant accomplishments in 2009 are the result of the expertise and skills of our employees around the world. Their hard work and commitment to excellence made us stronger even during difficult times.
February 28, 2010: A fan project called “King’s Quest 9 – The Silver Lining” is being terminated by Activision, shortly before its release. You could say… sure this always happens, but this time it was a bit different.
The team of hobby-developers, which started working on the project back in 2002 (about 8 years ago) and got a cease-and-desist from Vivendi Universal in 2005, managed to negotiate a deal for a “non-commercial fan license”, which allowed them to develop and publish “The Silver Lining” after all.
2010, nearly done with the work on the project, they handed in a copy for review as agreed in said contract, upon which (the rights to it now belonging to Activision) Activision decided it had no interest in doing anything of the likes and sent another cease-and-desist instead, forcing them to take down their website and forums and to stop working on the project immediately, which they had to do.
March 2-4, 2010: A bunch of security people raid the Infinity Ward offices, both studio heads/CEOs Jason West and Vince Zampella get fired, they were replaced by internal Activision Publishing employees (who worked for Procter & Gamble and Nestle before).
Just 2 days later, the 2 ex-CEOs file a lawsuit against Activision regarding the rights to “Modern Warfare” and 36$ million of royalties + damages.
A few excerpts from said “lawsuit”:
In the aftermath Jason and Vince create “Respawn Entertainment”, and over 30+ key Infinity Ward employees leave Activision, some of them joining them there (after themselves filing another group lawsuit against Activision regarding them not being paid/withheld their bonuses to force a “Call of Duty: Modern Warfare 3”)
I've obtained a copy of a lawsuit filed this morning in the Los Angeles Superior Court by 38 plaintiffs, calling themselves the "Infinity Ward Employee Group," against Activision. The Infinity Ward Employee Group (whom I'll refer to as IWEG throughout the rest of this story) alleges breach of contract, breach of the implied covenant of good faith and fair dealing, violation of California labor code and more. The group is after a large amount of unpaid royalties.
"Activision owes my clients approximately $75 million to $125 million dollars," said Bruce Isaacs, one of the IWEG's attorneys at Wyman & Isaacs LLP, over the phone this afternoon. "Activision has withheld most of the money to force many of my people to stay, some against their will, so that they would finish the delivery of Modern Warfare 3. That is not what they wanted to do. Many of them. My clients' entitled to their money. Activision has no right to withhold their money -- our money."
March 30, 2010: In a "Activision Blizzard restructuring move", the above often quoted CFO (Chief Financial Officer) Thomas Tippl is, according to Massively and the L.A. Times put in charge as COO (Chief Operations Officer) of the "Blizzard business unit", with Mike Morhaime directly reporting to him, according to Joystiq Tippl basically gets paid more, the more revenue the company makes:
The new company map features one business unit focused squarely on the Call of Duty franchise, another overseeing Activision-owned brands such as Tony Hawk and Guitar Hero, and a third unit to handle licensed properties. Blizzard Entertainment rounds out the fourth unit but interestingly, Blizzard's Mike Morhaime now reports directly to newly appointed chief operating officer Thomas Tippl, who in turn reports to Activision CEO Bobby Kotick.
"This is an important change as it will allow me, with Thomas, to become more deeply involved in areas of the business where I believe we can capture great potential and opportunity," Kotick said in the employee memo.
"Performance shares" are, according to Investopedia, "shares of company stock given to managers only if certain company wide performance criteria are met, such as earnings per share targets." Meaning, in so many words, that Activision has to meet a certain performance level in order for Tippl to earn said shares. That they will "vest ratably" is only to say that on Feb. 15 of each year for the next four years, he will earn part of that eventual 225,000-share goal (in 2014) ... should he stay in his position for all that time, of course. And finally, this is all based on the prediction that he delivers a higher or equal to non-GAAP earning per share when compared to the previous year. In short, he has to either break even or make money to get the stocks, and he has to maintain that for the next four years. Quite a tall order, sir!
May 5, 2010: After already having developed the “World of WarCraft Armory App” for Facebook, it is decided to be integrated into the new Battle.Net 2.0 full time and Blizzard already announced further features coming from said “partnership”…
Blizzard concerning privacy:
Should I be concerned about the privacy settings on my Facebook account?
Both Blizzard Entertainment and Facebook take the security of personal information very seriously.
FaceBook CEO concerning privacy: http://www.businessinsider.com/well-these-new-zuckerberg-ims-wont-help-facebooks-privacy-problems-2010-5
Zuckerberg: Yeah so if you ever need info about anyone at Harvard
Zuckerberg: Just ask.
Zuckerberg: I have over 4,000 emails, pictures, addresses, SNS
[Redacted Friend's Name]: What? How'd you manage that one?
Zuckerberg: People just submitted it.
Zuckerberg: I don't know why.
Zuckerberg: They "trust me"
Zuckerberg: Dumb f*cks.
Expand this Quote, if you want to know more about why FaceBook made it into Battle.Net 2.0 over several dozen other features.
June 15th-17th, 2010: At this year's E3, instead of having their own booth or presentation like EA did, Activision had a meeting room away from the craziness of the show floor, where they mainly talked to analysts and reporters. Read on if you want to know more about why Activision thinks that franchises can't get stale (no matter how many titles you put out there), some of the things they want to achieve, why it doesn't make sense for developers to feel good and have relaxation possibilities while making games or get new carpets and why videogames should be sold like washing powder.
In this article, Thomas Tippl (Activisions new COO and the guy overseeing Blizzard now) answers a few questions regarding their company policy:
GS: Also during the call, Bobby Kotick talked about a "culture of thrift" in the company. But people seem to think with Blizzard, you just give them the resources they want and then step back, letting them do what they do. Are they exempt from that culture of thrift?
TT: No, and I don't think they want to be exempt from that. The culture of thrift isn't about not investing in the games. It's exactly about investing in the games. If we don't waste money on golden toilets and what have you, that gives us the resources to invest in the games so we make a great game. Subsequently, it gives us the ability to spend big in marketing a game.
I don't know if you've been at our offices. We've had the same office since forever, and we just replaced the duct tape on the carpet because it became a trip hazard down the stairs. And that took five years to get done. So we are thrifty in the areas where frankly, the consumer doesn't see value.We are not thrifty in the areas where the consumer sees the value, which is in the game development.
That's why we added 300 headcount to Blizzard's development team, 900 headcount to the customer service team, 300 headcount around the Call of Duty franchise. There are many areas where we are making massive investments to improve the gamer experience, and then there are areas where we think it's not worth it. So we don't have a company gym, cafeteria, and valet parking. Because the gamer doesn't care about that. They don't see value in any of that. Go talk to Blizzard or the Treyarch guys or the Sledgehammer guys. We put the money where the gamer's going to see it.
Furthermore, he sees every move they make validated, because "gamers continue to buy their games".
GS: Activision's not too popular with some gamers after Kotick's comments about taking the fun out of development, the Brutal Legend lawsuit, or the Infinity Ward drama earlier this year. How do you deal with that negative perception? Is it something you can see affecting the bottom line at all?
TT: I would say this: When you become the number one in any industry, you automatically get a target painted on your back. That's just a fact of life, so you have to be able to deal with this. I think there's a very vocal minority that expresses very strong opinions. But at the end of the day, if you look at the overall results we've delivered, 2009 was a very difficult year in the industry. And we have succeeded in that environment because gamers continue to buy our games...because we market the franchise and not the company, and they get a great entertainment experience. So that's the most important thing.
What would Kotick do if he had one instant wish to change something in his company? He apparently wouldn't make his employees happier or create a better working environment, he wouldn't want to create a new succesful original IP but he'd make Call of Duty a subscription based service as soon as he could...http://online.wsj.com/article/SB10001424052748703509404575301231400042578.html
WSJ: If you could snap your fingers, and instantly make one change in your company, what would it be, and why?
Mr. Kotick: I would have Call of Duty be an online subscription service tomorrow. When you think about what the audience's interests are and how you could really satisfy bigger audiences with more inspired, creative opportunities, I would love to see us have an online Call of Duty world. I think our players would just have so much of a more compelling experience.
WSJ: Is that coming?
Mr. Kotick: Hopefully.
WSJ: Are the customers ready for it?
Mr. Kotick: I think our audiences are clamoring for it. If you look at what they're playing on Xbox Live today, we've had 1.7 billion hours of multiplayer play on Live. I think we could do a lot more to really satisfy the interests of the customers. I think we could create so many things, and make the game even more fun to play. We haven't really had a chance to do that yet, so that would be my snap of the fingers.
Here, Tippl is talking about how selling video games apparently is so very similar to selling washing powder, toilet paper or potato chips:
When Tippl joined Activision in 2005, he brought with him several years of executive experience with highly-successful consumer goods company Procter & Gamble, which is home for products ranging from toilet paper to potato chips to laundry detergent. He still draws from that mass market experience.
“When people come up and tell me, ‘how can you possibly make another Call of Duty,’ I always tell them that I used to work for a company that every year had to figure out how to make a white shirt whiter,” Tippl said. “And [Procter & Gamble] have been doing that for 35 years with a product like Tide.”
He continued, “You’re telling me with all the opportunities we have, and the technologies and the content ... and all the different stories, the characters that we can develop, that we can’t innovate on a franchise for 10 years? Give me a break. Then we’re just not doing our job.”