Bobby Kotick, king of the gamers
Activision chief’s knack for blockbusters is the envy of his Hollywood friends, writes Tim Bradshaw
Two years ago, 150m iPhones sold and $10bn in annual App Store spending could not persuade Bobby Kotick to take an interest in mobile gaming. The chief executive of Activision Blizzard, the world’s largest video games company, still worried that mobile games were all one-hit wonders, like Angry Birds and Flappy Bird, at a time when its latest Call of Duty title was minting $1bn on its first day on sale.
“Right now we just don’t see anything that would suggest that changing the way we approach investing against mobile would be a good idea,” Mr Kotick told analysts on an earnings call in 2013.
At the beginning of the decade, when many in the industry were chasing after Zynga’s FarmVille and other “social” games for Facebook, Mr Kotick had made a similarly counterintuitive move by launching Skylanders, a range of interactive toys. Sparking copycats from Disney to Nintendo, Skylanders became a $3bn franchise selling 250m action figures, while Zynga’s business has shrunk into irrelevance.
Even if social gaming turned out to be a fad, however, the decision to overlook mobile would soon catch up with Mr Kotick. By the end of 2013, an addictive puzzle app called Candy Crush Saga was being played by 93m people every day. Last year, it drove revenues of $2.2bn for its developers, King Digital.
This week, the 52-year-old Mr Kotick finally responded in bold style. Activision agreed to buy King for $5.9bn, creating a company with a combined audience of 500m monthly players.
What Mr Kotick calls his “disciplined, deliberate and methodical” dealmaking has made Activision Blizzard the most valuable company in videogaming, its market capitalisation hitting a new all-time high this week of $27bn.
Growing up in Long Island, New York, Mr Kotick was hustling from an early age, selling sandwiches and wallets at school. He started his first company, selling software for the Apple II personal computer, while studying art and literature at the University of Michigan. Steve Jobs, the Apple co-founder, persuaded him to drop out to pursue it full-time.
Among the big names in Mr Kotick’s vast network, it was Steve Wynn, the Las Vegas hotels billionaire, who gave Mr Kotick his start, writing a $300,000 cheque for the 20-year-old after they met at the Cattle Barons’ Ball in Dallas.
The Apple software business was shortlived but, a few years later, Mr Wynn supported another venture by Mr Kotick: his attempt to revive a struggling games company called Mediagenic. Spun out of Atari, a maker of home computers, in 1979, the company had made popular games with titles such as Kaboom! and Pitfall. But by 1990, it had lost all its founders and the video games market had stalled.
Mr Kotick bought a stake of the company for $400,000, moved it to Los Angeles and gave it back its original name: Activision. Gamers started gravitating towards the couch, playing games on televisions hooked up to powerful set-top consoles instead of sitting at computer screens, and the company followed them, doing ever-larger deals. LA studio Neversoft produced its first hit of the PlayStation era, Tony Hawk’s Pro Skater, in 1999. He picked up Guitar Hero — in which players put themselves in the shoes of Freddie Mercury, sporting plastic guitars that plug in to all major brands of console — for $100m in 2007. It became the first such game to reach $1bn in sales. That year also saw the first big hit of the Call of Duty franchise: Modern Warfare, which centres around special forces missions.
Mr Kotick has a knack for minting blockbuster franchises that makes his friends in Hollywood jealous. But to critics — who have compared him with everyone from Star Wars baddie Emperor Palpatine to the cartoon villain Scrooge McDuck — the annual Call of Duty update puts profit ahead of creativity.
Friends call that unfair. “He is an entrepreneur and a very bottom-line businessman,” says Jeffrey Katzenberg, chief executive of DreamWorks Animation. “But beyond that he is a very smart and intuitively great creative talent.”
Mr Kotick certainly has a sizeable pay packet: he earned $6.9m last year, and made $64.9m in 2012, including a four-year stock scheme. Among the other beneficiaries of that wealth is the Los Angeles County Museum of Art, where Mr Kotick is a trustee.
“He’s very generous and has been key to assembling the next generation of philanthropists,” says Lacma director Michael Govan, whom Mr Kotick convinced to move to LA from New York to take the post in 2006. “I can tell you first hand, he is a very persuasive person.”
But at Activision, Mr Kotick can be less generous with company funds. “Bobby is really tight and makes sure they don’t overpay for anything,” says Michael Pachter, games analyst at Wedbush Securities. “He throws nickels around like they are manhole covers.”
Mr Kotick’s own nickels are on the line. Together with Activision’s co-chairman Brian Kelly, he invested $100m two years ago as part of the $8.2bn deal to buy out Vivendi, the French media group that held a majority stake in the game maker. Even after that huge transaction and now the King deal, he is not standing still. Last month he hired the former chief executive of sports network ESPN to broadcast video games being played competitively. Movie offshoots are in the works, too.
“He’s a great storyteller,” says Mr Katzenberg. “I don’t think I could touch him at his game.”
The writer is the FT’s San Francisco correspondent. Additional reporting by Adam Thomson