Kotick: Profit, not revenue growth, is Activision's focus
Denies pay-to-play COD but hints at further move to online, as well as DLC game movies
Activision CEO Bobby Kotick has clarified the publisher's current business plan – claiming that it's no longer seeking significant revenue growth, but instead concentrating on higher margins from its products.
"We're in a different business now than five or 10 years ago," he claimed at Bank of America Merrill Lynch's Media, Communications & Entertainment Conference in California yesterday.
"We're better focused on figuring out how to expand the operating profit right now than chasing the revenue growth that's only going to contribute 20 percent operating margins."
"We have some businesses that are 50 percent operating margins and some businesses that are 15-20 percent operating margins. The bulk of our business five or 10 years from now are going to be those higher operating margin businesses with higher returns on capital."
His plans to achieve this include free to play models, subscriptions, microtransactions and download games, though he saw further opportunities arising in the near future.
"Today, probably 65 percent of our operating profit comes from online or online-related sources. As we see more televisions that have microprocessors that have an internet connection where we can get direct to the consumer, you'll continue to see the operating margins expand." He also talked of providing paid on-demand game movies for titles such as StarCraft.
Referring to Blizzard's oft-feted cutscenes, he suggested that "If we were to take that hour, or hour and a half, take it out of the game, and we were to go to our audiences - for whom we have their credit card information and a direct relationship - and say to them, 'Would you like to have the StarCraft movie?'... at a $30 or $20 price point, you'd have the biggest opening weekend of any film ever."
"Within the next five years you are likely to see us do that."
Kotick, however, dismissed talk (kickstarted by his own prior comments) that Activision was planning on adding a subscription model to Call of Duty multiplayer.
"That's what people are paying their $60 for. They get a game that has a lot of replayability. I think why Call of Duty has been so successful is because we're delivering extraordinarily high quality gameplay, production values and interactivity at great value."
He also criticised in-game advertising, claiming it would not be respectful towards players.
The CEO went on to hint as to plans for its partnership on a mystery project with Bungie, referring to how important the publisher's experience with customer support and the like with World of WarCraft had been in enticing the Halo developer to work with Activision.
"When Bungie started to think about their future product plan and realised how deficient they and everyone else was in providing all the services necessary to create great competitive products for the future, they didn't really have any other alternative."
This has been widely reported in the press as an intimation that Bungie is working on a primarily online title.
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