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Activision's Billion Dollar Man

Eric Hirshberg steered Activision to more than a billion dollars in profits last year. How is he going to follow that in 2012?

It's been pointed out before, but Eric Hirshberg was one of the biggest creative gambles that Activision ever took. Putting an ad veteran in the CEO position of the biggest console games publisher was greeted with scepticism 18 months ago - this is a publicly listed company that needs predictable processes, not a creative artist with floppy hair and brown shoes.

But that doubt now has to be laid to rest following the last financial year's $1 billion profits. This time last year, Activision said it was cutting back to three dedicated pillars, and many thought that just meant more incremental Call of Duty updates, a whimsical kids game accompanied by plastic tat and more fantasy iterations from Blizzard. What the year actually saw was Call of Duty expanded to a social network through Elite, a social event in the vein of BlizzCon with Call of Duty XP, and a consistently-selling credible kids IP in Skylanders, due for a sequel and expansion shortly. And that was without a major Blizzard release...

In this exclusive interview with, Hirshberg reflects on last year's brand expansions and how to feed the customer's needs, why monitoring games sales should change for the new market, why Modern Warfare 3 sales took a tumble at the start of the year, and how the free-to-play Call of Duty game with be a breakthrough in China. Last week you revealed impressive full-year profits of $1.1 billion...
Eric Hirshberg

And it wasn't just the numbers, I was really pleased with the way things came about. I was proud that it wasn't just another good year for Call of Duty but also that we showed a pretty good ability to launch a new IP with Skylanders and also do something outside the box with Elite. It was this time last year that Activision said it was stripping back its portfolio, putting some franchises on hold, but in reality you seem to be launching just as many new products and services, if you take into account Elite and the Call of Duty XP event.
Eric Hirshberg

Everyone's focus was what were weren't doing at that time, as opposed to what we were doing. The hardest thing to get right in this business is choosing what you're going to focus on. These are big undertakings, big financial risks, they're big creative undertakings and a lot of things we put out last year had a lot of difficult things to pull off. Focusing on the places where we think we can really do something different and something unique to gamers has been a good strategy a long time before I got here.

Call of Duty is already viewed as the premier first-person shooter in China before we've already entered the market. That's a rare moment where piracy plays in our favour. There was a big contrast last week with your sales and then NPDs assessment of the US market in January, with a very big drop in sales compared to last year. Is that a big worry to you guys, where sales on the High Street in the US and Europe are falling significantly.
Eric Hirshberg

Well, I think we spend a lot of time analysing industries through these macro-patterns and the sales of our franchises were really good. Obviously those macro-trends aren't applying to the project that we're working on. Of course it's concerning but I believe our focus is in the right place because we're fixed on having the best franchises and the best games whatever the delivery system becomes and those franchises will migrate to them. And NPD doesn't measure digital revenues. Obviously you know your own digital numbers...
Eric Hirshberg

And they're a huge part of our business. But do you need to see those numbers on a wider scale to get a bigger perspective of the industry's global digital business?
Eric Hirshberg

I think you're on to something there. Industries go through times of disruptive change and the measurement tools also need to modernise. What's more relevant? Neilsen ratings or YouTube hits? I bet Neilsens wished it started measuring things like viral videos a long time ago because there was a sea change in the way video was delivered. I give NPD a lot of credit because they noted that they didn't quite know how to measure Skylanders sales with or without the toys because it doesn't fit the traditional accessories market like controllers, they're part of the game. If you include the sales of the toys, Skylanders was the tenth biggest game of the year. There are a lot of new things to measure in our business right now and just looking at the old measurements doesn't necessarily give you an accurate depiction of the health of the industry. If you look at sales of Call of Duty Modern Warfare 3 in January they were very low compared to last year - 750,000 Black Ops games were sold in January 2011, versus 386,000 Modern Warfare 3 copies last month. Where did those sales go?
Eric Hirshberg

I think they moved forward. We broke the record for the biggest day and the biggest first five days and the biggest first 16 days. That came as a result of us putting together a very effective pre-sale programme and a very effective launch. Part of that was we drew more buyers forward in the process which is a good thing because we're convincing more people to buy it, some of them sight-unseen based on the past performance of the strength and fun of the franchise, and some of them very early as it comes out closest to launch. When you have such a successful pre-order programme and such a successful launch week I don't think it's surprising that the shape of the curve after that looks a little different than the year before.

When you have such a successful pre-order programme and launch week I don't think it's surprising that the shape of the curve after that looks a little different than the year before.

I would also say there was a lot of great competition in the fourth quarter, there was a lot of must have games that launched right around the same time, and there was also a lot of aggressive pricing activity, and those were two contributions as well. The sooner you get the customer to buy the game the more chance you've got them paying full price as opposed to discounted or second hand copies. And the Call of Duty games are one of a small few that can hold maintain value for months after release....
Eric Hirshberg

That takes a stomach of steel because we haven't really changed our pricing patterns to match or respond to a lot of the more aggressive stuff that's going on elsewhere in the industry. But I believe in the value of games, there's no other form of entertainment that delivers hundreds of hours of entertainment. They're very costly to make, they're very risky propositions and holding strong on the value they deliver is really important.

Matt Martin avatar
Matt Martin: Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.
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