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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Latest comments (11)

Tomis programmer 11 years ago
Someone break this guy's legs, please. One of the biggest douchebags I have ever heard about in the industry. I mean, he doesn't even play games, wtf is that? Just another moneygrubbing suit with absolutely no respect for games and the people who play them. Seriously, if you see him, kick him in the groin with a trackball.

Edited 1 times. Last edit by Tomis on 16th September 2010 6:19pm

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Antony Cain Lecturer, Teesside University11 years ago
I get that agitated reading anything about him too; every story reads "Greed greed greed greed"

If he wants nothing but profit he could make a game, sack the main staff then hold back bonuses for those who remain... I imagine that'd work well.

Slightly more seriously, I'd like to know how much of that 65% is from non-Blizzard products
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Lewis Marriott Functionality QA Tester 11 years ago
At least he has the right idea with in-game advertising.
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Show all comments (11)
Mark Hill Studying Computing & Networks, University of Abertay Dundee11 years ago
People playing Call of Duty are paying for their thereafter-free multiplayer gaming, but Starcraft players aren't expected to notice the story got ripped wholesale from the game?

He's just trolling again, I'll bet.
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Jaime Roberto Castro HernŠndez Journalism graduate 11 years ago
He plans on make us pay for CUTSCENES?!!!

Oh and then he goes on to say in-game adds are disrespectful. I'm a very laid back guy, but this dude gets on my nerves HARD. Seriously, Kotick, go f... youself.
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Christopher Willis11 years ago
He's right, as much as you hate this guy, that if they made a StarCraft movie for $20 they would have some amazing sells figures. I'd hope however when they DO go this route that they make something with a truly great story and that is well put together.

Their collaboration with Bungie on a project definitely won't hurt their pocket books as well. I suspect, and this is going out on a limb somewhat, Blizzard's new MMORPG will be getting some Bungie help. If that happens then expect Blizz to do it again! Their next MMO would build so much buzz with that kind of move that the Earth might implode.

Edited 1 times. Last edit by Christopher Willis on 16th September 2010 10:59pm

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Aidan Fitzpatrick Artist 11 years ago
Im kind of confused.
Is he saying: 'lets rip the cutscenes out and repackage them with a price point?'
Or is he saying: 'lets do separate CG movies made by blizzard that are set in the Starcraft universe and release them as download / online streaming pay per view?' - like the straight to dvd Marvel / DC movies: Hulk vs Wolverine and Batman Behind the Red mask?

If its the former, he can bugger off...

If it's the latter...
standalone CG movies made by blizzards Cutscene talent...
mmm tasty.
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Stephen Woollard Online Infrastructure Specialist, Electronic Arts11 years ago
Anyone who complains about Kotick's methods had better not have bought the MW2 map packs, because if they did, they're the main cause of the problem.

Bobby's job is to rake in cash for Activision's shareholders, and he is very good at that. When they announced the pricing for the MW2 packs, they shouldn't have sold a single copy, but people moaned on forums and then bought them anyway sending a clear message to Activision that it's OK to charge £15 for a couple of maps.

The genie is well and truly out of the bottle and the only way to put it back is for the players to stop stuffing Activision's pockets with their money.

That however is highly unlikely to ever happen. If he did rip the cutscenes out of SC2 and sell them on a DVD or whatever, people would be queueing around the block to spend £50 on the special edition - you know it and I know it.
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Jake Clayton11 years ago
Fuck you Kotick!
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Luke Allman Character Artist / Level Designer 11 years ago
I've said it before and I will say it again. You can't spell KOTICK with out TICK, which we all know is a blood-sucking parasite with no concern for the damage it does to the host just so long as it gets fed. Does that sound familiar?
As far as in game advertising goes with "respect" to gamers, when had Kotick EVER cared about being disrespectful to gamers? Every time this guy opens his mouth it's something about how "premium" games need to cost more and how his company is focused on more profit.
How can we as an industry tolerate this garbage? There has to be a point where we all say enough is enough. I know as a consumer I am VERY reluctant to buy ANY Activision game based on sheer principal.
The more that people let this little troll do whatever he wants, the more havoc he is going to wreak.
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Terence Gage Freelance writer 11 years ago
I know I'm a bit late commenting on this, but I would just echo Stephen's comments really: if anyone is really annoyed by Kotick and Activision, you should start by looking to your friends and peers, because they are the ones confirming to Activision Blizzard that they can get away charging a premium for old Call of Duty map packs, or a small fortune for a natty steed in WoW. It's also obvious that die hard Blizzard fans would flock to buy a standalone cutscene movie - especially if they packaged a DVD or Blu-ray as a collector's edition and included a few unlockables and so forth.

I also think it's obvious that Bungie's next development will have an onus on multiplayer or online modes - whilst their 'campaign' efforts arguably peaked with the first Halo instalment, they've been putting more development and more emphasis on multiplayer with each new iteration. It's a very healthy revenue stream, so they'd be silly not to capitalise on their massive audience of fans.
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