Activision Blizzard goes indie after CEO Kotick buys back the company

http://massively.joystiq.com/2013/07/26/activision-blizzard-goes-indie-after-ceo-kotick-buys-back-the-co/

by bdz • 13 years ago

133 85 13 years ago

massively.joystiq.com

zrail• 13 years ago

the split will see 439 shares (worth $5.83 billion) bought by Activision Blizzard itself, while an investment group led by Kotick and Kelly will purchase 172 million shares (worth $2.32 billion)

Those 439 shares must have one hell of a preference.

antr• 13 years ago

It's a typo. The real number is 429 million shares.

pavanky• 13 years ago

429 million sounds about right. 439 million skews the numbers way too much.

_nullandnull_• 13 years ago

It's interesting that Dell is doing this and now Activision. I wonder if we will start to see a trend of other companies doing the same?

Charos• 13 years ago

It's a distinct possibility. The C-suite is finally starting to understand the flaws in shareholder value theory, and going private/independent allows them to focus on long term value without having shareholders clamoring for their resignation due to poor short-term balance sheet results. Giant conglomerates such as GE or P&G will stay public, but I wouldn't be surprised if more focused technology firms - or even companies in other areas of consumer goods - start following this trend. It could be good for industry to have some variety in this way.

PakG1• 13 years ago

Maybe. See letter to shareholders by Jeff Bezos. If the business can handle it, and the leadership is capable, I don't see why they would avoid the benefits of being public either. When public, among other things, you have access to a huge amount of capital if you want it (if you can handle the effects of the increased dilution).

http://www.businessinsider.com/amazons-letter-to-shareholder...

ihsw• 13 years ago

When you're beholden to shareholders then you're a slave to the sales department, since they control the shareholder report. They'll drop their pants and make any deal to get those purchase orders in for the monthly/quarterly/annual reports, and clients that know this take advantage of it.

It also opens the possibility of deferring sales figures to fudge the numbers, for example sales in 2011 haven't "finalized" so they show up in 2012's reports, but those sales actually happened in 2011. It's effectively kicking the can down the road to buy time to fix whatever the reason sales figures are being deferred.

mtgx• 13 years ago

I'm not sure if I would call a company the size of Activision Blizzard "indie".

CodeCube• 13 years ago

There is of course a spectrum of "indieness". You seem to be subscribing to the small indie theory, where the team is comprised of just a handful of people; the perpetual underdog.

On the other side are those who define indie as your level of freedom to do what you please with your product. In that case, even though they may be large and successful, being privately owned and without a 3rd party (ie. publisher) gives them the freedom to take their games in whatever direction they choose.

Guvante• 13 years ago

The only thing they would ever lose being under Vivendi is their rainy day fund. They always had complete control.

stelonix• 13 years ago

Vivendi was never a publisher for Activision, Blizzard or Activision Blizzard. It was merely their owner. Both companies as well as the merged version of them were always self-publishers. They were always independent of other publishers (sans Blizzard back in the early 90s, but that's besides the point).

shawabawa3• 13 years ago

I thought for a second this was Vivendi buying Blizzard out of Activision, not the other way round. Blizzard games have definitely gone downhill since the activision merge

norswap3• 13 years ago

Have they? If anything, I think they have improved. It might not please everyone (I miss the old WoW), but it seems to me that Blizzard is making informed game design decisions based on what the users want. I wouldn't surprised me to hear they invested a lot in big data analytics.

Their big screw-up is perhaps the Diablo III auction house. The idea is good, but it has spiraled out of control. The auction house is now the only viable way to acquire gear. Playing only serves to rack money, but reselling is as good a way to make money. Gear serves to play, to rack more money, to buy better gear. The auction house is now the game. You can do very well at the game without ever playing the "real" game. Not to mention that shelling a few euros on the real money auction house will save tens of hours of farming, and real money continues to appreciate wrt in-game currency.

xentronium2• 13 years ago

Hardcore D3 has (or at least had) much better economics, due to:

* no RMAH (and as such, all the good items are on sell for gold)

* and huge moneysink in the form of dying characters (as such, less gold inflation)

Also, when you play HC, leveling up your new character is so much less painful with AH. Besides, I'd just by something @ d2jsp.

dubcanada2• 13 years ago

I have to agree with you, I've played every single Blizzard game ever made, and SC2 is just plain beautiful. The campaign cinematics were amazing...

enraged_camel4• 13 years ago

Heart of the Swarm was also inferior.

criley22• 13 years ago

They've grown to include wider appeal and be more profitable.

Since the merger, Blizzard has aggressively moved towards in-game real money transactions including one high profile fuckup where they irreparably ruined the economy of an entire game, ruining the game itself for many players (especially their older and more devoted fans).

They've scrapped their major next MMO, pushing it back and folding much of the staff into other projects while this one goes back to the drawing board.

They predictably released StarCraft 1.5, the graphics update, but StarCraft is a known commodity and they didn't have the leeway to make substantial changes without massively disrupting the playerbase.

I can't find a single product of theirs that screams character and love and devotion to video games like their classics do, but every single product does appear to be a financially calculated move to extract as much money as possible from gamers.

From this long time (and no longer) Blizzard fan, modern Blizzard looks more like Zynga than the company they once were. More interested in ARPU than making wonderful games.

EpicEng• 13 years ago

Depends on your definition of "user". Diablo III was a huge let down to most of us who are fans of DII. It's not just the AH either; online always, crap gear, crap story, dumbed down skills, pay-to-win RMAH, and constant nerfs of a game that is not meant to be an esport. Bleh.

xentronium2• 13 years ago

Why do you say so? Sales are good, games are good, korean cybersport is finally transitioning to SC2, diablo is fine, wow is probably holding record for the most living / profitable mmo.

dubcanada2• 13 years ago

Probably? Oh it passed that years ago. WoW is 100% cash cow at this point.

rhokstar• 13 years ago

But to your point about the most profitable mmo, Blizzard is leaking subscribers in the hundreds of thousands recently. The subscription model is becoming obsolete. WoW is an awesome game but times are changing.

srpablo• 13 years ago

While I think there is plenty of doom and gloom that isn't entirely true, I think the picture you've painted is still a bit rosy.

korean cybersport is finally transitioning to SC2

Yes and no. Proleague finally switched from Brood War and KeSPA players are doing excellent in the WCS leagues, esports in Korea are way down from where they've been, with MBCGame dead. Even then, almost everyone is playing LoL.

In fact, in PC Bangs, Starcraft 1 is STILL more popular than Starcraft 2.

diablo is fine

Again, yes and no. It sold well, and the initial sale of a Blizzard title is where almost all its revenue comes from. But many, many of the most hardcore fans were disappointed, and most won't buy the next Diablo property 'sight-unseen' like the last one.

wow is probably holding record for the most living / profitable mmo

True, WoW has been the most profitable MMO ever. But their numbers have declined over the last few years, and every attempt they've had to "give it the paddles" and reignite growth hasn't been too successful.

Almost all my friends who played WoW call it a shadow of the game that it was, citing the HUGE differences in skillsets and builds, how easy it is to get rewards, etc.

---

All that said, SC2 was a HUGE part of eSports rising worldwide, and still sports a pretty healthy audience. And one has to expect their next MMO will be spectacular, if they can ever abandon WoW.

jonnathanson4• 13 years ago

Not mentioned in this story: Chinese internet giant Tencent is part of the "investment group" Kotick has put together. Basically, the company is switching ownership from one conglomerate to a diffusion of others. I'd hardly call that "independent" in any sense of the word.

This story is less about independence, and more about allowing Vivendi to cash out on its 2007 merger of Activision and Blizzard. Basically, Vivendi transferred Blizzard to Activision in exchange for 52% of the combined entity (Activision Blizzard). While A-B has been doing well over the years, Vivendi has not fared as well. It wants some to capture some of the upside through the buyback.

wikwocket• 13 years ago

The article says that Activision Blizzard is buying the majority (about two thirds) of the shares itself. And presumably Kotick and Kelly have some personal stake in the investment group getting the rest of the shares?

I don't know if this makes them "independent," but it doesn't seem to make them owned by a conglomeration of other parties either.

jonnathanson4• 13 years ago

To clarify my previous comment...

The post-split cap table looks something like this (from what information has been made public at this point): Bobby Kotick & associates (including Brian Kelly and Tencent, among other unnamed parties) own 24.9%. Vivendi's share drops to 12%. A-B itself buys back the majority of shares. Technically speaking, yes, A-B becomes an independent company (in as much as the majority of outstanding shares are publicly owned).

My phrase "I'd hardly call that independent" was probably an overstatement worth correcting. My bad on that one. Because the word "independent" (and especially the derivative "indie") has a very industry-specific meaning in this case, I found the headline a bit misleading.

ameen• 13 years ago

Tencent do not get a board seat and as such it's "ownership" wouldn't account to much.

astrodust7• 13 years ago

Also Bobby Kotick, who takes smug pride in the fact he doesn't even play games, is the last guy you want being your CEO.

JonFish85• 13 years ago

See, I'd respectfully disagree with this. Based on [1], I'd say he's a man who knows his limitations in this area. He seems to know enough to stay away from trying to meddle with a game, and a CEO who knows enough not to meddle where he isn't good is a guy I'd trust (to some extent, anyways).

[1] http://kotaku.com/5559201/a-delightful-chat-with-the-most-ha...

dmead2• 13 years ago

can we have lan in starcraft 2?

finnw• 13 years ago

Hopefully somebody will create an unauthorized patch that enables LAN play and then Blizzard will have to release an official patch to compete with it.

touristtam• 13 years ago

You could as well ask for dedicated server and mod tools for the call of duty franchise.

AjithAntony• 13 years ago

Depending on why you want LAN, you may be interested in "Spawn mode" which lets you get all your friends together and play custom games and things. Your friends install the "Starter Edition" as long as one of you owns the game you can all play.

Still requires internet and battle.net accounts.

http://us.battle.net/sc2/en/buy-now/spawning

dmead2• 13 years ago

i want lan so that i can use the product i paid for without having to check in with bliz every time i do it.

Tomis022• 13 years ago

Indie my ass. OP means independent.

norswap3• 13 years ago

I'm confused, isn't "indie" an abbreviation for "independant"?

josh2600• 13 years ago

I don't want to debate semantics or linguistics, but I believe the comment you're responding to is insinuating that "indie" refers to complete independence (no external masters) whereas "independent" means private, but serving many masters.

It's a meaningless distinction, IMHO.

babuskov2• 13 years ago

"indie" can also mean "individual", so it all depends who do you ask.

Tomis022• 13 years ago

In the gaming world "indie" refers to small teams who are usually bootstrapped and not owned by some publisher. They try focusing on real game innovation and don't usually have big budgets - at least not when they start out, so they will use the cheapest tools available (e.g. Blender instead of 3d max); for instance I don't know if the studio developing Minecraft still qualifies as indie because they seem to have a truckload of money, so the definition may be fuzzy.

In any case, ActiBlizzard is very very far from being indie. They don't innovate, they have loads of money from some of their cash cows and probably every member of their team is easily replaceable like a standard cog in a machine. And when you're listed on NASDAQ and your employee count is in the thousands then you're practically a corporation.

astrodust7• 13 years ago

It's an abbreviation that's taken on a different meaning altogether.

babuskov2• 13 years ago

After carefully investigating definition of "indie", it seems that Microsoft is an "indie" company as much as Blizzard.

benologist• 13 years ago

Wait till Blizzard becomes one of this year's hottest startups!

kzrdude2• 13 years ago

Like other indie developers, Blizzard is cutting the middleman and selling the game directly to their fans. In this case Blizzard accomplished this by merging with games publisher Activision.

ido• 13 years ago

Blizzard was self-publishing before the merger.

astrodust7• 13 years ago

Why did Blizzard merge in the first place? They were making literal truckloads of cash. Did Activision have a warehouse to put all the money?

ChuckMcM• 13 years ago

Interesting (and smart) move on Kotick's part. I think WoW suffered under the mantra of 'make it broader, make it broader ...' perhaps they will pull back a bit from that.

Activision Blizzard goes indie after CEO Kotick buys back the company

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