The Edge: Activision's CEO On His Merger, The Future Of Video Games, And CEOs In The White House

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In December 2007, entertainment powerhouses Activision and Vivendi announced a merger that would put them atop the heap in the video game business. The combined company, Activision Games, now puts Guitar Hero, Tony Hawk, and World of Warcraft -- the number one online multi-player game -- under one roof. The Huffington Post's Willow Bay recently spoke with Activision's Chairman and CEO Bobby Kotick at his Santa Monica office. Among other topics, Kotick sounded off on managing his newly combined company, the future of gaming, and why he thinks the country might be better off with a CEO in the White House.

Huffington Post: You recently announced a merger with Vivendi's game unit, Blizzard Entertainment. How do you plan to manage a substantially larger company?

Bobby Kotick: Warren Buffett says, "We like to buy companies with good management because we can't supply it" and Blizzard was a company that came with great management, a long track record of success, and have a clear vision of where they want to go. So the opportunity to take Activision and combine it with the number one online game company seemed like a very natural transaction.

As for how we'll manage, we have a very decentralized studio structure with independent studios that focus on the development of quality games, all supported by the mother ship, which is Activision. We provide them with the technological tools and the financial and human resources, but they maintain their own names, corporate identity, and rules of operation. That decentralized structure has allowed us to have continuity and innovation and be much more entrepreneurial or opportunistic.

HP: If Activision is the "mother ship," how would you describe yourself?

BK: I'm captain of the mother ship. My job isn't to make the games; it's to make sure that the environment is conducive to making the very best games, and that all the really talented, capable, and inspired people have all the resources necessary to be successful. So I view my role as coach, as cheerleader, as facilitator, but I really like to see people own their responsibilities. I'm big on delegation!

HP: You have three daughters (ages five through eleven). Do you ever get insights- or "aha" moments- about where entertainment and gaming is headed from watching them?

BK: I've had many "aha!" moments, mainly thanks to Hannah Montana, High School Musical, and other Disney properties. But their media habits have definitely changed. I see them much more engaged on the computer and I'll tell you, interactive media will broaden its appeal to women, girls, and a broader consumer base through a combination of three things. First, production value. PlayStation 3 and Xbox 360 are delivering video and graphics that rival feature films and television, so you'll start to see it emerge as more of a story telling medium. Second is physical interface. Whether it's the Wii tennis game or Guitar Hero, connecting with what you see on the screen with something other than a gamepad or joystick has broadened the appeal of the experience to much greater groups of players. The last - and most important -- thing is the ability to have a social experience with a video game rather than just a solitary experience. As you see start to see the growth of internet-enabled Xboxes and PlayStations, for the first time we're seeing voice over IP. So, I can talk with a headset to the person that I'm playing against or pick up a game twenty-four hours a day, seven days a week. This transformation from solitary experience to social experience is transforming video games as a mass market medium.

HP: How are you poised to take advantage of that?

BK: For starters, we will, in the close of the merger, operate the largest social entertainment network that exists in the world. Unlike MySpace or Facebook, where the purpose of the social network is meeting other people, within World of Warcraft the purpose of the social network is purely entertainment.

The other thing is owning and controlling the very best properties that have the most potential for the future -- properties like Guitar Hero or Spiderman, which can sustain long-term competitive advantage and be able to put out a sequel every year.

HP: Is it true that you always knew you wanted to run a big company?

BK: Always. Always. And the funny thing is even when we first took over Activision and it was a nine million dollar company. I still thought I was running Procter & Gamble.

HP: So what is that? Self confidence...arrogance?

BK: Delusion. Pure delusion. If you ask Buffett what the one identifiable predictor of business success he has been able to identify is, he would say it is how early one started a business and how successful you were at an early age. If you were 10 and you had a paper route, and did better than anybody else in your neighborhood, that's a good future indicator of success. Personally, I started my first business when I was 6. I sold wallets in my father's law office and earned money for soda and popcorn.

HP: Besides an early entrepreneurial spirit, what other characteristics have served you well in business?

BK: I am not willing to easily accept no for an answer. I also think mentors are important. I have always been attracted to people who manage large organizations and who have great attention to process and institutionalization. And so as fascinating and capable as Steve Jobs is, being able to look at someone like Tom Watson or Jack Welch or Reuben Mark was really appealing to me. I was also fortunate to have had Steve Wynn as a mentor early on. I met him when I was nineteen, and he did more than just write a check to help me start a company; he really got engaged with his time and introduced me to successful and fascinating people. If there was an expertise I needed, say financial expertise, he'd bring in Michael Milken.

HP: We've had a lot of turmoil in the markets lately. What's your outlook on the economy?

BK
: I am very concerned about what is happening with our country and our economy...probably from a very different perspective than some of the other people that you talk to. I think a lot of the corrective actions that are being taken right now are inappropriate for the maintenance of free markets. I also think that lowering interest rates, as the Fed is doing, is not a good practice. We really need the economy to find its own way.

HP
: Have you declared your support of a presidential candidate?

BK: No. I was a supporter of the president and find him much more competent than people give him credit for. But he didn't manage the expense side. In commerce, you would never tolerate the incompetence, the lack of performance measures, or accountability that we've seen. It is almost incomprehensible that the government has gotten so big, unwieldy, and unproductive.

HP: You are a student of business. Do you think someone with broad based business skills, like a CEO of a large company, would make an effective president?

BK: I do. Jackie Mason used to say "The government's never really had a good quarter. If you wanted government to be efficient, you'd put congress on commission."

I actually think that if the standards that the government holds business accountable to, whether it's in financial reporting, or executive compensation, if the same type of standards that apply to commerce were to apply to education or government we would have much more effective ways to educate our kids or run our country.

HP: What type of CEO's would you want to see run for President?

BK
: Warren Buffett would make a good President. There's a generation of successful business people like Tom Murphy or Dan Burke who are fortunate to have the skills, ability, and character, and those are the guys you want running the country.