The Activision Apologist

Activision really isn't the Whore of Babylon. I promise.

Recently, a timeline detailing selected Activision/Blizzard business activities has made its way around the internet, infuriating gamers everywhere.  Why?  Activision/Blizzard shuts down unprofitable developers.  Activision/Blizzard lays people off during the worst global economic recession in recorded history.  Activision/Blizzard fires employees who may or may not have been trying to sell Activision/Blizzard IP to rival publisher EA.  Bobby Kotick is more evil than Darth Vader.  You know…the usual reasons.

If you haven’t done so already, take a look at the timeline and get your panties in a twist.  Then come back here for some (mostly) rational thoughts on the subject.

Read the timeline?  Great.  Now, I don’t care if you hate on Activision/Blizzard.  Hate on Activision/Blizzard all you want.  But before you go hating on Activision/Blizzard, I beg you to consider the following four important points:

1.  Most Entertainment Products Lose Money…a LOT of Money

Whether it’s music albums, video games, movies, or TV shows, entertainment products are not typically profitable.  A TV network, for example, will spend tens of millions of dollars producing a slate of pilot TV episodes, only a handful of which will appeal to advertisers enough to merit broadcast.  Then the network has to spend millions of dollars advertising those new pilots, and of those pilots that make it on air, only one or two will actually last long enough to be profitable through syndication.  So a TV network spends, say 50 million dollars up front, and hopes to make back 60 million dollars over the course of 10 years.  Pretty risky, and only financially viable if you have deep pockets and a willingness to make tough decisions.

Video games are somewhat similar.  A publisher like Activision/Blizzard pumps tens of millions into funding a slate of games.  Unlike TV, all of those games are likely to go to market.  Like TV, many of those games are not going to be profitable.  In order to maintain positive relationships with distributors like Best Buy and GameStop, a publisher like Activision/Blizzard has to buy back large portions of unsold inventory, or give the distributors enormous discounts on future purchases.  That can get pretty expensive.

So Activision/Blizzard does its best to maximize profits of those games that do make money, and Activision/Blizzard does so through some pretty creative ways.  They turn games into franchises, giving gamers MORE great Call of Duty, Guitar Hero and Marvel: Ultimate Alliance titles.  They offer gamers more in-game items and options in World of Warcraft.  They charge customers for services rendered and products sold.  And all that money gamers pay for “character recustomization” and Guitar Hero: Sixpence None the Richer doesn’t just go into Bobby Kotick’s pockets; it covers next year’s slate of games.

2.  Activision/Blizzard Is a Business

The author of the timeline includes the notable event that Activision acting CFO Thomas Tipple was named the COO of Blizzard, and implies outrage at the fact that Tipple’s contract is structured so that “Tippl basically gets paid more, the more revenue the company makes.”  At this point in the blog post, I will stop referring to the author of the timeline as “the author” and instead begin referring to him/her as HEY ASSHOLE.  HEY ASSHOLE, for your information, stipulating performance-based financial incentives in a contract is fairly standard practice for any management position in any company in any industry.  Now, HEY ASSHOLE, I see that you are posting from Germany, so let me see if I can put this in terms you can understand:  America is not full of socialist weasels, and you and everyone in your sausage-loving country are not so far removed from bowing to fascist and communist dictators that my American ass is going to passively listen to your abject inability to understand the way that capitalism works.  HEY ASSHOLE, read a book and figure out how the world works…or at the very least temper your idiocy.

You know how everyone in your country is pissed about Greece and Italy dragging down the value of your shared currency?  Part of the reason it’s easy for them to do so is because they are incentivized to take advantage of the system because they know that wealthy countries like you will bail them out.  Create a system that incentivizes people to work hard and earn money, and they are more likely to work hard and earn money.  Novel concept, right?

Activision is a business, and the goal of a business is to make a profit by providing a service to the general public.  Things like “incentives for employees” and “charging customers for services rendered and products sold” are ways businesses achieve their goals.  They’re pretty standard, be it at a mega-corporation like Wal-Mart or your local vegan coffee shop.

(Note that I really don’t have anything against sausage.  I had chicken-apple sausage with penne a la vodka for dinner last night, and it was delicious.)

3.  Until You Stop Paying Activision/Blizzard Your Money, Activision Is Right

So you’re pissed that Activision/Blizzard dropped Brütal Legend and Ghostbusters: The Video Game because they didn’t fit the Activision/Blizzard business model?  Yeah, maybe you should quit bitching about it and actually buy the damn games.  Both of those games under-performed and probably lost money, so it looks like Activision/Blizzard made a pretty good decision.  I actually bought Ghostbusters, I played it and I enjoyed it.  I’m glad it got published, but as a businessman, I can’t argue with the top line.  If every game company made games solely based off of what I wanted to play, the world would be a worse place.  (Without giving away too many details, I imagine every year would see a deluge of Kirby games, sex sims and sex-with-Kirby sims.)

So every once in a while, shut your mouth, check VGChartz.com and give ten seconds worth of thought to whether or not your unique tastes are appealing enough to a broad audience to justify tens of millions of dollars of development costs.  Don’t like the fact that Starcraft II offers players such an extraordinary amount of content that it had to be broken into three games?  Don’t buy it.  Don’t play it.  If enough people share your opinion, you can guarantee Starcraft III will be only one storyline with one point of view and one set of missions.  However, I’m going to take a wild guess and say that Starcraft II is going to be a monster success, both critically and financially.  Anyone want to put money against me?

4.  Gamers Are Nut-Jobs

When third party publishers NOT named Activision/Blizzard complain about Nintendo cutting them out of the development process for the Wii and blame Nintendo for lackluster sales on the consoles, gamers lambast Nintendo and rant about Nintendo’s supposed glory days…you know, those 10 years when nobody actually bought Nintendo consoles.

However, when Activision/Blizzard looks at a market made up of three different players – Nintendo, Sony and Microsoft – offering consoles with drastically different technological capabilities and suggests that, as the world’s dominant publisher who spends hundreds of millions on royalties simply to MANUFACTURE games for each system, MAYBE the console developers should include the publisher on the hardware creation process, gamers go ape shit and declare, “How DARE Activision BULLY those POOR console manufacturers?”

(Not like having more, better games for each system would actually be a good thing for gamers.)

Gamers, have a bowl of Grape Nuts tomorrow morning…you could do with a little consistency.