The end of an era: How Bobby Kotick shaped and divided Activision Blizzard

After more than 32 years as CEO Bobby Kotick is leaving Activision Blizzard on 29 December 2023. This follows Microsoft's purchase of the company for 68.7 billion dollars /page/it-is-official-activision-blizzard-gehoert-jetzt-microsoft-29985. In addition to Kotick, other notable Activision Blizzard executives are also leaving the company or will report to Xbox bosses. With these changes, Activision Blizzard will be organisationally integrated into Microsoft's expanding portfolio of developer studios.

The change in the management team has a signalling effect. Many employees and fans of the company are hoping for substantial changes with the departure of Bobby Kotick. After all, Kotick has become one of the most hated personalities in the video games industry in recent years. His more than three-decade-long career as CEO has been characterised by incredible successes, questionable business practices and numerous scandals.

From a bankrupt company to a 68.7 billion deal

One thing you have to give Kotick credit for: He is a brilliant businessman. Over the past 30 years, he has transformed Activision from an almost bankrupt company into a 70-billion-dollar megacorporation

Activision was on the brink of collapse at the beginning of the 1990s. The company no longer developed games, but sold business software and operated under the name Mediagenic. Kotick and his business partners seize the opportunity and acquire a majority stake in the company for less than 500,000 dollars. A year later, Kotick is appointed CEO.

Kotick changes the company name back to Activision and shifts the focus back to games. The publisher landed its first big hit under Kotick's leadership in 1999: "Tony Hawk's Pro Skater". In the early noughties, Activision attracts attention with licensed games ("Spider-Man", "Star Wars") in addition to other sports games. In 2003, Kotick lays the foundation for one of the most successful game series of all time with the release of the first "Call of Duty". In 2006, Activision buys the "Guitar Hero" publisher Redoctane and gains a foothold in the then lucrative music games market.

But that wasn't enough for Kotick. He wanted access to the booming MMO market. In 2006, he sought dialogue with the French media conglomerate Vivendi, whose publishing division Vivendi Games has a well-known MMO developer studio in its portfolio: Blizzard Entertainment ("World of Warcraft"). After lengthy negotiations and regulatory processes, the merger between Vivendi Games and Activision took place in 2008, resulting in a new company: Activision Blizzard.

Vivendi, the parent company of Vivendi Games, owns the majority stake at this time. In 2013, Kotick buys back a large proportion of Vivendi's shares with the help of a specially established company in the Cayman Islands. This gives him even more power in the company.

Kotick's appetite for expansion is far from satisfied, however. In 2016, Activision Blizzard attacked the smartphone gaming market with the acquisition of mobile game developer King ("Candy Crush"). The cost: a whopping 5.9 billion dollars.

The temporary high point in Activision Blizzard's company history was reached when Kotick was acquired by Microsoft. The 68.7 billion dollar deal is by far the largest acquisition in video game history. Kotick himself will also benefit personally after his departure - the shares he owns will be worth around $400 million after the takeover.

Questionable statements establish Kotick's bad reputation

So far, so capitalism. What Kotick has done with Activision is in line with the principles of capitalist growth strategies. Perhaps with the exception of the Cayman Islands story. But he has made the company bigger and more profitable for shareholders. This makes him no different from thousands of other CEOs. So why is Kotick so hated by many fans and employees?

The beginnings of his bad reputation can be traced back to shortly after the merger with Vivendi Games. At the time, Activision announced that several Vivendi game series would be cancelled for good. In an interview with MTV, Kotick talks about Activision's business strategy: "If a game doesn't have the potential to be exploited on every possible platform every year, we have no interest in it".

That Activision is not afraid of milking franchises to death has been proven by Kotick with the once successful "Tony Hawk's Pro Skater" series, among others. With annual releases and major fluctuations in quality, the franchise was driven to the wall with the disastrous "Tony Hawk's Proving Ground" in 2007 at the latest. Another prominent victim of this strategy is "Guitar Hero". With countless spin-offs and expansions, Activision not only killed the franchise between 2006 and 2011, but also oversaturated and destroyed the music game market as a whole.

Kotick's statements at a banking conference in 2010 are also legendary. During his appearance, he emphasised that his mission at Activision was to "take all the fun out of video game development". A culture of "scepticism, pessimism and fear" should prevail in his company in order to remain as "frugal" as possible. Statements that are forever etched in the collective memory of the gaming public.

A lot of video game fans were venting their anger at Kotick with Photoshop creations at the time. It is particularly popular to depict the CEO as a personified devil with horns. In an interview with the New York Times in 2012, Kotick gets upset about these images. He asks fans to stop because it is affecting his love life: "Think about how it affects my dating life when the first picture that comes up in a Google search shows me as the devil." As expected, this statement has further galvanised Activision Blizzard fans to produce devil images of the CEO.

Internal power struggles over "Call of Duty"

The fact that Kotick is serious about his "mission to take all the fun out of game development" is demonstrated by various internal power struggles. Including in the dispute with the creators of the "Call of Duty" games Vincent Zampella and Jason West. In 2009, following the immense success of the games, they demanded better conditions for themselves and their development studio Infinity Ward - namely more money and greater creative freedom. Kotick agreed, on the condition that the rights to "Call of Duty" would be transferred to Activision Blizzard if the two were sacked.

And so it comes as it must. According to testimony from a later court case, employees are tasked with "digging up dirt on Jason and Vince" so that Kotick has a reason to fire them. The two are eventually dismissed and, after a lawsuit against Activision, found their own studio: Respawn Entertainment ("Titanfall", "Apex Legends").

The man who destroyed Blizzard

Fans of developer studio Blizzard in particular harbour great resentment towards Kotick. Many see him as the reason why Blizzard is no longer what it used to be. Our colleague Phil has shed some light on the entire downfall of Blizzard in an article:

After the merger with Vivendi, Activision initially let the Blizzard division operate relatively independently. Although it is part of the new Activision-Blizzard construct, it enjoys great freedom in the planning and development of games. This will all change in 2018, when Activision will increase the pressure on Blizzard to operate as cost-effectively and efficiently as possible. More games have to be produced with fewer people. In anonymous interviews with Kotaku, many employees expressed concern about the future of the studio. Kotick's approach with "annual releases that are cannibalised on all platforms" does not fit in with Blizzard's "release it when it's ready" philosophy.

This year, Blizzard fans are also realising that something has changed within the company. In December, Blizzard announced that it would be cancelling the e-sports events for its MOBA game "Heroes of the Storm" for good. At the annual Blizzcon conference, the company presents "Diablo Immortal" - a mobile spin-off of the PC game series "Diablo". This is followed by boos and accusations that Blizzard is neglecting its PC community in order to mine the mobile market for short-term profits.

Around a year later, Bobby Kotick announces that the company has had a "record year". Shortly afterwards, around 800 employees were made redundant. The Blizzard division, which, unlike Activision's development studios, has not produced a hit game for a long time, was also hit hard.

The Blizzard employees who remain will have to live with additional cost-cutting measures. According to a report by Bloomberg, many employees expressed dissatisfaction with their low wages in 2019. QA testers and customer service in particular are literally starving. In leaked internal chats, employees discuss how they can save money by skipping meals to pay their rent. Meanwhile, Kotick collects a salary of 40 million dollars in the same year.

Accusations of abuse within the company

Kotick experienced his biggest crisis as CEO in 2021, when Activision Blizzard was sued by the Californian labour inspectorate. The allegations: the company systematically discriminates against female employees. In addition, Activision Blizzard supports a culture that despises women and enables sexual abuse.

Most of the accusations concern the Blizzard division. According to the report, inappropriate touching and other types of sexual harassment often occur in everyday working life and at parties. A female employee takes her own life due to sexual harassment during a business outing. For the most part, the misbehaviour of the perpetrators has no consequences.

Kotick insists at the time that he knew nothing about these incidents. He announces a company-wide plan to tackle the culture of sexual abuse. He also asked the Board of Directors to cancel his bonuses and reduce his salary to the minimum.

The Wall Street Journal published a report in November 2021 stating that Kotick was well aware of many sexual assaults and a rape case. According to internal documents, Kotick deliberately did not inform the board of directors and other team leaders in order to minimise the incidents. Kotick himself is also accused in the report of having abused several female employees. In 2006, for example, he threatened to kill a female assistant with a voice message. In 2007, Kotick also fired a flight attendant on his private jet because she had complained about inappropriate sexual advances by the pilot.

Many Activision Blizzard employees organise themselves after the allegations are made public. There are strikes demanding consequences for the management team. The Board of Directors and the majority of shareholders back CEO Bobby Kotick, even after the Wall Street Journal report. In response, around 1,000 employees signed a petition demanding that Kotick leave the company immediately. To no avail.

Where to go with all the money?

In the meantime, the court case surrounding the allegations of abuse at Activision Blizzard has been settled. The court has reached an agreement with Activision Blizzard. To settle the lawsuit, the company must pay around 54 million dollars "to directly compensate the affected employees and to cover the costs of the lawsuit". For a 70-billion-dollar megacorporation, this is a vanishingly small amount. In return, the court recognises that the allegations of sexual harassment and discrimination at Activision Blizzard have not been confirmed. The court also recognises that there is no evidence of any misconduct by Bobby Kotick.

All's well that ends well for Bobby. What's more. In retrospect, the whole scandal surrounding the allegations of abuse turned out to be a real blessing for Kotick. According to the Wall Street Journal report in November 2021, Activision's share value fell by 15 per cent. Due to the low share price Microsoft started talks with Kotick about a possible takeover shortly afterwards. And around six months after being sued by the Californian labour inspectorate, Microsoft announced that it was buying Activision Blizzard for 68.7 billion dollars.

What is Bobby Kotick up to next after his tenure at Activision? In his farewell letter, the CEO does not yet reveal his plans. He thanks his employees and is proud to have fostered an environment that "favours inspiration, creativity and a relentless commitment to excellence". According to news, Kotick wants to turn his back on the video games industry and use his billions to join football club West Ham United.