Fundamentals of Management, 8th ed



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management english

94

Part 2: Planning

Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

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managing a burgeoning portfolio of studios had slipped

into a counterproductive pattern: Identify an extremely

popular game, buy the developer, delegate the original

creative team to churn out sequels until either the team

burned out or the franchise fizzled, and then close

down or absorb what was left.

On the other hand, EA still sold a lot of video

games, and to Kotick, the basic tension in EA culture

wasn’t entirely surprising: Clearly the business of mak-

ing and marketing video games succeeded when the

creative side of the enterprise was supported by financ-

ing and distribution muscle, but it was equally true that

a steady stream of successful games came from the

company’s creative people. The key to getting Activi-

sion back in the game, Kotick decided, was managing

this complex of essential resources better than his com-

petition did.

So the next year Kotick moved the company to Los

Angeles and began to recruit the people who could fur-

nish the resources that he needed most—creative

expertise and a connection with the passion that its

customers brought to the video-game industry. Activi-

sion, he promised prospective developers, would not

manage its human resources the way that EA did:

EA, he argued, “has commoditized development. We

won’t absorb you into a big Death Star culture.”

Between 1997 and 2003, Kotick proceeded to buy no

fewer than nine studios, but his concept of a video-

game studio system was quite different from that of

EA, which was determined to make production more

efficient by centralizing groups of designers and pro-

grammers into regional offices. Kotick allows his stu-

dios to keep their own names, often lets them stay

where they are, and further encourages autonomy by

providing seed money for Activision alumni who want

to launch out on their own. Each studio draws up its

own financial statements and draws on its own bonus

pool, and the paychecks of studio heads reflect compa-

nywide profits and losses.

The strategy paid off big time. For calendar year

2007, the company, now known as Activision Blizzard,

estimated compiled revenues of $3 8 billion—just

enough to squeeze past EA’s $3 7 billion and sneak

into the top spot as the bestselling video game pub-

lisher in the world not affiliated with a maker of

game consoles (such as Nintendo and Microsoft).

Revenues for calendar year 2012 were $4 6 billion, up

more than 22 percent over 2009, making Activision

Blizzard the number one video game publisher in

North America and Europe. Today, its market capitali-

zation of $14 5 billion is twice that of EA.

Kotick attributes the firm’s success to a “focus on

a select number of proven franchises and genres

where we have proven development expertise… .

We look for ways to broaden the footprints of our

franchises, and where appropriate, we develop inno-

vative business models like subscription-based online

gaming.”



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