Age of Kotick

This week John Funk said in his Twitter feed, “Let’s be honest here. We could write the news story ‘Bobby Kotick Opens Door for Old Lady’ and people would *still* be furious with him.” He’s right. Activision CEO Bobby Kotick has gathered such an astoundingly negative reputation that you can almost troll a forum just by invoking his name. I admit to being a minor contributor to this attitude. I’ve made Kotick the butt of many jokes and taken my cheap shots like everyone else. So I thought I’d like to put aside the fat jokes, the “dark lord” jokes, the retard jokes, and have a slightly more grown-up look at what this guy is doing.

A lot of people give Kotick a hard time for being “greedy.” By greedy I assume they mean he wants his company to make more money. This is not something we should be angry about. As the chief executive officer of a multibillion-dollar company, it’s his job to be greedy. That’s why they hired him. Being angry about a CEO being greedy is like getting mad at a heavy metal band for playing electric guitars and being loud. Do you think Valve software puts games on deep discount because they love us? They do it because they can make more money when they occasionally go after the cheapskates and bargain hounds. And that’s fine.

No, the problem isn’t that Kotick is “greedy.” The problem is that he’s awful at his job. He’s bereft of ideas, he doesn’t understand his customers, and he has no sense of public relations. According to Kotick’s Forbes profile, he makes just under a million bucks and takes home a total of about fifteen million in benefits and bonuses. I think that’s pretty standard for companies this size. But for that kind of money, Activision should be getting someone remarkable. If you’re going to take the budget of a mid-size game and give it to one guy, every single year, then the person cashing the checks should be bringing something amazing to the table. There are hundreds of thousands of talented business majors in the world that would love a crack at a high-paying, high-profile job like this, and Activision should make sure they’re getting the best of the best. The CEO needs to be smarter than the other contenders, have a deeper understanding of the industry, be great with his employees, and have a silver tongue in public. Mr. Kotick has none of these qualities.

Let’s run down the list of what the CEO should be able to do and see how Kotick holds up:

1. He should be exceptional at coming up with new business ideas.

From the start, Kotick’s business ideas have been ham-fisted and obvious. His only plan has been to nickel and dime gamers by charging them money for stuff they used to get for free. Everything he does is just a variation on this theme. Charging for cutscenes. Charging for multiplayer. Cutting up the three acts of a single-player game and selling each at full price.

He shows no understanding of going after downmarket sales. (As Valve does.) He doesn’t have any ideas for new products or services, but instead just sells stuff they were already giving away.

Imagine if you hired someone to make your grocery store more profitable and they came up with ideas like making people rent their shopping carts, charging an entry fee for each section of the store, and charging for shopping bags. Would you conclude that you had just hired a business genius? Check out this post on the Team Liquid forums, which gives a timeline of Kotick’s ideas. Or rather, his one idea and its thousand permutations.

(Although I will say that the small $5 and $10 transactions for World of Warcraft were a new product and turned out to be quite profitable. Then again, “Get World of Warcraft to make more money” isn’t exactly the most impressive challenge the industry has to offer. Just about anyone can find a way to make money when you already have fifteen million customers.)

2. He should be good at finding and attracting talent, and at inspiring and motivating his people.

The list of disgruntled former Activision employees is long. The relationship he has with his people is an antagonistic one. There are few people who aren’t getting checks signed by Kotick that have nice things to say about him, and people who leave his employ usually have a lot of animosity for him. He’s not known as “tough, but fair.” Or, “hard-nosed but wise.” Or even, “cutthroat but practical.” He’s just a regular old garden-variety jerk. If you were one of the top people in game development, would you want to work someplace where you’ve got to sue your employer to get your promised bonus after you make the most successful game in history?

3. He needs to posses a keen understanding of the gaming industry.

Remember when Kotick said that, “With respect to the franchises that don’t have the potential to be exploited every year across every platform with clear sequel potential that can meet our objectives of over time becoming $100 million plus franchises, that’s a strategy that has worked very well for us.”

The idea that you can’t make money with non-sequels is a ridiculous one. All franchises began as not sequels, you know? What this statement says to me is that Kotick can’t tell a good game from a bad one, so he’d rather stick to churning out sequels because he can tell a sequel from a non-sequel. Note the casual game revolution and the motion control revolution of the past few years. The people who launched those revolutions made a lot of money. Kotick’s plan is simply engineered stagnation.

4. He should be skilled at public relations.

Just do a search for Kotick and you’ll find dozens and dozens of public statements from the guy that are followed by indignation and outrage from gamers. (Who could also be thought of as, “potential Activision customers.”) It’s not wrong that he wishes he could charge more for games. Every company wishes they could charge more for their products, and will do so if it makes sound business sense. But most of them aren’t so clueless as to brag about it in public. Walmart doesn’t triumphantly announce when they raise prices. Grocery stores don’t buy billboard space to announce that they’re cutting cashiers and so you’ll be standing in line 50 percent longer. This isn’t secret arcane knowledge. This isn’t even Marketing 101. This is pedestrian common sense. And Kotick doesn’t have it.

You might argue that, “If he wasn’t making money they would fire him, therefore he’s good at his job.” But in business things aren’t nearly that simple. Sure, the company is making money, but I think it could be making a lot more if the CEO knew what he was doing. You can’t look at alternate histories and see that the company would make more or less if it was doing different things. If all you want is for Activision-Blizzard to make money – any money – then they could fire Kotick and hire a desk lamp, because Blizzard was an unstoppable cash-generating dynamo before Kotick ever sat down in the CEO chair. The question isn’t, “Are they making money?” but “Would they be making more money with someone else’s ideas and leadership?”

Another thing to remember is that getting rid of your CEO is usually a negative thing for a publicly held company. It hurts the stock price and makes the board look bad, so there are reasons they might hang onto Kotick even if the board was unhappy with his performance. The point is, the fact that he has a job isn’t proof that he’s any good at it or that someone else couldn’t do a lot better. Activision deserves more for its fifteen million bucks. So do gamers.

Shamus Young is the guy behind Twenty Sided, DM of the Rings, Stolen Pixels, Shamus Plays, and Spoiler Warning. Beat that, fanboy.