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Leadership Style at Activision Blizzard : Activision Blizzard, Inc., formerly Activision, Inc. (NASDAQ: ATVI) is the American holding company for Activision and Blizzard Entertainment. The company is majority owned by French conglomerate Vivendi SA and was created through the merger of Activision and Vivendi Games, announced on December 2, 2007,[3] in a deal worth USD$18.8 billion.[4] The deal closed July 9, 2008. The company believed that the merging of the two companies would create "the world’s largest and most profitable pure-play video game publisher".[5] It believes that it is the only publisher that has "leading market positions across all categories" of the video game industry.[5]
Activision was the number one third-party U.S. console and handheld publisher for the first six months of calendar 2007, according to The NPD Group. The company increased its market share over the six month period to a record 13.7%, a 5.1% increase over the same period last year.
Additionally, for the first quarter of fiscal year 2008, ended June 30, 2007, Activision was the number one U.S. publisher on both the Xbox 360 video game and entertainment system and the PlayStation 2 computer entertainment system, according to The NPD Group. The company also ranked as the number one third-party publisher on the PLAYSTATION 3 computer entertainment system and the Nintendo platforms in the U.S.
"Our record performance was fueled by strong sales of our proven franchises Guitar Hero II, Spider-Man 3 and Shrek The Third, as well as our new intellectual property TRANSFORMERS: The Game," stated Robert Kotick, Chairman and CEO, Activision, Inc. "Our balanced portfolio has enabled us to continue our leadership position across the console and handheld platforms."
Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.5 billion for the fiscal year ended March 31, 2007.
Activision Blizzard is the American holding company for Activision and Blizzard Entertainment, majority owned by French conglomerate Vivendi SA. The company is the result of a merger between Activision and Vivendi Games, announced on December 2, 2007 in a deal worth USD $18.8 billion.
Firm Information
Activision Blizzard’s creation was a result of a 2007 merger of Vivendi Games (which had consisted of Blizzard Entertainment and Sierra Entertainment) and Activision. As part of the merger agreement, Activision and Blizzard would publish games under the parent company Activision Blizzard. However, both Activision and Blizzard would continue to operate and develop games as separate entities. Sierra Entertainment would contribute select titles to the parent company while most of its operations would cease. Vivendi, a French media conglomerate, became the majority shareholder in Activision Blizzard.
The game publisher’s portfolio includes popular franchises such as Call of Duty, Diablo, Guitar Hero, Starcraft, Tony Hawk, Warcraft and World of Warcraft. Activision Blizzard seeks to continue providing products of exceptional quality while maintaining its corporate reputation. The company’s goal is to become one of the largest, most profitable, and well-respected software corporations of the world. Activision Blizzard’s management team is currently led by CEO Robert Kotick and maintains headquarters in Santa Monica, California.
Competitive Advantage and Strengths
The two major advantages Activision Blizzard holds over its competitors are the size and diversity of the corporation. The fact that Activision Blizzard sells products across several consoles and in various genres allows it to compete with gaming behemoth, Electronic Arts. In fact, since the company’s inception in 2007, Activision Blizzard has become the world’s largest and most profitable pure-play video game publisher. The company’s diversity is a critical advantage because it allows for expansion and cross-selling opportunities across various platforms. For example, in June 2008, Guitar Hero 3, a successful Activision console game, featured a song from Blizzard’s highly acclaimed massively multiplayer online role-playing game World of Warcraft.
Much of Activision Blizzard’s success can be attributed to the company’s commitment to producing games of the highest quality. Diablo, Starcraft, Warcraft, and World of Warcraft all have become staples amongst the best-selling PC franchises. The key to this success has been Activision Blizzard’s ability to develop an enjoyable original release, and introduce slight modifications and add-ons in sequels. Consumers also enjoy great replay value from these PC games because of the availability of online multiplayer play. Battle.net, Blizzard Entertainment’s online gaming center, offers a convenient forum for real-time strategy gamers from all over the world to connect. Additionally, console franchises such as Guitar Hero, Tony Hawk, and Call of Duty have all won critical acclaim for innovative and superior gameplay.
It is important to note that multiplayer gaming is paramount to the success of Activision Blizzard. PC games allow for multiplayer gaming over the internet and console games allow for multiplayer gaming on the same system or via an Internet Service Provider. Multiplayer gaming benefits from network effects, that is, as more people join a multiplayer gaming network, the more all users in that network benefit. New players mean more competitors, more people to meet, and generally more enjoyment for all multiplayer users. The network effects of multiplayer gaming have attracted many new customers.
Activision Blizzard’s portfolio of games usually attracts more hardcore gamers than casual gamers. This is a decisive advantage in an economic downturn because Activision Blizzard’s sales are not as affected when there is a decrease in consumer spending. When potential customers have limited disposable income, they need to be assured of the quality of what they are purchasing. The Activision Blizzard brand is often strong enough to convince a repeat customer of the quality of a new game.
Future Opportunities
Future opportunities for Activision Blizzard include the introduction of new games and expansion into foreign markets. Two of the more notable games scheduled for release in the near future include Call of Duty: Modern Warfare 2 and Starcraft 2. Slated for release in the winter of 2009, Call of Duty: Modern Warfare 2 is the sequel to the award winning Call of Duty 4: Modern Warfare. Sales of the game are projected to surpass the 14 million copies sold by Call of Duty 4: Modern Warfare. In 2010, Activision Blizzard is scheduled to release Starcraft II, one of the most anticipated sequels in PC gaming history. The release of Starcraft II will coincide with the launch of a revamped version of Battlet.net. The launching of new games is expected to provide a significant cash flow for Activision Blizzard.
Activision Blizzard is also fervently seeking to develop its presence in foreign markets. Starcraft already has a cult following in South Korea and Starcraft II looks to build upon this success. World of Warcraft is extremely popular in China and the record increases in new internet users should help that market grow. In addition to expansion in South Korean and China, Activision Blizzard is seeking to capture market share in emerging broadband markets such as India, Russia, and Eastern Europe.
Threats and Weaknesses
Activision Blizzard’s main competitors in video game publishing include Electronic Arts and Take Two Interactive. Furthermore, electronics conglomerates such as Sony, Nintendo and Microsoft also publish select games. Although Activision Blizzard’s current market cap is extremely strong in comparison to other pure-play video game publishers, there are several genres which the company has yet to exploit. For example, Electronic Arts has a significant advantage in sports video games because of its EA Sports arm.
Another weakness for Activision Blizzard’s business model is its dependency on computer and console manufacturers. Because the company only publishes games, Activision Blizzard’s sales are often dependent on the pricing of video gaming consoles such as Sony’s Playstation 3 or Microsoft’s Xbox 360. These consoles are necessary for users to play Activision Blizzard’s console games. Furthermore, the video gaming industry has proven to not be recession proof as many experts had predicted. This means that video game companies such as Activision Blizzard will need to be extremely wary of economic conditions in the future.
Opinion
Activision Blizzard is a good investment because of the company’s solid business model of developing games of high quality and garnering return customers of its gaming brand. Although Activision Blizzard has already enjoyed significant commercial success, its ambitious management team continues to seek expansion opportunities expansion for its products.
Excitement for many of Activision Blizzard’s upcoming releases is clearly palpable amongst the gaming community. In fact, because of the success of past releases, the standards have been set very high for these upcoming games. However, as long as Activision Blizzard adheres to its proven formula of providing quality games and a user-friendly interface for multiplayer gamers, the company will continue to reap success in the video gaming industry.
Activision was the number one third-party U.S. console and handheld publisher for the first six months of calendar 2007, according to The NPD Group. The company increased its market share over the six month period to a record 13.7%, a 5.1% increase over the same period last year.
Additionally, for the first quarter of fiscal year 2008, ended June 30, 2007, Activision was the number one U.S. publisher on both the Xbox 360 video game and entertainment system and the PlayStation 2 computer entertainment system, according to The NPD Group. The company also ranked as the number one third-party publisher on the PLAYSTATION 3 computer entertainment system and the Nintendo platforms in the U.S.
"Our record performance was fueled by strong sales of our proven franchises Guitar Hero II, Spider-Man 3 and Shrek The Third, as well as our new intellectual property TRANSFORMERS: The Game," stated Robert Kotick, Chairman and CEO, Activision, Inc. "Our balanced portfolio has enabled us to continue our leadership position across the console and handheld platforms."
Headquartered in Santa Monica, California, Activision, Inc. is a leading worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.5 billion for the fiscal year ended March 31, 2007.
Activision Blizzard is the American holding company for Activision and Blizzard Entertainment, majority owned by French conglomerate Vivendi SA. The company is the result of a merger between Activision and Vivendi Games, announced on December 2, 2007 in a deal worth USD $18.8 billion.
Firm Information
Activision Blizzard’s creation was a result of a 2007 merger of Vivendi Games (which had consisted of Blizzard Entertainment and Sierra Entertainment) and Activision. As part of the merger agreement, Activision and Blizzard would publish games under the parent company Activision Blizzard. However, both Activision and Blizzard would continue to operate and develop games as separate entities. Sierra Entertainment would contribute select titles to the parent company while most of its operations would cease. Vivendi, a French media conglomerate, became the majority shareholder in Activision Blizzard.
The game publisher’s portfolio includes popular franchises such as Call of Duty, Diablo, Guitar Hero, Starcraft, Tony Hawk, Warcraft and World of Warcraft. Activision Blizzard seeks to continue providing products of exceptional quality while maintaining its corporate reputation. The company’s goal is to become one of the largest, most profitable, and well-respected software corporations of the world. Activision Blizzard’s management team is currently led by CEO Robert Kotick and maintains headquarters in Santa Monica, California.
Competitive Advantage and Strengths
The two major advantages Activision Blizzard holds over its competitors are the size and diversity of the corporation. The fact that Activision Blizzard sells products across several consoles and in various genres allows it to compete with gaming behemoth, Electronic Arts. In fact, since the company’s inception in 2007, Activision Blizzard has become the world’s largest and most profitable pure-play video game publisher. The company’s diversity is a critical advantage because it allows for expansion and cross-selling opportunities across various platforms. For example, in June 2008, Guitar Hero 3, a successful Activision console game, featured a song from Blizzard’s highly acclaimed massively multiplayer online role-playing game World of Warcraft.
Much of Activision Blizzard’s success can be attributed to the company’s commitment to producing games of the highest quality. Diablo, Starcraft, Warcraft, and World of Warcraft all have become staples amongst the best-selling PC franchises. The key to this success has been Activision Blizzard’s ability to develop an enjoyable original release, and introduce slight modifications and add-ons in sequels. Consumers also enjoy great replay value from these PC games because of the availability of online multiplayer play. Battle.net, Blizzard Entertainment’s online gaming center, offers a convenient forum for real-time strategy gamers from all over the world to connect. Additionally, console franchises such as Guitar Hero, Tony Hawk, and Call of Duty have all won critical acclaim for innovative and superior gameplay.
It is important to note that multiplayer gaming is paramount to the success of Activision Blizzard. PC games allow for multiplayer gaming over the internet and console games allow for multiplayer gaming on the same system or via an Internet Service Provider. Multiplayer gaming benefits from network effects, that is, as more people join a multiplayer gaming network, the more all users in that network benefit. New players mean more competitors, more people to meet, and generally more enjoyment for all multiplayer users. The network effects of multiplayer gaming have attracted many new customers.
Activision Blizzard’s portfolio of games usually attracts more hardcore gamers than casual gamers. This is a decisive advantage in an economic downturn because Activision Blizzard’s sales are not as affected when there is a decrease in consumer spending. When potential customers have limited disposable income, they need to be assured of the quality of what they are purchasing. The Activision Blizzard brand is often strong enough to convince a repeat customer of the quality of a new game.
Future Opportunities
Future opportunities for Activision Blizzard include the introduction of new games and expansion into foreign markets. Two of the more notable games scheduled for release in the near future include Call of Duty: Modern Warfare 2 and Starcraft 2. Slated for release in the winter of 2009, Call of Duty: Modern Warfare 2 is the sequel to the award winning Call of Duty 4: Modern Warfare. Sales of the game are projected to surpass the 14 million copies sold by Call of Duty 4: Modern Warfare. In 2010, Activision Blizzard is scheduled to release Starcraft II, one of the most anticipated sequels in PC gaming history. The release of Starcraft II will coincide with the launch of a revamped version of Battlet.net. The launching of new games is expected to provide a significant cash flow for Activision Blizzard.
Activision Blizzard is also fervently seeking to develop its presence in foreign markets. Starcraft already has a cult following in South Korea and Starcraft II looks to build upon this success. World of Warcraft is extremely popular in China and the record increases in new internet users should help that market grow. In addition to expansion in South Korean and China, Activision Blizzard is seeking to capture market share in emerging broadband markets such as India, Russia, and Eastern Europe.
Threats and Weaknesses
Activision Blizzard’s main competitors in video game publishing include Electronic Arts and Take Two Interactive. Furthermore, electronics conglomerates such as Sony, Nintendo and Microsoft also publish select games. Although Activision Blizzard’s current market cap is extremely strong in comparison to other pure-play video game publishers, there are several genres which the company has yet to exploit. For example, Electronic Arts has a significant advantage in sports video games because of its EA Sports arm.
Another weakness for Activision Blizzard’s business model is its dependency on computer and console manufacturers. Because the company only publishes games, Activision Blizzard’s sales are often dependent on the pricing of video gaming consoles such as Sony’s Playstation 3 or Microsoft’s Xbox 360. These consoles are necessary for users to play Activision Blizzard’s console games. Furthermore, the video gaming industry has proven to not be recession proof as many experts had predicted. This means that video game companies such as Activision Blizzard will need to be extremely wary of economic conditions in the future.
Opinion
Activision Blizzard is a good investment because of the company’s solid business model of developing games of high quality and garnering return customers of its gaming brand. Although Activision Blizzard has already enjoyed significant commercial success, its ambitious management team continues to seek expansion opportunities expansion for its products.
Excitement for many of Activision Blizzard’s upcoming releases is clearly palpable amongst the gaming community. In fact, because of the success of past releases, the standards have been set very high for these upcoming games. However, as long as Activision Blizzard adheres to its proven formula of providing quality games and a user-friendly interface for multiplayer gamers, the company will continue to reap success in the video gaming industry.
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