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Activision's chief has flair for making deals that pay off

Bobby Kotick's gambles have included acquiring the developers of the 'Guitar Hero' and 'Tony Hawk' franchises.

December 03, 2007|Alex Pham | Times Staff Writer

He may be a college dropout, but Bobby Kotick could never be accused of being a slacker.

From his days at the University of Michigan, where he founded a software company in his dorm room, Kotick has had a knack for spotting promising trends and making risky bets that have paid off.

Sunday's proposed sale of a controlling stake in Activision Inc., the video game company he runs, to the French water company Vivendi could be his biggest score yet. Kotick's 5% stake in the Santa Monica firm is worth more than $310 million.

Kotick, 44, a boyish-looking Long Island native with an unruly burst of reddish hair, is reputed to be one of the savviest players in the $40-billion video game business. He is a regular at the annual Allen & Co. conference in Sun Valley and can be counted upon to give other guests a lift in his plane to the exclusive retreat.

One of his most prescient deals was in 1990, when he and a partner paid $440,000 for a controlling stake in the company that went on to become Activision. Today, Activision has a market capitalization of $6.45 billion.

His latest gamble was last year's $100-million purchase of RedOctane Inc., the studio that developed the "Guitar Hero" franchise. "When that deal got done a year ago, people were scratching their heads," said John G. Taylor, managing director of Arcadia Investments. "Now 'Guitar Hero' is exceeding everyone's expectations."

The "Guitar Hero" series is estimated by analysts to generate at least $360 million in revenue this year alone.

"It's on track to be the fastest Activision brand to hit $1 billion in sales," Activision's chief financial officer, Thomas Tippl, said in a recent interview with The Times.

In a hits-driven business, Kotick has consistently delivered blockbusters. He did it by aggressively bidding on major Hollywood licenses, such as "Spider-Man" and "Shrek." He also snapped up independent studios with promise and left them alone to develop games. Among them was the 2003 acquisition of Infinity Ward, a team of developers that had worked on the highly successful "Medal of Honor" franchise owned by Activision's chief rival, Electronic Arts Inc. The team produced "Call of Duty," for Activision, one of its top-selling game series.

Another fortuitous acquisition was the 1999 purchase of Neversoft Entertainment, which developed the "Tony Hawk" series of skateboarding games. That captured the attention not only of notoriously discriminating hard-core gamers but casual players who are able to quit playing after 10 minutes. Sales of "Tony Hawk" games long ago skated past $1 billion and are still going strong.

Kotick toiled for nearly two decades in the shadows of Electronic Arts until this year. In the first six months, Activision became the first company in at least a decade to unseat Electronic Arts as the country's largest video game publisher in terms of sales.

At the time, most analysts expected EA to reclaim its title in the second half of the year. Kotick's deal with Vivendi puts a bullet in that prediction.

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alex.pham@latimes.com

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