Gaming Biz

Before Microsoft deal, Activision Blizzard considered Electronic Arts

Apparently, EA was too small for Activision Blizzard CEO Bobby Kotick's long-term goals.

SANTA MONICA, CA-113012- Robert Kotick, also known as Bobby Kotick, CEO, President, and a director o...
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Activision Blizzard’s controversial CEO Bobby Kotick has overseen the company’s evolution for decades. Now, his company will become a subsidiary of Microsoft in a $68 billion deal set to close in 2023. Kotick has made the reasons behind the deal public, including the fact that Activision Blizzard was reportedly considering a merger with Electronic Arts before landing with Microsoft.

Friends with Microsoft — In a GamesBeat interview, Kotick shared his reasoning behind the Microsoft deal and why he didn’t gun for a merger with Electronic Arts. Kotick said that Microsoft Gaming’s CEO Phil Spencer called him to discuss a possible acquisition and that the two “know each other well” and “have a great relationship.”

Now, it’s clear why Spencer danced around the allegations of sexual assault against Activision Blizzard in a recent interview with the New York Times — he’s actually a friend of Kotick’s.

Wage claims — But a friendship isn’t enough to make a billion-dollar deal. So why did Activision Blizzard sell out to Microsoft? According to Kotick, Activision Blizzard was too small and wasn’t competitive enough to attract top talent. But if it was a part of Microsoft, it could be.

“I’ve never seen as much competition, and we’re seeing it even in the wage inflation. Whether it’s Riot, Tencent, Epic, Sony, or Microsoft, EA, there are just so many different places that people are recruiting talent,” Kotick said.

Ironically, the wage that’s arguably inflated the most is Kotick’s. Yahoo! Finance reported that the Activision Blizzard CEO will pocket a cool $390 million in the Microsoft deal.

Whether or not wage inflation is actually affecting the gaming business, however, is up for debate. Kotick himself reportedly promoted a workplace “culture of thrift” and Activision Blizzard notoriously underpaid its employees despite record-breaking profits.

The reports are dire. Some Activision Blizzard employees said they had to skip meals and use the company’s free coffee to stave off hunger pains. One employee said that staffers are making less than they did ten years ago, thanks to changes in overtime compensation, among other issues. That sure doesn’t sound like gaming industry employees have inflated wages, does it?

Size worries — Regardless, Kotick is convinced that Activision Blizzard has become a small fish in a big pond. “You’d think, oh, we’re this big company and have just these great resources. But when you’re comparing us to, you know, $2 trillion companies and $3 trillion companies... you realize, we may have been a big company in video gaming, but now... it’s a different world than ever before,” Kotick explained.

When considering who could buy Activision Blizzard to increase its access to money and resources, Kotick said he “thought about all possible partners” during a recent investor call. But as he explained to GamesBeat, “even if we were to have consolidated within EA [Electronic Arts], that wouldn’t have given us what we’re going to need going forward. And you needed to have a big partner in order to make it work.”

Big dreams — So what are Kotick’s visions for Activision Blizzard, exactly? Well, he wanted to make a new Guitar Hero game, a new Skylanders game and add social features to Candy Crush. He also wants “a real streaming Call of Duty experience” and to hire more employees focused on AI and machine learning.

All those big dreams come at a cost, however — one Kotick believed EA couldn’t afford. It’s why Microsoft, with its market cap of nearly $2.3 trillion, won the day.