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Could Activision be influencing Blizzard’s recent decisions?

The partnership of Activision and Blizzard has been criticized by some fans from the very beginning. For those who may not know the business side of what Activision Blizzard does, here is a short history.

The 2008 merger brought Activision and Blizzard together.

Activision and Vivendi Games merged back in July 2008 for $18.9 billion. Vivendi Games was the holding company for both Sierra Entertainment and Blizzard Entertainment. Activision Blizzard eventually separated from Vivendi in 2013. By 2015, Activision Blizzard had joined Electronic Arts as the only gaming companies on the S&P 500 stock market index. The same year, the company acquired King (the creators of Candy Crush Saga). It later acquired Major League Gaming (MLG) in early 2016. Activision Blizzard launched the Overwatch League later that year. In 2017, it joined the Fortune 500 companies list, becoming only the third gaming company to do so after Atari and Electronic Arts.

At what cost?

There is no doubt that Activision Blizzard is a very successful company and will continue to be successful, at least in terms of revenue and brand recognition. CEO Bobby Kotick is one of the (if not the) longest-serving CEOs of any publicly traded tech company. Kotick has been in his position as CEO since 1991 and has a contract that will keep him in that position until 2021.

However, Activision Blizzard (ATVI) has had a series of missteps that has plunged its share price considerably in 2018. In early October, ATVI was trading at around $83 a share. As of this writing, the number is closer to $48.50. That is a 41.57 percent drop in its stock price. This raises some very important questions for Activision Blizzard: is the company becoming more Activision and less Blizzard? Is the drop in stock price a reflection of the recent decisions within the company?

Activision Blizzard Stock Price
What are the reasons behind the sudden drop of ATVI’s stock price?

The Activision-Blizzard relationship, while profitable, has also come under great scrutiny.

A forum post on Team Liquid’s website in 2010 details Activision’s relationship with Blizzard after the merger. In 2009, Kotick and then-Chief Financial Officer (CFO) Thomas Tippl (who has since held the roles of Chief Corporate Officer, Chief Operating Officer, and is currently Vice Chairman at Activision Blizzard) considered a subscription-based Call of Duty title. Activision also shuttered numerous franchises under Kotick’s watch between 2008 and 2010.

While this is not reflective of the current state of the company, it does show that Kotick and the top brass at Activision Blizzard have a history of placing profits over the quality of its games and the feedback of gamers themselves. This was one of the key criticisms about the Activision-Blizzard relationship in the first place. Some other events may have also indicated that Activision is seeking to dominate the relationship with Blizzard.

Adding Black Ops 4 and Destiny 2 to the Battle.net launcher

Black Ops 4 and Destiny 2 are not Blizzard titles. Many people have suggested that the games be removed from the Battle.net launcher altogether, or at least give players the option to hide them. From my perspective, this is probably just a minor blip on the radar, but it definitely suggests Activision’s desire to dominate their relationship with Blizzard rather than maintain a 50/50 relationship.

Possible Activision influence: Activision is now pushing the Black Ops franchise onto the Battle.net launcher (previous Black Ops titles were released on Steam). They are listed under Activision in the launcher.

Mike Morhaime’s Departure

Co-founder of Blizzard Mike Morhaime stepped down as president of Blizzard on October 3. This was when ATVI stock was at its peak. J. Allen Brack succeeded him as president the same day. While this may not have had a significant impact on the average Blizzard fan, more hardcore fans may have questioned why Morhaime stepped down in the first place. Was it Activision’s increasing influence at Blizzard? Did Morhaime want a break after 27 years? Or did Morhaime know something we didn’t know? The rumor mill was churning leading up to (and even after) Blizzcon 2018.

Former Blizzard President Mike Morhaime
Why has Morhaime stayed silent since stepping down?

Morhaime still holds an advisory role at Blizzard, so he isn’t completely out of the picture. The Blizzard co-founder has been quiet about the reasons for handing off the torch, but that hasn’t stopped Blizzard fans from speculating and asking questions. In fact, Morhaime’s silence over his departure may actually be fueling rumors about why he stepped down as president.

Possible Activision influence: ATVI’s Q3 financials, which showed Blizzard’s year-over-year operating income increase but Activision’s decrease (also note that Activision’s net revenues in Q3 are even lower than King’s on page 8).

Diablo: Immortal

Blizzcon 2018 introduced the extremely controversial Diablo: Immortal as one of the main announcements for the Diablo franchise. Fans anticipated either a Diablo 4 announcement (which was revealed to have been pulled at the last minute) or a Diablo 2 remaster. The Diablo: Immortal announcement was met with immediate backlash. Polygon‘s Ben Kuchera said, “The assumption being made, and being spread throughout social media, is that Blizzard is selling out its ideals for a chunk of the lucrative mobile gaming market, at the expense of the fans that have been there all along.”

This idea is not new in gaming (or even business in general). At some point in time, a great majority of businesses have sold out (as in sacrifice its mission and philosophy) to make money. In fact, Apple co-founder Steve Jobs had this to say about the relationship between sales and marketing and those actually making the product back in 1995. This is also part of the reason Jobs himself took over much of the marketing at Apple when he returned to the company in 1997.

Activision Blizzard Steve Jobs Quote
Activision Blizzard could learn a lesson from Steve Jobs

Possible Activision influence: Activision’s desire to profit off the global mobile gaming market, and to have mobile versions of each Blizzard franchise. While Hearthstone is already mobile, the other Blizzard franchises aside from Overwatch are only on PC.

HGC Cancellation

Yesterday, Blizzard announced that it was shuttering the Heroes of the Storm Global Championship (HGC) and Heroes of the Dorm, two of the game’s esports offerings. It was the first major business decision of Brack’s tenure as Blizzard president. The Heroes esports team said that it was a difficult decision on their part.

Possible Activision influence: Activision’s role in this decision (or even if they had any say in this decision at all) is still unknown. The viewership and sponsorships were not entirely there for the Heroes franchise in comparison to other games in the genre. However, Kotick has a record for shuttering non-profitable products and franchises despite fan support.

Poorly-Timed Mount Announcement

On the day of the HGC cancellation, Blizzard announced another new mount: the Vulpine Familiar. While the art team at Blizzard is one of the best, many people complained about the poor timing of the mount’s announcement. There is no doubt that Blizzard’s art team did a great job with the mount. The criticism of Patch 8.1 and the lack of content before the Battle for Dazar’alor has left players scratching their heads.

Activision Blizzard Pay To Win
The beautiful mount has received backlash since its announcement

Possible Activision influence: A (possible) apology for canceling HGC and Heroes of the Dorm? Most likely just another offering in the Blizzard store, as paid mounts have not been a hugely controversial issue in the past.

Final Verdict

Is Activision killing Blizzard? There are many Blizzard loyalists despite the flaws of the games. Some suggest that Activision’s influence is creeping into the development of Blizzard’s games. Blizzard is the main money maker for the three-way partnership between Activision, Blizzard, and King. Kotick is known for his “money first” attitude. While investors may love Kotick’s “money first” attitude, gamers have had an ax to grind with Kotick over this issue. Kotick’s previous (and current) focus on the bottom line is a telling sign that Activision would seek to take control in recent months.

What do you think? Is Activision Blizzard becoming more Activision than Blizzard? Or is there nothing wrong with the company right now? Let us know in the comments below!