News Analysis: Activision and the Conference Call of Doom or Predictamajig: Activision, Take-Two and Call of Duty
February 21, 2011 Leave a comment
Activision-Blizzard is all over the news as of late, what with the conference call of doom that announced the (for now) death of their music game business and the recent closure of Bizarre Creations. The biggest news is that Activision is currently rumored to be looking into an acquisition of Take-Two, the current owner of 2K Games, Rockstar and their respective properties.
The disbanding of the music game business unit and the cancellation of True Crime: Hong Kong, which by all accounts was relatively far along in development and turning out not that badly, came swiftly and without warning. These are only the latest examples of something we knew about the mega-publisher all along: Activision is entirely unafraid of putting down financially declining franchises and studios.
So what’s left for Activision at this point? Well we have a number of licensed titles, — Nascar, Transformers, Spider-Man, X-Men and Family Guy games have been confirmed for 2011 releases — the suite of Blizzard titles, including the perpetual money-machine that is World of Warcraft, a couple of mediocre properties (Prototype 2 anyone? How about Spyro and Crash Bandicoot?), the new Bungie property (which we likely won’t see until at least 2012) and of course Call of Duty. That’s it, that we know of of course.
That’s a significant lack of content for the world’s “largest video game publisher.” An acquisition of Take-Two sounds like the smartest possible move they could make. The company is coming off a damn fine year, both critically and financially. Regardless of their current success, the obvious value is in their stable of IPs and industry leading developers. With Take-Two comes Rockstar and Grand Theft Auto, Irrational Games and Bioshock and the entire 2K sports line.
Let’s break this down. If this rumor is true and the deal eventually goes down Activision-Blizzard would be the owners of three of the industries largest properties — WoW, Call of Duty and Grand Theft Auto. In addition they would now have a full lineup of sports games to compete with EA, including the a semi-exclusive license with Major League Baseball.
While this would undoubtedly be an amazing play by Activision, this would be horrible for the industry. Given their treatment of properties. A game like LA Noire, which has been in development for at least four years and is not a guaranteed hit, would likely not stand. Take-Two gives studios something Activision seems to undervalue: autonomy. Given the prestige of its developer stable this is key. Ken Levine and the Housers aren’t going to put up with corporate bullshit. They can just quit and start up a new studio where their creative process isn’t inhibited by publisher demands. Sound familiar?
This exact scenario played out last year during the Infinity Ward scandal, losing the studio’s heads and the majority of its veteran developers. This situation is a bit more complicated, with questions of payment entering the equation, but it’s a similar scenario with the end result being Respawn Entertainment, a new studio headed up by the former Infinity Ward execs.
Finally, let’s talk Call of Duty. The mega franchise will see its eighth mainline installment this year accompanied by the launch of a digital DLC selling platform of sorts, the specifics of which are still to be announced. 2010’s Black Ops continued the franchises unimaginable success and actually outsold Modern Warfare 2. The future of the series though doesn’t seem as bright. It will of course continue to outsell just about everything else out there, but I foresee sales at least plateauing, if not decreasing slightly, with this year’s installment. While it will not even come close to toppling Call of Duty, the Battlefield series is gaining a lot of steam and stealing disillusioned players away from CoD. I’m predicting at least 3.5 million units of Battlefield 3 sold in the first month and a sustained success throughout the rest of the year.
Activision’s future is uncertain. If Call of Duty turns the corner and nose dives the way Guitar Hero did, which is very unlikely given the respective audiences of those two franchises, they’d be left with nothing but the Blizzard properties. Swallowing up Take-Two is a brilliant business move and really solves all of the company’s problems. It would, however, be just awful for the industry. Bringing three of the industry’s largest properties and a handful of its most influential developers under one creatively hostile roof would be a tragedy.
EA tried a hostile takeover of Take-Two back in 2007 and failed. At this point the amount of money needed to by the necessary shares is even higher and after stock decreases following the conference call of doom, Activision may not be in the financial position to enact the acquisition. We’ll see.