10 ms·

Activision Blizzard goes indie after CEO Kotick buys back the company

133 points by bdz 13y ago

zrail 13y ago
> the split will see 439 shares (worth $5.83 billion) bought by Activision Blizzard itself, while an investment group led by Kotick and Kelly will purchase 172 million shares (worth $2.32 billion) Those 439 shares must have one hell of a preference.
- antr 13y ago
  It's a typo. The real number is 429 million shares.
  - pavanky 13y ago
    429 million sounds about right. 439 million skews the numbers way too much.
_nullandnull_ 13y ago
It's interesting that Dell is doing this and now Activision. I wonder if we will start to see a trend of other companies doing the same?
- Charos 13y ago
  It's a distinct possibility. The C-suite is finally starting to understand the flaws in shareholder value theory, and going private/independent allows them to focus on long term value without having shareholders clamoring for their resignation due to poor short-term balance sheet results. Giant conglomerates such as GE or P&G will stay public, but I wouldn't be surprised if more focused technology firms - or even companies in other areas of consumer goods - start following this trend. It could be good for industry to have some variety in this way.
  - PakG1 13y ago
    Maybe. See letter to shareholders by Jeff Bezos. If the business can handle it, and the leadership is capable, I don't see why they would avoid the benefits of being public either. When public, among other things, you have access to a huge amount of capital if you want it (if you can handle the effects of the increased dilution). http://www.businessinsider.com/amazons-letter-to-shareholders-2013-4 http://www.businessinsider.com/amazons-letter-to-shareholder...
    - kenster07 13y ago
      No one should expect Bezos to speak for all companies in -Amazon's- letter to the shareholder. The problem with the stock market is that it is optimizing for a different thing than most companies, and even society at large. If the minimum holding period for an asset was, say, 20 years, the subprime mortgage crash would have been much less likely. (One could make a similar argument for democratic office. But I digress.) Shareholder value theory induces a sort of hysterical myopia, where ideas and results are evaluated in these Q2Q or Y2Y window. Growth is only evaluated within the context of the company, which creates perverse incentives wrt externalizing costs. Furthermore, if growth initiatives require no additional external funding, then the public stock market -really- makes no sense, and that is likely the case for Blizzard and Dell. Getting away from shareholder value theory's myopia is the surest way to begin a sustainable recovery of our capital markets.
      - CamperBob2 13y ago
        If the minimum holding period for an asset was, say, 20 years, the subprime mortgage crash would have been much less likely. One wonders what rules Microsoft stockholders are playing by. They seem to have the patience of a Zen master. Are their dividends enough to justify another 'lost decade' with Ballmer in charge?
- ihsw 13y ago
  When you're beholden to shareholders then you're a slave to the sales department, since they control the shareholder report. They'll drop their pants and make any deal to get those purchase orders in for the monthly/quarterly/annual reports, and clients that know this take advantage of it. It also opens the possibility of deferring sales figures to fudge the numbers, for example sales in 2011 haven't "finalized" so they show up in 2012's reports, but those sales actually happened in 2011. It's effectively kicking the can down the road to buy time to fix whatever the reason sales figures are being deferred.
deleted 13y ago
[deleted]
- mesozoic 13y ago
  Don't worry this is probably the worst titled article of the year.
mtgx 13y ago
I'm not sure if I would call a company the size of Activision Blizzard "indie".
- CodeCube 13y ago
  There is of course a spectrum of "indieness". You seem to be subscribing to the small indie theory, where the team is comprised of just a handful of people; the perpetual underdog. On the other side are those who define indie as your level of freedom to do what you please with your product. In that case, even though they may be large and successful, being privately owned and without a 3rd party (ie. publisher) gives them the freedom to take their games in whatever direction they choose.
  - Guvante 13y ago
    The only thing they would ever lose being under Vivendi is their rainy day fund. They always had complete control.
  - stelonix 13y ago
    Vivendi was never a publisher for Activision, Blizzard or Activision Blizzard. It was merely their owner. Both companies as well as the merged version of them were always self-publishers. They were always independent of other publishers (sans Blizzard back in the early 90s, but that's besides the point).
shawabawa3 13y ago
I thought for a second this was Vivendi buying Blizzard out of Activision, not the other way round. Blizzard games have definitely gone downhill since the activision merge
- norswap 13y ago
  Have they? If anything, I think they have improved. It might not please everyone (I miss the old WoW), but it seems to me that Blizzard is making informed game design decisions based on what the users want. I wouldn't surprised me to hear they invested a lot in big data analytics. Their big screw-up is perhaps the Diablo III auction house. The idea is good, but it has spiraled out of control. The auction house is now the only viable way to acquire gear. Playing only serves to rack money, but reselling is as good a way to make money. Gear serves to play, to rack more money, to buy better gear. The auction house is now the game. You can do very well at the game without ever playing the "real" game. Not to mention that shelling a few euros on the real money auction house will save tens of hours of farming, and real money continues to appreciate wrt in-game currency.
  - xentronium 13y ago
    Hardcore D3 has (or at least had) much better economics, due to: * no RMAH (and as such, all the good items are on sell for gold) * and huge moneysink in the form of dying characters (as such, less gold inflation) Also, when you play HC, leveling up your new character is so much less painful with AH. Besides, I'd just by something @ d2jsp.
    - norswap 13y ago
      I never played HC, is the regular auction house separate from non-HC though?
      - eterm 13y ago
        Yes, neither gold nor loot can cross the carebear/hardcore threshold.
jonnathanson 13y ago
Not mentioned in this story: Chinese internet giant Tencent is part of the "investment group" Kotick has put together. Basically, the company is switching ownership from one conglomerate to a diffusion of others. I'd hardly call that "independent" in any sense of the word. This story is less about independence, and more about allowing Vivendi to cash out on its 2007 merger of Activision and Blizzard. Basically, Vivendi transferred Blizzard to Activision in exchange for 52% of the combined entity (Activision Blizzard). While A-B has been doing well over the years, Vivendi has not fared as well. It wants some to capture some of the upside through the buyback.
- wikwocket 13y ago
  The article says that Activision Blizzard is buying the majority (about two thirds) of the shares itself. And presumably Kotick and Kelly have some personal stake in the investment group getting the rest of the shares? I don't know if this makes them "independent," but it doesn't seem to make them owned by a conglomeration of other parties either.
  - jonnathanson 13y ago
    To clarify my previous comment... The post-split cap table looks something like this (from what information has been made public at this point): Bobby Kotick & associates (including Brian Kelly and Tencent, among other unnamed parties) own 24.9%. Vivendi's share drops to 12%. A-B itself buys back the majority of shares. Technically speaking, yes, A-B becomes an independent company (in as much as the majority of outstanding shares are publicly owned). My phrase "I'd hardly call that independent" was probably an overstatement worth correcting. My bad on that one. Because the word "independent" (and especially the derivative "indie") has a very industry-specific meaning in this case, I found the headline a bit misleading.
- ameen 13y ago
  Tencent do not get a board seat and as such it's "ownership" wouldn't account to much.
- astrodust 13y ago
dmead 13y ago
can we have lan in starcraft 2?
- finnw 13y ago
  Hopefully somebody will create an unauthorized patch that enables LAN play and then Blizzard will have to release an official patch to compete with it.
- touristtam 13y ago
  You could as well ask for dedicated server and mod tools for the call of duty franchise.
- AjithAntony 13y ago
  Depending on why you want LAN, you may be interested in "Spawn mode" which lets you get all your friends together and play custom games and things. Your friends install the "Starter Edition" as long as one of you owns the game you can all play. Still requires internet and battle.net accounts. http://us.battle.net/sc2/en/buy-now/spawning http://us.battle.net/sc2/en/buy-now/spawning
  - dmead 13y ago
    i want lan so that i can use the product i paid for without having to check in with bliz every time i do it.
Tomis02 13y ago
Indie my ass. OP means independent.
- norswap 13y ago
  I'm confused, isn't "indie" an abbreviation for "independant"?
  - josh2600 13y ago
    I don't want to debate semantics or linguistics, but I believe the comment you're responding to is insinuating that "indie" refers to complete independence (no external masters) whereas "independent" means private, but serving many masters. It's a meaningless distinction, IMHO.
  - babuskov 13y ago
    "indie" can also mean "individual", so it all depends who do you ask.
  - Tomis02 13y ago
    In the gaming world "indie" refers to small teams who are usually bootstrapped and not owned by some publisher. They try focusing on real game innovation and don't usually have big budgets - at least not when they start out, so they will use the cheapest tools available (e.g. Blender instead of 3d max); for instance I don't know if the studio developing Minecraft still qualifies as indie because they seem to have a truckload of money, so the definition may be fuzzy. In any case, ActiBlizzard is very very far from being indie. They don't innovate, they have loads of money from some of their cash cows and probably every member of their team is easily replaceable like a standard cog in a machine. And when you're listed on NASDAQ and your employee count is in the thousands then you're practically a corporation.
    - speeder 13y ago
      Indie is abbreviation of "independent" And by the way, "gaming" industry refers to gambling industry.
babuskov 13y ago
After carefully investigating definition of "indie", it seems that Microsoft is an "indie" company as much as Blizzard.
- benologist 13y ago
  Wait till Blizzard becomes one of this year's hottest startups!
- kzrdude 13y ago
  Like other indie developers, Blizzard is cutting the middleman and selling the game directly to their fans. In this case Blizzard accomplished this by merging with games publisher Activision.
  - ido 13y ago
    Blizzard was self-publishing before the merger.
  - astrodust 13y ago
    Why did Blizzard merge in the first place? They were making literal truckloads of cash. Did Activision have a warehouse to put all the money?
ChuckMcM 13y ago
Interesting (and smart) move on Kotick's part. I think WoW suffered under the mantra of 'make it broader, make it broader ...' perhaps they will pull back a bit from that.

133 points by bdz 13y ago

zrail 13y ago

> the split will see 439 shares (worth $5.83 billion) bought by Activision Blizzard itself, while an investment group led by Kotick and Kelly will purchase 172 million shares (worth $2.32 billion) Those 439 shares must have one hell of a preference.

antr 13y ago
It's a typo. The real number is 429 million shares.
- pavanky 13y ago
  429 million sounds about right. 439 million skews the numbers way too much.

_nullandnull_ 13y ago

It's interesting that Dell is doing this and now Activision. I wonder if we will start to see a trend of other companies doing the same?

Charos 13y ago
It's a distinct possibility. The C-suite is finally starting to understand the flaws in shareholder value theory, and going private/independent allows them to focus on long term value without having shareholders clamoring for their resignation due to poor short-term balance sheet results. Giant conglomerates such as GE or P&G will stay public, but I wouldn't be surprised if more focused technology firms - or even companies in other areas of consumer goods - start following this trend. It could be good for industry to have some variety in this way.
- PakG1 13y ago
  Maybe. See letter to shareholders by Jeff Bezos. If the business can handle it, and the leadership is capable, I don't see why they would avoid the benefits of being public either. When public, among other things, you have access to a huge amount of capital if you want it (if you can handle the effects of the increased dilution). http://www.businessinsider.com/amazons-letter-to-shareholders-2013-4 http://www.businessinsider.com/amazons-letter-to-shareholder...
  - kenster07 13y ago
    No one should expect Bezos to speak for all companies in -Amazon's- letter to the shareholder. The problem with the stock market is that it is optimizing for a different thing than most companies, and even society at large. If the minimum holding period for an asset was, say, 20 years, the subprime mortgage crash would have been much less likely. (One could make a similar argument for democratic office. But I digress.) Shareholder value theory induces a sort of hysterical myopia, where ideas and results are evaluated in these Q2Q or Y2Y window. Growth is only evaluated within the context of the company, which creates perverse incentives wrt externalizing costs. Furthermore, if growth initiatives require no additional external funding, then the public stock market -really- makes no sense, and that is likely the case for Blizzard and Dell. Getting away from shareholder value theory's myopia is the surest way to begin a sustainable recovery of our capital markets.
    - CamperBob2 13y ago
      If the minimum holding period for an asset was, say, 20 years, the subprime mortgage crash would have been much less likely. One wonders what rules Microsoft stockholders are playing by. They seem to have the patience of a Zen master. Are their dividends enough to justify another 'lost decade' with Ballmer in charge?
ihsw 13y ago
When you're beholden to shareholders then you're a slave to the sales department, since they control the shareholder report. They'll drop their pants and make any deal to get those purchase orders in for the monthly/quarterly/annual reports, and clients that know this take advantage of it. It also opens the possibility of deferring sales figures to fudge the numbers, for example sales in 2011 haven't "finalized" so they show up in 2012's reports, but those sales actually happened in 2011. It's effectively kicking the can down the road to buy time to fix whatever the reason sales figures are being deferred.

deleted 13y ago

[deleted]

mesozoic 13y ago
Don't worry this is probably the worst titled article of the year.

mtgx 13y ago

I'm not sure if I would call a company the size of Activision Blizzard "indie".

CodeCube 13y ago
There is of course a spectrum of "indieness". You seem to be subscribing to the small indie theory, where the team is comprised of just a handful of people; the perpetual underdog. On the other side are those who define indie as your level of freedom to do what you please with your product. In that case, even though they may be large and successful, being privately owned and without a 3rd party (ie. publisher) gives them the freedom to take their games in whatever direction they choose.
- Guvante 13y ago
  The only thing they would ever lose being under Vivendi is their rainy day fund. They always had complete control.
- stelonix 13y ago
  Vivendi was never a publisher for Activision, Blizzard or Activision Blizzard. It was merely their owner. Both companies as well as the merged version of them were always self-publishers. They were always independent of other publishers (sans Blizzard back in the early 90s, but that's besides the point).

shawabawa3 13y ago

I thought for a second this was Vivendi buying Blizzard out of Activision, not the other way round. Blizzard games have definitely gone downhill since the activision merge

norswap 13y ago
Have they? If anything, I think they have improved. It might not please everyone (I miss the old WoW), but it seems to me that Blizzard is making informed game design decisions based on what the users want. I wouldn't surprised me to hear they invested a lot in big data analytics. Their big screw-up is perhaps the Diablo III auction house. The idea is good, but it has spiraled out of control. The auction house is now the only viable way to acquire gear. Playing only serves to rack money, but reselling is as good a way to make money. Gear serves to play, to rack more money, to buy better gear. The auction house is now the game. You can do very well at the game without ever playing the "real" game. Not to mention that shelling a few euros on the real money auction house will save tens of hours of farming, and real money continues to appreciate wrt in-game currency.
- xentronium 13y ago
  Hardcore D3 has (or at least had) much better economics, due to: * no RMAH (and as such, all the good items are on sell for gold) * and huge moneysink in the form of dying characters (as such, less gold inflation) Also, when you play HC, leveling up your new character is so much less painful with AH. Besides, I'd just by something @ d2jsp.
  - norswap 13y ago
    I never played HC, is the regular auction house separate from non-HC though?
    - eterm 13y ago
      Yes, neither gold nor loot can cross the carebear/hardcore threshold.

jonnathanson 13y ago

Not mentioned in this story: Chinese internet giant Tencent is part of the "investment group" Kotick has put together. Basically, the company is switching ownership from one conglomerate to a diffusion of others. I'd hardly call that "independent" in any sense of the word. This story is less about independence, and more about allowing Vivendi to cash out on its 2007 merger of Activision and Blizzard. Basically, Vivendi transferred Blizzard to Activision in exchange for 52% of the combined entity (Activision Blizzard). While A-B has been doing well over the years, Vivendi has not fared as well. It wants some to capture some of the upside through the buyback.

wikwocket 13y ago
The article says that Activision Blizzard is buying the majority (about two thirds) of the shares itself. And presumably Kotick and Kelly have some personal stake in the investment group getting the rest of the shares? I don't know if this makes them "independent," but it doesn't seem to make them owned by a conglomeration of other parties either.
- jonnathanson 13y ago
  To clarify my previous comment... The post-split cap table looks something like this (from what information has been made public at this point): Bobby Kotick & associates (including Brian Kelly and Tencent, among other unnamed parties) own 24.9%. Vivendi's share drops to 12%. A-B itself buys back the majority of shares. Technically speaking, yes, A-B becomes an independent company (in as much as the majority of outstanding shares are publicly owned). My phrase "I'd hardly call that independent" was probably an overstatement worth correcting. My bad on that one. Because the word "independent" (and especially the derivative "indie") has a very industry-specific meaning in this case, I found the headline a bit misleading.
ameen 13y ago
Tencent do not get a board seat and as such it's "ownership" wouldn't account to much.
astrodust 13y ago

dmead 13y ago

can we have lan in starcraft 2?

finnw 13y ago
Hopefully somebody will create an unauthorized patch that enables LAN play and then Blizzard will have to release an official patch to compete with it.
touristtam 13y ago
You could as well ask for dedicated server and mod tools for the call of duty franchise.
AjithAntony 13y ago
Depending on why you want LAN, you may be interested in "Spawn mode" which lets you get all your friends together and play custom games and things. Your friends install the "Starter Edition" as long as one of you owns the game you can all play. Still requires internet and battle.net accounts. http://us.battle.net/sc2/en/buy-now/spawning http://us.battle.net/sc2/en/buy-now/spawning
- dmead 13y ago
  i want lan so that i can use the product i paid for without having to check in with bliz every time i do it.

Tomis02 13y ago

Indie my ass. OP means independent.

norswap 13y ago
I'm confused, isn't "indie" an abbreviation for "independant"?
- josh2600 13y ago
  I don't want to debate semantics or linguistics, but I believe the comment you're responding to is insinuating that "indie" refers to complete independence (no external masters) whereas "independent" means private, but serving many masters. It's a meaningless distinction, IMHO.
- babuskov 13y ago
  "indie" can also mean "individual", so it all depends who do you ask.
- Tomis02 13y ago
  In the gaming world "indie" refers to small teams who are usually bootstrapped and not owned by some publisher. They try focusing on real game innovation and don't usually have big budgets - at least not when they start out, so they will use the cheapest tools available (e.g. Blender instead of 3d max); for instance I don't know if the studio developing Minecraft still qualifies as indie because they seem to have a truckload of money, so the definition may be fuzzy. In any case, ActiBlizzard is very very far from being indie. They don't innovate, they have loads of money from some of their cash cows and probably every member of their team is easily replaceable like a standard cog in a machine. And when you're listed on NASDAQ and your employee count is in the thousands then you're practically a corporation.
  - speeder 13y ago
    Indie is abbreviation of "independent" And by the way, "gaming" industry refers to gambling industry.

babuskov 13y ago

After carefully investigating definition of "indie", it seems that Microsoft is an "indie" company as much as Blizzard.

benologist 13y ago
Wait till Blizzard becomes one of this year's hottest startups!
kzrdude 13y ago
Like other indie developers, Blizzard is cutting the middleman and selling the game directly to their fans. In this case Blizzard accomplished this by merging with games publisher Activision.
- ido 13y ago
  Blizzard was self-publishing before the merger.
- astrodust 13y ago
  Why did Blizzard merge in the first place? They were making literal truckloads of cash. Did Activision have a warehouse to put all the money?

ChuckMcM 13y ago

Interesting (and smart) move on Kotick's part. I think WoW suffered under the mantra of 'make it broader, make it broader ...' perhaps they will pull back a bit from that.