Senior Honors Project (Activision Blizzard)

RUNNING HEAD: Activision Blizzard
Senior Honors Project

Case Study
Activision Blizzard
Student: Saparmurat Khadzhimurzaev

Academic Supervisor: Prof. Liam Ryan
Moscow Touro University

Moscow-New York
2022
Activision Blizzard
Table of Contents
Executive Summary 3
Introduction 4
Chapter 1. General Provision of the Video Game Industry 5
1.1 History and Development of the Video Game Industry 5
1.2 Objectives, Principles and Priorities of the Video Game Industry 17
1.3 PESTEL Analysis 20
Chapter 2. Characteristic Features of Activision Blizzard 26
2.1 History and Organization of Activision Blizzard 26
2.2 Differences from Regular Industry 40
2.3 Similarities to Regular Industry 41
2.4 SWOT Analysis 44
Chapter 3. Critical Analysis 50
3.1 Porter Five Forces Analysis 50
3.2 Financials 52
3.3 Position of the company today within the industry 56
3.4 Difficulties the company faces 59
3.5 Suggestion for current performance improvement 61
3.6 Recommendations for future growth 62
Conclusion 64
Bibliography 65
Appendix 71
Activision Blizzard
Executive Summary
The main purpose of this case study is to give the reader a clear understanding of what
exactly is a video game industry as well as it’s history, development and market analysis
through Activision Blizzard.
This case study is divided into three chapters. The first chapter describes the history of
the video game industry, it’s main objectives and principles as well as PESTEL analysis.
The second chapter describes the history of Activision Blizzard, it’s main objectives,
management, core values and ownership. Second chapter gives a clear understanding of
what role does Activision Blizzard plays within the industry and how important they are
in the industry. In addition, a SWOT analysis is evaluated, which identifies the main
external and internal factors that influence the company.
The third chapter is a critical analysis of Activision Blizzard which contains financials,
Porter Five Forces analysis, position of the company within the industry and suggestions
for improving company’s performance and growth.

Activision Blizzard
Introduction
The desire to play is as old as humanity itself. It’s a critical tool for preparing youngsters
for life, and it’s a means for adults to sometimes escape reality and have a few moments of
enjoyment to themselves. Gaming, like practically every other element of our life, has moved
into the digital space in recent decades. Nowadays, one-third of the world’s population spend
time playing video games on their phone, console, or computer on a regular basis. The
triumphal rise of the video game began in the 1970’s, but it’s origins may be traced back
nearly 20 years.1
What exactly is a video game? A video game is an electronic game that involves
interaction with a user interface or input device – such as a joystick, controller, keyboard, or
motion sensing device – to generate visual feedback. This feedback is shown on a video
display device, such as a TV set, monitor, touchscreen, or virtual reality headset. Video games
are often augmented with audio feedback delivered through speakers or headphones, and
sometimes with other types of feedback, including haptic technology. 2 There are many
different types of video games and they are all defined by a platform on which this game is
played. Video games are classified into arcade video games, console games, and personal
computer games. The video gaming industry has lately grown to include mobile gaming via
smartphones and tablet computers, virtual and augmented reality systems, and distant cloud
gaming. Based on the style of gameplay and goal, video games are divided into a variety of
genres. 3
The video game industry is enormous. It's bigger than the movie and music industries
combined, and it's only becoming bigger. Though it does not receive the same level of
1
Blog.Nationalmuseum.ch, The history of video games by Alexander Rechsteiner.
https://blog.nationalmuseum.ch/en/2020/01/the-history-of-video-games/
2
https://en.wikipedia.org/wiki/Video_game
3
https://en.wikipedia.org/wiki/Video_game
Activision Blizzard
attention as the film and music industries, there are over two billion players worldwide. This
equates to 26% of the world's population. 4 That is why the writer decided to choose
Activision Blizzard as his point of interest company. Activision Blizzard is one of the biggest
players in the industry and through various mergers, acquisitions, and successful content
performance, Activision Blizzard has grown into the biggest gaming company by market
capitalization, which stood at 75.2 billion U.S. dollars in June 2021. 5 In 2020, Activision
Blizzard's annual revenue amounted to 8.09 billion U.S. dollars. 6 As one of the biggest video
game companies, Activision Blizzard has a big impact on the industry and since this company
is multinational, this case study won’t be talking about one specific country in general but will
be focusing more on the one that has a bigger player base and revenue.
Chapter I. General Provisions of the Video Game Industry
1.1 The History and Development of the Video Game Industry
Video games are now a $100 billion global industry, with over two-thirds of American
households having individuals who play them on a regular basis. It's no surprise: video games
have been around for decades and are available on a variety of platforms, including arcade
systems, home consoles, handheld consoles, and mobile devices. They're also frequently on
the cutting edge of computer technology.7 Gaming has grown from its early days as a
technological oddity at a scientific lab in the 1950s to become one of the world's most
successful entertainment enterprises.8
4
Investopedia.com, How the Video Game Industry Is Changing by Andrew Beattie, October 31, 2021. How the
Video Game Industry Is Changing (investopedia.com)
5
Statista.com, Activision Blizzard - statistics & facts by J. Clement, June 11, 2021. Activision Blizzard - statistics &
facts | Statista
6
Ibid
7
History.com, Video Game History by History.com editors, September 1, 2017. Video Game History - Timeline
& Facts - HISTORY
8
TechCrunch.com, The History of Gaming: An Evolving Community by Riad Chikhani, October 31, 2015. The
History Of Gaming: An Evolving Community | TechCrunch
Activision Blizzard
Computer scientists began utilizing electronic machines to build very simple game
systems as early as 1950, such as “Bertie the Brain” in 1950 for playing tic tac toe or
“Nimrod” in 1951 for playing Nim.9 Three decades later in 1967, Ralph Baer and his team
unveiled their prototype "Brown Box" as the first game system meant for commercial home
use.10 The "Brown Box" was a vacuum tube circuit that could be attached to a television set
and allowed two people to control cubes on the screen that followed each other. 11 The "Brown
Box" could be configured to play ping pong, checkers, and four sports games, among other
things.12 Accessories included a lightgun for a target shooting game and a unique attachment
for a golf game both of which were made possible by advanced technology at the time. 13
According to the National Museum of American History, Baer recalled, “The minute we
played ping-pong, we knew we had a product. Before that we weren’t so sure.” 14 Magnavox
was granted a license to use the "Brown Box" and the Magnavox Odyssey was released in
1972.15 It came out a few months before Atari which is frequently wrongly regarded as the
first video game console.16 Around 300,000 Magnavox consoles were sold between August
1972 and 1975, when it was discontinued. However, sales were poor and were attributed to
weak handled in-store marketing and the fact that at that time, home gaming was a foreign
notion to the ordinary Americans.17 This was the beginning of digital gaming as we know it
today.
9
Spacing.ca, Meet Bertie the Brain, the world’s first arcade game, built in Toronto by Chris Bateman, August 13,
2014 . spacing.ca/toronto/2014/08/13/meet-bertie-brain-worlds-first-arcade-game-built-toronto/
10
TechCrunch.com, The History of Gaming: An Evolving Community by Riad Chikhani, October 31, 2015. The
11
Ibid
12
Ibid
13
Ibid
14
AmericanHistory.si.edu, The Brown Box, 1967–68 by National Museum of American History. The Brown Box,
1967–68 | National Museum of American History (si.edu)
15
TechCrunch.com, The History of Gaming: An Evolving Community by Riad Chikhani, October 31, 2015.The
16
Ibid
17
Ibid
Activision Blizzard
Meanwhile, Nolan Bushnell, a brilliant young entrepreneur recalls playing
“Spacewar!” while being a student at the University of Utah.18 He began to think how the
game could be sold. Bushnell had previous expertise with amusement park arcades and had
experienced the success of pinball machines firsthand. He was confident that “Spacewar!”
would be a profitable coin-operated machine. 19 Despite the failure of Computer Space,
Bushnell remained optimistic about the future of coin-operated video games. In May 1972,
after watching a demonstration of Magnavox Odyssey's table tennis game, Bushnell set out to
create an arcade version of the same game. In June 1972, he and his commercial partner, Ted
Dabney, founded Atari Inc., and debuted Pong, an arcade ping-pong game, the same year. 20
Andy Capp's Tavern in Sunnyvale, California, was the first to have a Pong machine installed.
A few days later, the pub owner called Atari and requested that someone come out to repair
the system. The issue turned out to be that the cashbox was overflowing with quarters. The
coins had overflowed, clogging the machine. Atari had certainly created a sensation.
Encouraged by the success of Pong, Atari collaborated with Sears, Roebuck & Company to
create a home version of the game in 1975. 21 Later, Magnavox filed a patent infringement
lawsuit against Bushnell. Magnavox won the case by a landslide. Ralph Baer's work had been
meticulously documented. Magnavox could show that they exhibited Odyssey to the public in
1972 and that Bushnell was present. (It was later established that Bushnell had participated in
Odyssey's tennis game.) Rather than risk a protracted and certainly fruitless court battle, Atari
reached an agreement with Magnavox. 22

An interesting fact is that arcade video games
became popular in Japan early as a result of collaborations between American and Japanese
industries that kept Japanese companies up to date on technological breakthroughs in the
18
Si.edu, The Father of the Video Game: The Ralph Baer Prototypes and Electronic Games
Video Game History by Smithonian. Video Game History | Smithsonian Institution (si.edu)
19
Ibid
20
Ibid
21
Ibid
22
Ibid
Activision Blizzard
United States. In late 1973, the Nakamura Amusement Machine Manufacturing Company
(Namco) collaborated with Atari to import Pong into Japan. By mid-1973, Taito and Sega had
released Pong clones in Japan. In 1974, Japanese firms began generating new titles and
exporting or licensing them through partners.23 Among these was Taito's Gun Fight (formerly
Western Gun in Japan), which was licensed by Midway. Midway's version, published in
1975, was the first arcade video game to employ a microprocessor rather than separate TLL
components.24 This breakthrough significantly decreased the complexity and time required to
build arcade games, as well as the quantity of physical components required to accomplish
more advanced gameplay. 25
Following the saturation of the ball-and-paddle industry in 1975, game developers
began seeking for fresh game ideas, aided by the possibility to employ programmable
microprocessors instead of analog components. Tomohiro Nishikado, who had previously
worked on Gun Fight, was inspired by Atari's Breakout to create Space Invaders, a shooting
game that was initially launched in Japan in 1978.26 In Japan, Space Invaders was an instant
hit, with several arcades dedicated only to Space Invaders machines. 27 While not as well-
known in the United States, Space Invaders became a smash in 1979, with Midway, the North
American manufacturer, selling over 60,000 units.28 Space Invaders started off the so-called
"golden period" of arcade games, which from 1978 to 1982. Asteroids (1979), Galaxian
(1979), Defender (1980), Missile Command (1980), Tempest (1981), and Galaga (1981) were
among the influential and best-selling arcade games produced during this time by Atari,
23
GameStudies.org, The Foundation of Geemu: A Brief History of Early Japanese video games
by Martin Picard. Game Studies - The Foundation of Geemu: A Brief History of Early Japanese video games
24
Steve L. Kent (2001), The ultimate history of video games: from Pong to Pokémon and beyond : the story
behind the craze that touched our lives and changed the world, p. 64
25
GameDeveloper.com, The History of Atari: 1971-1977 by Steve Fulton, November 06, 2007. The History of
Atari: 1971-1977 (gamedeveloper.com)
26
TheVerge.com, For Amusement Only: the life and death of the American arcade by Laura June, January
16,2013. For Amusement Only: the life and death of the American arcade | The Verge
27
Ibid
28
Dale Peterson (1983), Genesis II, creation and recreation with computers, Reston Publishing, p. 175
Activision Blizzard
Namco, Taito, Williams, and Nintendo (1981). Pac-Man, which was introduced in 1980
becoming a pop culture phenomenon, spawned a new wave of games with recognizable
characters and unique concepts like navigating a maze or navigating a succession of levels.
Apart from Pac-Man and its sequel, Ms. Pac-Man (1982), Donkey Kong (1981) and Q*bert
(1982) were the most successful games in this genre during the golden period (1982). 29 The
arcade's golden period began to fade in 1983, owing in part to the crash of the home console
market the same year. Other important concerns included a lack of creativity, as gamers
would only keep buying games if fresh gameplay was available. Furthermore, in the 1980s, a
new moral panic surrounding video games evolved, linking video games to violence and
addiction, creating bad perceptions of video game arcades and pushing away younger
players.30
Along with the video game boom triggered by Space Invaders, plenty of new firms
and platforms popped up, resulting in market saturation. Too many gaming consoles with not
enough exciting, engaging new games to play on them inevitably results in the 1983 North
American video games crash, which saw massive losses and massive amounts of unwanted,
low-quality titles buried in the desert to get rid of them. The gaming industry was in desperate
need of a makeover.31 Several home computer and video game console firms went bankrupt
during the crisis, which lasted a few years. When the Nintendo Entertainment System (NES),
also known as the Famicom in Japan, was released in the United States in 1985, the video
game home market began to revive. In comparison to earlier consoles, the NES had better 8-
bit visuals, colors, sound, and playability. 32 Nintendo, a Japanese corporation founded in 1889
as a producer of playing cards, is responsible for a variety of well-known video game titles,
29
TheVerge.com, For Amusement Only: the life and death of the American arcade by Laura June, January
16,2013. For Amusement Only: the life and death of the American arcade | The Verge
30
Ibid
31
32
& Facts - HISTORY
Activision Blizzard
including Super Mario Bros., The Legend of Zelda, and Metroid. In addition, Nintendo
established a number of restrictions on third-party games created on its platform, assisting in
the fight against rushed, low-quality software. Many other long-running series were created
by third-party creators, including Capcom's Mega Man, Konami's Castlevania, Square's Final
Fantasy, and Enix's Dragon Quest (Square and Enix would later merge to form Square Enix in
2003).33 With the release of its 8-bit Game Boy video game console and the frequently-
bundled game Tetris in 1989, Nintendo once again created waves by popularizing portable
gaming. Nintendo would go on to create a series of successful successors to the Game Boy
over the next 25 years, including the Game Boy color in 1998, the Nintendo DS in 2004, and
the Nintendo 3DS in 2011. Because many of the former American manufacturers had quit the
industry by the end of the 1980s, Japan became the epicenter of the video game market,
thanks to Nintendo's domination.34 Simultaneously, personal computer software producers
recognized the strength of consoles, and businesses such as Epyx, Electronic Arts, and Lucas
Arts began focusing their efforts on making console games.35 By 1989, the market for
cartridge-based console games had grown to more over $2 billion, compared to less than $300
million for disk-based computer games.36 Sega also introduced their 16-bit Genesis platform
in North America in 1989, as a follow-up to its Sega Master System, which failed to compete
effectively against the NES in 1986.37 The Genesis made great progress against its older
opponent because to its technological advantages over the NES, as well as creative marketing
and the introduction of the Sonic the Hedgehog game in 1991. Nintendo's 16-bit Super NES
console was released in North America in 1991, kicking off the first major "console war." 38
33
Ibid
34
Don L. Daglow (August 1988). "Over the River and Through the Woods: The Changing Role of Computer
Game Designers". Computer Gaming World. p. 18.
35
Computer Gaming World. No. 65. November 1989. p. 4. Computer Gaming World Issue 65 : Free
Download, Borrow, and Streaming : Internet Archive
36
"Soaring Into 1989". Computer Gaming World. February 1989. p. 8.
37
& Facts - HISTORY
38
Ibid
Activision Blizzard
From the early to mid-1990s, a slew of popular titles was released for both platforms,
including new brands like Street Fighter II and Mortal Kombat, a fighting game with blood
and gore on the Genesis edition.39 Sega established the Videogame Rating Council in 1993 in
response to the violent game (as well as congressional hearings on violent video games) to
offer descriptive labeling for every game sold on a Sega home console. The committee later
gave birth to the Entertainment Software Rating Board, which is still used to rate video games
depending on their content today.40 The Sega-Nintendo console rivalry lasted until 1994,
when Sony Computer Entertainment shocked both companies by releasing the PlayStation.41
By the spring of 1994, an estimated 24 million houses in the United States (or 27% of
all households) had a personal computer. On their computer, 48 percent played games, 40
percent had a 486 CPU or higher, 35 percent had CD-ROM drives, and 20 percent had a
sound card. This witnessed a huge spike in consumer use, owing to the fact that PCs now had
online browsing and document processing capabilities. 42 Doom, the first popular 3D game,
was released on the PC in 1993 and pushed the boundaries of what was thought to be
feasible.43 Doom is widely regarded as the most influential first-person shooter ever created. 44
It had a huge influence on succeeding shooter games as well as video gaming in general, and
it's been released on practically every console since. 45 46

The early PC and console
39
Ibid
40
Ibid
41
VentureBeat.com, The art and legacy of the ’90s console war by Gavin Greene, November 28, 2015. The art
and legacy of the '90s console war | VentureBeat
42
Rlc.Ventures.com, The History & Evolution of Video Games by RLC Ventures. The History & Evolution of Video
Games - RLC Ventures
43
Ibid
44
NerdBurglars.net, Importance of FPS in Video Games by Dan Hastings, October 5, 2019. FPS Explained - What
does FPS Mean? - Nerdburglars Gaming
45
Uk.Gamespot.com, The Greatest Games of All Time: Doom by Gamespot.uk, October 11, 2012. The Greatest
Games of All Time: Doom - GameSpot.com (archive.org)
46
Ugo.com, First Shot Fired by Cheese Hasselberger, December 07, 2009. Guide to FPS | First Shot Fired
(archive.org)
Activision Blizzard
communities, which grew up around their respective platforms, still exist today and are a
hotly debated topic.47
The fifth generation of video games ushered in the three-dimensional era of gaming,
thanks to advancements in computer technology.48 By the end of the 1980s, console games
were supplied on ROM cartridges, while PC games were distributed on floppy disks, both of
which had storage capacity constraints. Optical media, notably the CD-ROM, was originally
produced for music distribution in the mid-1980s, and by the early 1990s, both the medium
and CD drives had become affordable enough to be incorporated into consumer computing
devices, such as home consoles and PCs. 49 Optical media made it convenient to include
lengthier video pieces in games, such as full motion video or animated or pre-rendered
cutscenes, in addition to additional gameplay content. This allowed for more narrative
elements to be added to games.50 Sega debuted the Saturn system in North America five
months ahead of plan in 1995, making it the first 32-bit console to play games on CDs rather
than cartridges. This was done to beat Sony's initial entry into video games, the PlayStation,
which came later that year and retail for $100 cheaper than the Saturn. The Nintendo 64, a
cartridge-based 64-bit console, was introduced the following year. 51 Despite the fact that Sega
and Nintendo each released a number of highly rated, on-brand 3D games, such as Virtua
Fighter on the Saturn and Super Mario 64 on the Nintendo 64, the established video game
companies couldn't match Sony's strong third-party support, which helped the PlayStation 52
47
48
& Facts - HISTORY
49
Archive.Fortune.com, CD-ROM: THE NEXT PC REVOLUTION CD-ROMs by Mark Alpert, June 29, 1992. CD-
ROM: THE NEXT PC REVOLUTION CD-ROMs -- compact disks for personal computers -- are finally coming on
strong. Now you can use them to choose a hotel, track down a patent, or teach your kids to read. - June 29,
1992 (fortune.com)
50
Therrien, Carl (2007). "Chapter 22: CD-ROM Games". In Wolf, Mark (ed.). The Video Game Explosion.
Westport, CT: Greenwood Press. pp. 121–126.
51
& Facts - HISTORY
52
Ibid
Activision Blizzard
secure a number of exclusive titles. Sony owned the video game market and would do so for
the foreseeable future.
Throughout the 1990s, the PlayStation One sold over 100 million copies. Sega
eventually dropped out of the race with its final platform, the Dreamcast, which was released
in 1998. The success that Sony experienced (and capitalized on with the release of the PS2)
drew the attention of other hardware manufacturers, including Microsoft, which joined the
market in 2001 with the first Xbox. Eventually, Sony dominated the video game market and
would do so for the foreseeable future. The PlayStation 2, which was released in 2000 and
could play only original PlayStation titles, would go on to become the best-selling game
system of all time.53 In the early 2000s, the famed Xbox vs. PlayStation battle had already
begun, but Nintendo's GameCube console had also sold roughly 20 million copies.54
Since the early 2000s, Internet capabilities have skyrocketed, and computer processor
technology has advanced at such a breakneck pace that each new generation of games,
graphics, and consoles appears to outperform the preceding. 55

Microsoft's Xbox 360, Sony's
PlayStation 3, and Nintendo's Wii were released in 2005 and 2006 as the next generation of
high-definition game consoles. To entice new players into their ecosystems, each console
released exclusive titles: Sony provided Gran Turismo, Little Big Planet, and The Last of Us,
while Microsoft supplied the iconic Halo, Crackdown, Gears of War, and more. The console
wars continued to rage.56 Though the PlayStation 3—at the time, the only system capable of
playing Blu-ray discs—was a commercial success, Sony faced severe competition from its
competitors for the first time. Despite being weaker in terms of technology to the other two
53
& Facts - HISTORY
54
55
56
Activision Blizzard
systems, the Wii outsold them both in terms of sales. Its motion-sensitive remote controls
make gaming more active than ever before, allowing it to appeal to a much wider audience,
including elderly in nursing homes.57
Another piece of technology was quietly ascending in the distance. In the early 2000s,
the concept of mobile games was still nascent, and single-player games like Snake were the
norm.58 The first iPhone was released in 2007, and it revolutionized the industry. Despite its
limitations, such as the lack of an App Store and 3G capabilities, the 'MVP' mainly
foreshadowed the future of mobile internet as we know it today. 59 A total of 500 iOS
applications were available at the time of the App Store's introduction (July 10, 2008).
Millions more apps were developed and released over the next decade, including some of the
most popular games in history (Candy Crush has had over 500 million players). 60 Angry
Birds, one of the most well-known mobile games, launched with a $0.99 price tag. Rovio (the
company behind Angry Birds) had launched on Android by 2010 and was looking into
alternative income models. The team quickly realized that they could make money by offering
a free game with ads and a paid option to remove them. This finally unlocked several new
revenue streams, resulting in monthly revenue of $40 million or more.61 62
As affordable broadband Internet access became more widely available, several
publishers resorted to online games as a method to differentiate themselves. RuneScape,
EverQuest, and Ultima Online were among the most popular MMORPGs on the PC, with
World of Warcraft being one of the most successful titles.63 Other large-scale massively
multiplayer online games, such as Second Life, which emphasized social interactions with
57
Ibid
58
Ibid
59
Ibid
60
Ibid
61
Ibid
62
Symbian.Freak.com, The Supremely Addicting Angry Birds Hits 42 Million Free and Paid Downloads by
Symbian Freak, 22 October, 2010. Angry Birds Hits 42 Million Free and Paid Downloads (archive.org)
63
Bartle, Richard A. (2010). "From MUDs to MMORPGs: The History of Virtual Worlds". In Hunsinger, Jeremy;
Klastrup, Lisbeth; Allen, Matthew (eds.). International Handbook of Internet Research. Springer.
Activision Blizzard
virtual player avatars and user creations over any gaming components, were also released. 64
Due to the lack of included Internet access options for consoles, there have been few console-
based MMORPGs in the past. It was difficult to build a large enough subscriber community to
justify the development costs because of this. Phantasy Star Online for the Sega Dreamcast
(which had a built-in modem and an aftermarket Ethernet adapter) was the first notable
console MMORPG, followed by Final Fantasy XI for the Sony PlayStation 2 (an aftermarket
Ethernet adapter was shipped to support this game).65 Another important thing was the rise of
esports. In the 2000s, the first significant esports (electronic sports) contests took place.
Professional esports emerged from South Korea around 2000, with many of their events
centered around current fighting games and various RTS titles like StarCraft and Warcraft III.
While Street Fighter II and other fighting games from the 1990s had introduced organized
video game competitions earlier, professional esports emerged from South Korea around
2000, with many of their events centered around current fighting games and various RTS
titles like StarCraft and WarCraft III. By 2010, a slew of international esports tournaments
had sprung up across a variety of game genres.66 The Nintendo Wii U launched the eighth
generation of video games in 2012, followed by the PlayStation 4 and Xbox One in 2013.
Despite having a touch screen remote control that allowed for off-TV gameplay and the
ability to play Wii games, the Wii U was a commercial failure and was discontinued in
2017.67 Sony produced a more powerful version of their platform, the PlayStation 4 Pro, in
2016, which was the first console to support 4K visual output. Nintendo announced the
Nintendo Switch, the only system that allows both television-based and handheld gaming, in
64
Harris, H.; Bailenson, J.N.; Nielsen, A.; Yee, N. (2009). "The evolution of social behavior over time in second
life". Presence: Teleoperators and Virtual Environments. 18 (6): 434–448.
65
Bartle, Richard A. (2010). "From MUDs to MMORPGs: The History of Virtual Worlds". In Hunsinger, Jeremy;
Kastrup, Lisbeth; Allen, Matthew (eds.). International Handbook of Internet Research.
66
TheVerge.com, Field of streams: how Twitch made video games a spectator sport by Ben Popper, September
30, 2013. Field of streams: how Twitch made video games a spectator sport | The Verge
67
& Facts - HISTORY
Activision Blizzard
early 2017. In late 2017, Microsoft released the Xbox One X, a 4K-ready system. 68 The PS5
and Xbox Series X, which were released in Autumn 2020, ushered in the next generation of
consoles. Due to the Coronavirus Pandemic, there is a surge in demand for gaming consoles,
which is compounded by a persistent shortage of semiconductors. 69 With 120Hz frame rates,
8-core AMD Zen 2 CPUs, and 18GB of RAM, these consoles took the experience even
farther. PlayStation has optimized its systems for Virtual Reality (VR) hardware support with
their PSVR offering, following the success of the Oculus Quest 2 (sold separately).70
Oculus, a virtual reality (VR) firm was acquired by Facebook in 2014 and its Rift
headset was released in 2016. The headset appears to be tailor-made for use in the video game
industry, with the capability of allowing gamers to "live" in an interactive, immersive 3D
world. It may be possible to develop fully interactive, dynamic "worlds" for MMORPGs, in
which players can wander around, engage with other players, and experience digital
landscapes in a completely new way.71 In the field of language-processing artificial
intelligence, there have been many developments in recent years. Google bought Deep Mind
in 2014;72 IBM bought AlchemyAPI,73 a key developer of deep-learning technology, this year;
and Apple bought two AI companies in less than a week in October 2015. 74 Voice recognition
technology and open-ended computer discourse are two of the fields being developed. These
advancements could usher in an exciting new era for gaming, especially when combined with
virtual reality, as they could allow players to interact with game characters who would be able
68
Ibid
69
70
Ibid
71
72
Tech.Crunch.com, Google Acquires Artificial Intelligence Startup DeepMind For More Than $500M by
Catherine Shu, January 27, 2014. Google Acquires Artificial Intelligence Startup DeepMind For More Than
$500M | TechCrunch
73
TechTimes.com, IBM Acquires AlchemyAPI To Boost Deep Learning Capabilities Of Watson by Menchie
Mendoza, March 05, 2015. IBM Acquires AlchemyAPI To Boost Deep Learning Capabilities Of Watson | Tech
Times
74
BusinessInsider.com, Apple has bought 2 artificial-intelligence companies in 4 days by Alexei Oreskovic,
October 6, 2015. Apple Acquired 2 AI Companies (businessinsider.com)
Activision Blizzard
to respond intelligently and naturally to inquiries and orders. Players may effectively direct
the computer to accomplish in-game activities in first-person shooters, sports games, and
strategy games, as developments in speech recognition accuracy would allow the computer to
interpret commands through a headset.75
With all this being said, we can say for sure that the video games industry is always
advancing and developing. Who knows, maybe in 2030 we will have video games that will
allow us to fully immerse into digital world, allowing us to be anywhere and becoming
anyone, we want. Nevertheless, the video games industry will exist as long as humanity will.
1.2 Objectives, principles and priorities of the Video Games Industry
Principles
As any other industry, the video games industry must meet certain standard
requirements before the game is being released on a mass market. To ensure that, different
organizations exist depending on a country. Firstly, the most common one is The
Entertainment Software Association (ESA) which is a video game industry's trade association
in the United States. So, what exactly does ESA do? While working with Congress and the
Administration, the ESA promotes for strong intellectual property protection and enforcement
measures, as well as standards that enable unfettered cross-border data flows and the
reduction of barriers to digital trade and services. The ESA provides its members with
information and communication support to help them promote the industry, their products,
and the positive influence of games on society. 76 Another important organization is
Entertainment Software Rating Board (ESRB) which is a self-regulatory organization which
provides a rating for video games. In 1994, the Entertainment Software Association (ESA)
75
76
Theesa.com. Who we are by The Entertainment Software Association. Entertainment Software Association |
About The ESA
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formed the ESRB. In order to rate a developer's product, the board charges a fee (which is
scalable and depends on the developer's budget). They also enforce advertising restrictions
and have expanded the usage of their ratings into mobile and digital shops as of 2015. These
ratings are intended to provide consumers with a broad sense of the nature of the content
included within the games, specifically whether or not it contains any violent or otherwise
unacceptable material. ESRB ratings currently include: EC (Early Childhood), E (Everyone),
E10+ (Everyone ten or older), T (Teens), M (Mature), AO (Adults only), RP (Rating
Pending). The board also includes content descriptors, which further identify potentially
negative information.77 78
Another important thing is the pursuit of trends within the industry. Trends are indeed
a big thing in video games and there are many that keep the consumers. Successful developers
follow trends to learn what audience is looking for. Firstly, there is Augmented
Reality/Virtual Reality trend which grew in popularity in 2020 and still continues to grow
beyond. Sixty-one percent of the experts polled believe AR/VR will have an impact on the
future of game development.79 Furthermore, many industry experts, such as Gamasutra,
foresee huge things for AR/VR in 2020. 80 Second, eSports is becoming increasingly popular,
particularly in the COVID-19 era. Because of the COVID-19 coronavirus, real-life athletic
activities have been canceled. And admirers all across the world are looking for alternatives.
Lastly, the introduction of 5G is expected to usher in technological advances and promote
innovation in the videogame development process. 5G will be essential for supporting
77
Techopedia.com. Entertainment Software Rating Board (ESRB) by Techopedia Publishers. What is the
Entertainment Software Rating Board (ESRB)? - Definition from Techopedia
78
Esrb.org. About ESRB by Entertainment Software Rating Board. Ratings Guides, Categories, Content
Descriptors | ESRB Ratings
79
Perforce.com. What’s the Future of Game Development? Trends and More by Johan Karlsson, August 18,
2020. What’s the Future of Game Development? Trends & More | Perforce
80
Gamedeveloper.com. 10 Game Development Trends to Watch Out for in 2020 by Hardik Shah, November 18,
2019. 10 Game Development Trends to Watch Out for in 2020 (gamedeveloper.com)
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streaming platforms and lowering latency. It will allow console-quality games to be streamed
on mobile devices. And platforms like Steam and Stadia are rapidly expanding.81
Objectives
The video games industry is rapid – growing and technologically advancing. The main
objective of the video game industry is to always be relevant in the market and to bring
something new to the market. First and most important objective that video game industry
should strive for is technical innovations. As mentioned before, one of these innovations is
AR/VR. In terms of immersion, video games have already exceeded many forms of
entertainment but virtual reality will add another dimension. Second objective is
merchandising. Because the product is expensive to produce, the video game business, like
Hollywood, needs to generate more cash from its intellectual property. Merchandise is already
available, including t-shirts, figures, hats, mugs, and other items. Many successful video
games made it into movies like Ubisoft’s Assassin’s Creed in 2016 and Sega’s Sonic the
Hedgehog in 2020. Lastly, the industry should focus on expansion of the market
demographics. People are playing games at a younger and older age, and the gender ratio is
approaching balance. Video games became so large scale that certain gamers make a lot of
money just by streaming their favorite games at home.
1.3 PESTEL Analysis
Analysis of the Video Games Industry
The United States of America and China have the biggest influence on the market.
China became the largest gaming market in the world by 2020, with a revenue of 40.85 billion
81
Perforce.com. What’s the Future of Game Development? Trends and More by Johan Karlsson, August 18,
2020. What’s the Future of Game Development? Trends & More | Perforce
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US dollars. The video gaming market in the United States was placed second, with yearly
revenues of approximately 36.92 billion US dollars.82
Political
There are different legislations to regulate video games depending on a country. As
mentioned before, there is an ESA who controls and oversees ESRB. Although due to the
governmental lobbying by the ESA, there are many controversies due to The First
Amendment. The U.S. Supreme Court said that video games are a type of expression entitled
to First Amendment protection. As a matter of fact, in Brown v. Entertainment Merchant
Association Act, 564 U.S. 768 of 2011, The United States Supreme Court found that that a
California legislation restricting the sale or rental of violent video games to minors violates
the First Amendment. The Court said: “Like the protected books, plays, and movies that
preceded them, video games communicate ideas -- and even social messages -- through many
familiar literary devices … and through features distinctive to the medium. That suffices to
confer First Amendment protection."83 However there is a Video Games Ratings Enforcement
Act which enforces that it is unlawful to export or distribute in interstate commerce, sell, or
rent a video game whose outer packaging lacks a label displaying an age-based content rating
determined by the Entertainment Software Ratings Board (ESRB).84
On the other hand, in China, government have a much stronger impact on the industry
than in the United States. For example, politically sensitive topics and dissent, gore and ultra-
violence, gambling, and depictions of 'vulgarity' are the most obvious features that cannot be
featured in a video game. Moreover, all games that are going to be lawfully released in China
must have a publication license (ISBN) and IP certification. These are reviewed by related
82
Statista.com. Leading gaming markets worldwide 2020, by revenue by J. Clement, June 24, 2021. • Video
game sales revenue by country | Statista
83
Mtsu.edu. Video Games by Patrick M. Garry, September 2009. Video Games | The First Amendment
Encyclopedia (mtsu.edu)
84
Congress.com, H.R.287 - Video Games Ratings Enforcement Act by 113th Congress 2013-2014. H.R.287 -
113th Congress (2013-2014): Video Games Ratings Enforcement Act | Congress.gov | Library of Congress
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authorities and can take anywhere from six months to a year to be granted, if approved at all.
This goes to both Chinese and international titles, though foreign games must be released by a
Chinese publisher (foreign publishers cannot obtain a publication license for games on their
own) and are permitted in significantly fewer quantities than their Chinese counterparts.
Foreign video games must also be completely translated.85 Another interesting thing to
mention is that in China, the government has banned underage people playing video games
for more than three hours a week. These restrictions apply to any devices are a major blow to
the global video game industry market. Chinese government limit underage people playing
only one hour a day from 8 PM – 9 PM, on Fridays, Saturdays and Sundays. Video game
companies are prohibited from providing services to minors outside of working hours and
must verify that real – name verifications methods are in place.86
Economic
As video games become more popular, more and more individuals spend a significant
amount of time playing them, raising the question of how they affect the economy. According
to a 2019 gaming market study, there were over 2.5 billion gamers worldwide. In 2019, the
predicted spending rate of these consumers on games was expected to reach $152.1 billion.
This resulted in a significant contribution to numerous economies. Now, it is obvious that the
gaming sector contributes significantly to economic growth. Also, the stock trading of gaming
companies has increased dramatically in recent years. China and the United States of America
are considered to be the countries with the highest growth in gaming. In 2019, the United
States made $36.9 billion in gaming income, which supported over 1.8 million jobs across the
country. The taxes, which are a direct channel into the economy, totaled $10.7 billion,
85
Gamesindustry.biz. How China's gaming regulations affect its market and the rest of the industry by Daniel
Camilo, October 20, 2015. How China's gaming regulations affect its market and the rest of the industry |
GamesIndustry.biz
86
Reuters.com. Three hours a week: Play time's over for China's young video gamers by Brenda Goh, August
31,2020. Three hours a week: Play time's over for China's young video gamers | Reuters
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demonstrating a significant contribution to the economy's strength. In 2018, China had 620
million gamers who spent over $38 billion on gaming, creating $138 billion in revenue. China
had the largest gain in gaming revenue in 2019, with a $35.8 billion increase. In just two
months, revenue in 2020 has reached $26.1 million. This is predicted to be reflected in their
economy, with revenue expected to expand at a 2.2 percent yearly rate between 2020 and
2024.87 Another thing that affected video game industry economically is recent COVID – 19
pandemic. For example, looking back to 2020, global digital gaming spending on in-game
content and paid downloads grew by 12% and 21%, respectively, illustrating the rise of digital
revenues. Physical video game sales have been dropping in recent and the avoidance of
physical shop places have encouraged digital and e-commerce gaming sales even more.88
Social
First of all, during the initial outbreak of the global COVID-19 pandemic in spring
2020, gaming turned out to be as one of the most popular leisure activities, with user’s
playing skyrocketing. Another big social thing that affects the video games industry is video
games conventions. One of the biggest worldwide conventions is called E3, short for
Electronic Entertainment Expo which is organized annually by the ESA. In E3 many
developers and publishers introduce upcoming games and game – related products such as
merchandise, movies, comics to retailers and press. E3 is considered the biggest and impactful
gaming convention where hundreds of fans, sellers, press meet and talk about video games.
E3 is held annually in June however due to the COVID – 19 pandemic it was cancelled in
2020 and in 2021 it was held virtual. Lastly, esports have a big social impact on the industry.
So, what exactly is esports? esports is a term used to describe competitive video gaming that
is often managed by multiple leagues, ladders, and tournaments, where players typically
87
Spieltimes.com. Learn How Video Games Influence Economic Growth by Spiel Times, February 24, 2020.
Learn How Video Games Influence Economic Growth (spieltimes.com)
88
Statista.com. COVID-19 impact on the gaming industry worldwide - statistics & facts by J. Clement, June 4,
2021. COVID-19 impact on the gaming industry worldwide - statistics & facts | Statista
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belong to teams or other sporting groups that are sponsored by various commercial entities. 89
Although organized tournaments have long been a feature of video game culture, they were
mostly between amateurs until the late 2000s when professional gamers began to participate
and spectatorship in these events via live streaming which resulted in an increased popularity.
By the 2010s, esports has established itself as a key role in the video game industry with
many game makers actively designing and supporting tournaments and other events.90 91
Technological
Technology plays the most important role in the video games industry. Things like 3D
graphics, multiplayer and online gaming, cloud gaming, augmented and virtual reality,
artificial intelligence and licensed gaming software and engines made a huge impact on the
industry. First of all, as mentioned before, in the old times video games were based on two –
dimensional graphics with text – based technology. Eventually, when 3D graphics and special
effects were created, the games became very realistic. The creation of 3D graphics gave many
possibilities to for building realistic textures, physical characteristics and in-game
interactions. Nowadays, special effects with well – made graphics and textures allow gamers
to immerse themselves in the gaming world. Secondly, cloud gaming technology has made a
big breakthrough in the industry. Thanks to it, this technology has made gaming more
accessible. It allows gamers to play games of their interest without making a big investment in
computer hardware and consoles. A gamer is able to play a given computer remotely and
enjoy their games. Lastly, the technological breakthrough in augmented and virtual reality
hardware allowed player to fully immerse into digital world, increasing the experience of
89
Trepo.tuni.fi. What is eSports and why do people watch it? by Juho Hamari and Max Sjoblom. What is eSports
and why do people watch it? (tuni.fi)
90
Theverge.com. Field of streams: how Twitch made video games a spectator sport by Ben Popper, September
30th, 2015. Field of streams: how Twitch made video games a spectator sport | The Verge
91
Forbes.com. 2012: The Year of eSports by Paul Tassi, December 20, 2012. 2012: The Year of eSports
(forbes.com)
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entertainment.AR/VR gives many possibilities for publishers and developers to create more
projects.
Environmental
The video games industry can negatively affect the environment. Several aspects come
into play when analyzing how gaming affects the environment, including the physical waste
of game packaging, the power consumption of different gaming consoles and even the length
of different video games when it comes to time spent playing. Physical and digital games can
leave an unexpectedly large carbon footprint. The worst offender in physical games is the
packaging, which includes the aluminum polycarbonate disc, the plastic case, and the paper
cover and pamphlet inside the container which eventually end up as trash. Meanwhile,
depending on download times and the activity of internet usage, digital games may require
additional energy usage. This means that even though digital downloads are becoming more
popular and are more eco-friendly than traditional physical games, they do not come close to
removing gaming's environmental impact. Another thing to add is that most of the consoles
and PC’s hardware are made in China which tends to use more fossil fuel and coal energy
which eventually increases carbon dioxide emission. Lastly, console’s parts are extremely
difficult to recycle because its is not possible to upgrade them.
Legal
Piracy is one of the main legal factors which affects the video games industry. What
exactly is piracy? It is an unauthorized use and distribution of intellectual property (video
games and software). Piracy is harming the gaming industry in some way since it would be
quite frustrating for the developer to know that people are not utilizing the original version of
the video game but rather the pirated version. If consumers download unauthorized versions
of video games, the video game industry will suffer greatly since sales will be reduced. In
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order to do something, one of the first major measures was the formation of anti-piracy trade
organizations within the most involved countries such as the Software Publishers' Association
in the United States. The initial legal lawsuits were directed at several large corporations that
allowed (or promoted) the broad distribution of pirate software. Then, with the prospect of
random controls by the authorized authority, hundreds of small and medium-sized developers
were forced to explicitly clarify their positions on copyright policy.92
Chapter 2. Characteristic features of Activision Blizzard
2.1 History and organization of Activision Blizzard
Overview. Aсtivision Blizzard is an American company and one of the largest video
gaming companies in the world which headquarters is located in Santa Monica, California.
Activision Blizzard creates and publishes interactive entertainment digital content in the
Americas, Europe, the Middle East, Africa, and Asia Pacific.
The corporation is divided into three divisions: Activision Publishing, Inc., Blizzard
Entertainment, Inc., and King Digital Entertainment with each of them responsible for their
own key gaming franchise. It creates and distributes content and services for video gaming
consoles, desktop computers, and mobile devices, including subscription, full-game, and in-
game sales, as well as software licensing to third-party or related-party firms that distribute
92
Tessi.luiss.it. The Effects of Piracy and Counterfeiting in the Video Games Industry by Alessandro Piacentini,
2018. 665731_PIACENTINI_ALESSANDRO.pdf (luiss.it)
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Activision and Blizzard products. Also, the company maintains its unique online gaming
service Battle.net app that allows digital content distribution, online gaming and social
networking. In addition, it also runs esports leagues and sells digital advertising contents, as
well as providing logistics and sales distribution services to third-party publishers.93
Although Activision Blizzard used to be two different companies Activision and
Blizzard which had their own unique gaming franchises, the two decided to merge and
eventually on July 8th, 2008 when the stakeholders finally agreed to merge and then the deal
was done the next day for an US$18.9 billion. 94 As of today, the number of employees in
Activision Blizzard is approximately 9.500 people.
Ownership. Activision Blizzard is a public company with most of its shares hold by
Robert A. Kotick, Daniel Alegre, Dennis Durkin, Vanguard Group Inc., FMR LLC, and
BlackRock Inc.95
Leadership Team. Activision Blizzard’s management key figures are:
 Bobby Kotick – Chief Executive Officer;
 Daniel Alegre – President & Chief Operating Officer;
 Frances F. Townsend – Executive Vice President for Corporate Affairs;
 Armin Zerza – Chief Financial Officer;
 Brian Bulatao – Chief Administrative Officer;
 Grant Dixton – Chief Legal Officer;
 Helaine Klasky – Chief Communications Officer;
 Jule Hodges – Chief Peoples Officer;

93
Finance.yahoo.com. Activision Blizzard Inc. by Yahoo Finance. Activision Blizzard, Inc. (ATVI) Company Profile
& Facts - Yahoo Finance
94
Investopedia.com. 5 Companies Owned by Activision Blizzard by Nathan Reiff, July 09, 2021. 5 Companies
Owned by ATVI (investopedia.com)
95
Investopedia.com, Top Activision Blizzard Shareholders by Matthew Johnston, January 07, 2021. Top
Activision Blizzard Shareholders (investopedia.com)
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 Fernando Machado – Chief Marketing Officer;
 Sandeep Dube – Chief Commercial Officer;
 Rob Kostich – President, Activision;
 Mike Ybarra – Leader, Blizzard;
 Humam Sakhini – President, King;96
Forbes. On the Forbes list, Activision Blizzard holds the following positions:
 #383 World’s Best Employers 2021
 #271 America’s Best Employers 2021
 #85 Top 100 Digital Companies 2019
 #228 Growth Champions 2018
 #278 America’s Largest Public Companies 2018 97
Mission statement
Activision Blizzards mission statement is: “To connect and engage the world through
epic entertainment has never been more important. Through communities rooted in our video
game franchises we enable hundreds of millions of people to experience joy, thrill and
achievement. We enable social connections through the lens of fun, and we foster purpose and
a sense of accomplishment through healthy competition. Like sport, but with greater
accessibility, our players can find purpose and meaning through competitive gaming. Video
games, unlike any other social or entertainment media, have the ability to break down the
barriers that can inhibit tolerance and understanding. Celebrating differences is at the core of
96
Activisionblizzard.com. Our leadership by Activision Blizzard. Activision Blizzard | Leadership
97
Forbes.com. Activision Blizzard ON FORBES LISTS by Forbes, May 13, 2021. Activision Blizzard (ATVI)
(forbes.com)
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our culture and ensures we can create games for players of diverse backgrounds in the 190
countries our games are played.”98
Vision statement
“We create the most epic interactive gaming and entertainment experiences on earth
immersing players in new, unimagined worlds. Our products help build community and create
social platforms that bring people together. We are relentlessly curious, pushing the
boundaries of what is possible to create games of our dreams—and yours. To put it simply,
our goal is to make every day more fun with games such as Candy Crush™, Call of Duty®,
World of Warcraft®, Overwatch®, Hearthstone® and Diablo®.”99
Core Values
Respecting each other. When talking about respect it is important to know that all
employers want to go to work feeling safe and comfortable. It is necessary in order to work
well and achieve company’s goals. Each of the employer is expected to do their part in order
to create a respectful workplace environment – one that is not based on unlawful bias,
harassment, discrimination and intimidation of any kind.
Protecting our company. In order to protect the company, its leaders must ensure that
their intellectual property and confidential information is well protected. Next thing that the
company should be aware of is social media transparency. For example, if someone wants to
write a post about the company, the author must ensure to disclose his relationship with the
company, make it clear that he is expressing his own opinion, be careful to not share any
confidential information and keep company’s reputation adequate. Lastly, the company must
98
Investor.activision.com. Activision Blizzard Board of Directors Issues Statement Regarding Recent Article by
The Activision Blizzard Board of Directors, November 16 th , 2021. Activision Blizzard | Activision Blizzard Board
of Directors Issues Statement Regarding Recent Article
99
Activisionblizzard.com. About our company by Activision Blizzard. Activision Blizzard | About
Activision Blizzard
keep in mind about conflict of interest. Employers personal interest conflicts must not
intersect with the interest of the company.
Maintaining our shareholder’s trust. Just like as with the company’s customers and
fans, the company should keep their high standards in regards of their shareholders. To ensure
that, the company must be accurate and transparent with their records and reports, forbid and
monitor insider trading, watch out for money laundering, anti – corruption policies and
following international rules and laws.
Protecting our fans and customers. Activision Blizzard have a big customer and fan
base, whether they play their video games, follow Esports or watch films and television, what
they do influences them. The company should make sure to give every effort to be honest,
clear and truthful in their advertising. Since Activision Blizzard servicer require personal
information for purchasing their products, it’s up to them to keep this information
confidential. Finally, the company should keep up to their high-quality product and standards.
Working with our business partners and communities. In order for the company to
work with their business partners and communities, some rules need to be followed. These
rules include: fair competition, trade associations, human rights, environmental sustainability.
How we act. This value is particularly important because it represent the company’s
image and prestige. The company must always live up to its code, follow laws and rules and
prevent any sort of discrimination, hate and prejudice between its employers.
History
Activision Blizzard is one of the biggest, most discussed about video games company
in the world. Never before has one company dominated the industry of gaming, with a focus
on the most popular genres and cooperation with the world’s very talented developers. In
Activision Blizzard
order to talk about history of this big company, we need to tell the story of both companies
Activision and Blizzard, and how they ended up together.
Activision. This history of Activision began when four Atari developers Al Miller,
David Crane, Larry Kaplan, and Bob Whitehead quit towards the end of the 1970s to start the
first independent third-party gaming firm to produce cartridges for the VCS, paving the way
for the company's future. Activision was founded in late 1979, just as the first decade of video
games was coming to a close. The reason for their quit was the following. Atari's cartridge
sales for the same year were estimated to be over $100 million, according to several of the
engineers. It was an easy arithmetic problem to figure out how much each cartridge had cost.
Al Miller, David Crane, Larry Kaplan, and Bob Whitehead were the four designers that
accounted for 60% of the sales. “We went to see Ray Kassar with this information,” relates
David Crane. “He told us we were no more important than the people on the assembly line
who put the cartridges together.” Later at the meeting Kassar said, “I understand creative
people. After all I worked with towel designers”. It wasn't just about money, though. The
majority of the designers were enthusiastic about their work. It was about some kind of
acknowledgment. “I would say it was equal between designer credit and royalties,” added
Crane. “If Ray had given either of them to us, we would have been happy with it. But he gave
us nothing.”100
Atari's practices on authorship credit and payments for VCS game designers
influenced the formation of Activision, at least in part. Ray Kassar brought the issue to a head
in 1979, but issues with royalties and bonuses had been at Atari for much longer. According
to Activision co-founder David Crane, during the VCS' first year, tech head Bob Brown and
then-president Joe Keenan developed a plan to assign 50 cents per console sold and a dime
100
High Score! Expanded. The Illustrated History of Electronic Games by Rusel DeMaria (2018), CRC Press, p.60,
p.68.
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per cartridge to the engineering group as compensation. The money, on the other hand, never
showed, and management denied that the scheme had existed.
Then there was the written incentive plan, which was based on "Departmental
Budgeted Operating Income," or DBOI. It was dubbed "Don't Bet On It" by some of the
engineers. This incentive also vanished somewhere in the legal terminology, despite the fact
that some of the top designers were brought behind closed doors, given 25% increases, and
warned not to tell anybody. The last point came in 1979, when marketing sent them a
document listing the % of sales of each VCS cartridge sold the previous year and, in reference
to the top things on the list, saying something along the lines of, “These games are quite
popular. Carry on as usual."101
Jim Levy, on the other hand, was aiming to start a computer software publishing
company. “I could see that the PC and video games were going to become as ubiquitous as hi-
fi stereo/equipment sometime by the end of the ’80s,” says Levy. “I was sure that publishing
games and other software for them would be potentially as large as the recorded music
industry was at the time. I had been shopping a business plan for such an idea to the venture
capital community.” It turned out that the four Atari designers met up with Levy by chance,
and the first third-party gaming firm was born, permanently transforming the game
industry.102
Activision debuted their initial games — “Dragster”, “Boxing”, “Fishing Derby”, and
“Checkers”—at the Summer Consumer Electronics Show in Chicago in late 1979 with
$750,000 in venture funding and loans. “Skiing” and “Bridge” was finished by early 1981.
That was only the start. Activision was destined for quick success, and, like Atari, it
established its own culture and legacy of unforgettable games. Four of Activision's five
101
Ibid
102
Ibid
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creators were the company's initial designers, and they realized the benefits of success in a
way that they had never experienced at Atari. In the end Activision grew fast and started to
expand, ultimately creating games for computers.103
Crane's “Freeway”, Larry Kaplan's “Kaboom!”, Bob Whitehead's “Stampede”, and
Alan Miller's “Ice Hockey” were all released the next year. Alan Miller's “Starmaster”, Steve
Cartwright's “Barnstorming”, Crane's “Grand Prix”, Carol Shaw's “River Raid”, and Bob
Whitehead's “Chopper Command” were all released in 1982. “Activision’s game designers
were at the top of our field. We really knew how to make great games,” said Crane. Then,
Pitfall!, one of Activision's biggest blockbusters and a game that would set the basis for a new
genre was launched in 1982. "It was evident early on in the creation of Pitfall! that we had
something remarkable" Crane said. "The game was formed out of a desire to make the game's
main character more human than previous tanks, jet planes, drag racers, and so on." In 1983,
Activision went public, and it was a huge success. Crane said, "The Activision of the late
1970s and early 1980s was a really remarkable environment." "Everyone wanted to work
there because we were riding a rocket." We ended up with a firm full of overachievers
because we chose the finest and brightest. We had 60 workers when Activision surpassed $60
million in revenue. To generate $1 million in income per employee, people must put forth a
lot of effort. And everyone was pleased to work hard and expand the firm until the gaming
business broke."104
The home console industry was undergoing a transformation. After only a few peak
years, the industry's exponential expansion ultimately caught up with it. In 1983-1984, the
video game collapsed, and it crashed violently. There are several reasons behind the video
103
Ibid
104
Gamasutra.com. The History of Activision by Jeffrey Fleming, July 30, 2007, Gamasutra - The History Of
Activision
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game industry's collapse. After Activision successfully defended itself against Atari's claims,
third-party publishers were able to enter the market.105
A thriving arcade culture and home console successes like “Pitfall!”, Atari's “Pole
Position”, and “Imagic's Demon Attack” pushed the gaming market forward. By 1983,
however, there were hints of crisis. "It's hilarious that we didn't see the accident coming
considering we were right in front of it," Crane said.106 Third-party software businesses began
selling gaming software in the early 1980s, each vying for a piece of the pie. By the spring of
1982, at least 50 businesses were developing games for the Atari 2600, each aiming for a 5%
share of the entire market. According to Jim Levy, “The overall 1982 cartridge market was
anticipated to be around 60 million copies, according to our Activision forecasts, which we
feel were quite accurate. Activision controlled between 12 and 15% of the market. We
estimated that seven to eight million cartridges would be sold, so we made appropriately."
However, Atari was so pleased with their success that they failed to consider the new rivals
when projecting how many cartridges they would sell. They intended to sell 60 million
cartridges, accounting for 100% of the market! In addition, each of the new software
companies projected to sell 1-2 million cartridges. There were massive backlogs of software
in warehouses by the end of 1982. A slew of "Johnny-come-latelies," as Levy refers to them,
were not selling and were running out of money. They weren't getting paid since their product
wasn't selling well at retail, but they had to pay their suppliers nevertheless. Many of these
fledgling businesses began selling their wares at low costs. Despite the fact that some games,
such as Activision's Pitfall! and River Raid, managed to sell successfully, there was
widespread anxiety in 1983. Mattel declared early in that year that they were exiting the
electronic gaming market, shuttering Mattel Electronics. Activision decreased the price of
several of their older products. Then, Atari began to dump items, both financially and
105
High Score! Expanded. The Illustrated History of Electronic Games by Rusel DeMaria (2018), CRC Press, p.107
106
Activision
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physically, in the second quarter of 1983. Although it was not well recognized at the time,
Atari carried millions of cartridges out into the desert in New Mexico and buried them. Panic
began to take hold. Once more, Jim Levy said, “By the middle of 1983, it was run for the
exits and hope you could get there before the building collapsed.107
The video game industry was shattered in 1984. Jim Levy recalls it well: “We had 400
people at our peak in mid – 1983 and 95 at the bottom 18 months later. We went from $50
million revenue per quarter to six or seven. And we were lucky. We were coming into PC
software, although it was a small market then, and we had strong international sales. We also
had plenty of cash. If we had been exclusively Atari 2600 in the U.S., we would have gone
out of business.”108
With Atari's VCS no longer in production and its replacement, the 5200, a no-go,
Activision focused its efforts on computer games. Crane's unique artificial life game Little
Computer People and the complicated adventure/strategy title Hacker were highlights of its
1985 releases. Activision began the process of purchasing Infocom, the founders of Zork and
a pioneer in text adventure games, to strengthen its PC emphasis. Infocom made its name in
the early 80s with a hit titles like “A Mind Forever Voyaging”, “The Hitchhiker’s Guide to
the Galaxy” and “The Lurking Horror” however the company failed when it tried to
unsuccessfully diversify into database software. The offer from Activision to purchase
Infocom appeared to be a path out for the failing business. However, as the acquisition was
being finalized, Activision's board of directors chose to replace Jim Levy as CEO and hired
Bruce Davis. Davis was dissatisfied with the transaction, believing that Activision had
overpaid for Infocom. What was supposed to be an "Info Wedding" suddenly devolved into a
disaster. Davis was a San Francisco lawyer who had previously managed the collapse of
Imagic, soon when the acquisition was concluded in 1986, Activision launched a lawsuit in an
107
High Score! Expanded. The Illustrated History of Electronic Games by Rusel DeMaria (2018), CRC Press, p.108
108
Ibid
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attempt to reclaim money from Infocom's stockholders. Infocom began making graphic
adventures under the direction of Activision, releasing Zork Zero, James Clavell's Shogun,
and publishing Westwood's BattleTech: The Crescent Hawk's Inception. The new Infocom's
revenues never reached those of its predecessors, and by 1989, Activision had shut it down,
with The Lost Treasures of Infocom I and II CD-ROM compilations published in 1991 and
1992 as a monument to Infocom's prior triumphs.109
The financial consequences of the Crash of 1983-1984 lingered for years. “The
company was strong enough to weather the crash,” Crane remembered. “We had kept tight
controls on cash, and so we were in OK shape. Jim Levy’s strategy was to come up with the
best estimate of what the business would look like in one year, and then downsize the
company to match that target. Every year he was just a little too optimistic, and the business
took years to recover.”110 Then the board of directors of Activision replaced Jim Levy and put
Bruce Davis in charge which resulted in misunderstanding in views between Davis and Crane.
The reason for this was that Bruce Davis had no sufficient marketing and creative skills which
ultimately led to David Crane leaving the company. Regardless, Crane worked as a freelance
developer for a while, designing games for Activision, until forming Absolute Entertainment
with Gary Kitchen in 1988.111
With the recent events of home console game’s crash and all the original founders of
Activision gone, the company found it hard to keep on their feet. In the next two years,
Activision published important games like Alter Ego and the puzzle game Shanghai, however
the sales were low so the company shifted to business and management software, advertising
109
Activision
110
Ibid
111
Ibid
Activision Blizzard
a line of HyperCard – based products under the TenpointO and Activision Presentation Tools
brands.112
After some time, Activision decided to reform and changed their name to Mediagenic
in 1988 while still looking for a sustainable market approach. Despite refocusing on business
software, Mediagenic continued to publish games under the Activision label. In 1989,
Activision published one of the first PC drives game based on Robyn and Rand Miller’s The
Manhole.113
In 1991, after several attempts to try to turn the firm around, Mediagenic’s finances
continued to deteriorate with a $26.8 million losses with just $28.8 million in revenues.
Following that, the BHK corporation, led by Robert Kotick, purchased Mediagenic, with
Kotick taking over as CEO from Bruce Davis. In 1992, the corporation was fully rebuilt, and
it renamed itself back to Activision and relocated its headquarters to Los Angeles.114
When Kotick opened the books, he discovered that things were not as they looked. "I
had brunch with Kotick shortly after, and he remarked, 'I may have spent $440,000, but I
guess I'm $20 million in debt now,'" Crane says. Activision began hiring development
expertise in Southern California to help them get back on track. Return to Zork, a fully
graphical CD-ROM adventure launched in 1993 by Infocom (then owned by Activision),
paved the way for games like Myst to follow shortly after. Pitfall: The Mayan Adventure was
the first new game produced in Activision's South California studio, and it was released in
1994. The totally contemporary re-imagining of David Crane's original classic was a smash
hit, establishing Activision's position on console and PC. Activision had quickly assembled a
really world-class development team. It launched Mechwarrior 2, a hard-hitting mech
simulator, in 1995, which absolutely excelled its predecessor and was a financial success.
112
Ibid
113
Ibid
114
Ibid
Activision Blizzard
Despite continuing to anthologize the company's earlier Atari and Infocom games, Activision
gained a new audience on the PC with a series of unique classics like Interstate '76 as well as
the action/strategy hybrid Battlezone. They also collaborated on Quake II with id Software
when the software pioneer transitioned to a completely retail-based strategy — a relationship
that has lasted until recently. Once again, the Activision name stood for quality. The name
Activision was synonymous with fantastic PC games under the leadership of Bobby Kotick
and skilled producers like Scott Krager and Pandemic Studios founder Josh Resnick, but they
still had a long way to go before truly reaching the masses.115
By the end of the 1990s, Activision had a solid internal staff, but it was their
connections with independent companies that pushed them to the next level. Activision built a
reputation for massive yearly franchises and a succession of high-profile buyouts throughout
the next decade, eventually becoming the world's largest publisher. Their first big smash
happened in 1999 when they released Tony Hawk’s Pro Skater, developed by Neversoft. This
unique approach on the sport thematic resurrected a game genre that had almost died out,
creating an infinite mount of clones and still outselling them. It quickly became a yearly
franchise and one their well-known hits. Soon after the release of Tony Hawk’s Pro Skater,
Activision bought Neversoft but maintained company’s key management and facilities.
Kotick thought that it is important to respect studio’s creative and independent environment
for the future long – term success, thus he took little part in the series’ creative vision.
Meanwhile, Activision tasked Neversoft with creating new Tony Hawk and Spiderman games
every year, ensuring a constant, predictable income to satisfy investors. Activision would not
reach the same type of gold mine again until 2003. Preying on their competitor Electronic
Arts’ mistake, Activision invested in Infinity Ward, a new company formed of senior
developers previously employed by 2015 Inc., the studio behind financially successful game
115
Ign.com. History of Activision by Travis Fahs, March 31, 2020. The History of Activision - IGN
Activision Blizzard
Medal of Honor: Allied Assault. Activision’s goal was to go head-to-head with Electronic
Arts through their own game, using the same individuals who helped to establish EA’s own
franchise. After some time, Activision proclaimed Call of Duty as a franchise even before the
actual game release. Infinity Ward was put in charge and allowed a lot of creative freedom. In
the end, Call of Duty franchise became a successful symbol of Activision.116
Activision had become large enough to simply purchase financially attractive assets
without risking their investment on fresh ideas. In 2006, Activision purchased RedOctane,
following the huge popularity of their Guitar Hero franchise. Various inner Activision
departments were tasked with porting the music videogame to practically every possible
platform, with a continuous stream of expansions and downloadable content to go along with
it. It is no surprise that Activision had become a conqueror in the gaming industry and
Kotick’s habit to be loud about his business beliefs resulted in a tense relationship with the
gaming media. His devotion in releasing companies’ big series yearly and aggressive
acquisition of other independent gaming companies made Activision a very good-looking
company to the investors, but controversial to the media.
In 2007, this controversy finally reached its finish, when Kotick put his sight on
Vivendi Universal, his largest target ever. The French media conglomerate never really had its
own niche in the gaming industry, but thanks to a dozen of mergers and buyouts, acquired
plenty of current famous gaming franchises like Blizzard’s World of Warcraft, the most
lucrative game of all time. Blizzard’s World of Warcraft was very interesting to Kotick
because of its monthly subscription fees and in-game purchases. Kotick made a risky bid
roughly equivalent to Activision's net worth, believing that promoting online gaming was the
future. When the merger was successful in the summer 2008, the newly formed company
Activision Blizzard became the biggest game publisher with Kotick as its head.117
116
Ibid
117
Ibid
Activision Blizzard
Many of Activision's moves since the merger reflect a shift in the company's original
ideals. Many of Activision's moves since the merger reflect a shift in the company's original
ideals. Bobby Kotick notably backed a workplace culture of "skepticism, pessimism, and
fear" to keep its development crew loyal in 2009, an attitude that mimics Atari's mistakes that
eventually led to its staff leaving and becoming Activision. They've backed this up with
several increased firings and studio closures, all of which have been explained by declining
series sales, which many would say have simply been over-exposed owing to the regular
release schedule. Ironically, much of Infinity Ward’s crew left due to Activision’s inability to
provides promised compensations, as it was for Atari in 1979. Activision's contentious
choices may be harsh, but they may be correct. On the other hand, they may be rash and
cynical, leaving an opening for their competitors when their stable revenue streams gradually
decrease. In any case, Activision's success or failure will undoubtedly influence the way
games are developed and sold for many years to come.118
2.2 Differences from regular industry
Activision Blizzard’s products are very unique within the industry. Activision Blizzard
owns several famous and lucrative franchises such as Call of Duty, Crash Bandicoot, Spyro,
Guitar Hero, Tony Hawk’s, World of Warcraft, StarCraft, Diablo Hearthstone, Heroes of the
Storm, Overwatch and Candy Crush Saga. These games are among the most unique with a big
fan base all over the world. We will look at several things the company has done over the
years that helped them stand out within the industry. One the thing that makes Activision
Blizzard unique is that they continuously produce hits. Activision’s main games that they
focus on are Hearthstone, Overwatch and World of Warcraft. As a matter of fact, these games
ranked in the top 10 of the most watched games on YouTube and Twitch. This is more than
any other game developer, and it demonstrates the company's capability to develop several
118
Ibid
Activision Blizzard
games which appeal to a broad audience. There are 374 million monthly active users who
play the company's games for an average of over an hour every day. Millions of players
spending time in various games helps the firm discover which things people want, allowing
Activision to continue producing high-quality gameplay experience for its fans.119
First of all, Activision would not be where it is today if it hadn't bought Blizzard
Entertainment in 2008 and placed World of Warcraft under its business. World of Warcraft is
a popular subscription – based game with an estimated 117,487,099 total players. Fourteen
years after its release, the game still makes hundreds of millions of dollars per year with
subscriptions and in – game microtransactions.120
Secondly, it is no secret that games like StarCraft and Call of Duty have a strong
position within e-sports activities. However, everything changed when Activision Blizzard
launched its new Overwatch League that pushed the e-sports even beyond. In 2014, Blizzard
revealed that Overwatch was in production. After Overwatch's international success following
its debut earlier same year, the company revealed in late 2016 that it was developing a
competitive e - sport based on the game. In the end, their first season was very successful
where company received huge media attention and attracted big sponsors like T-Mobile Us
and Toyota Motors, having 20,000 seats to the Grand Finals at Barclays Center in Brooklyn
sold out in less than two weeks, the Overwatch League appears to be the hottest e - sport
around. It's evident that executives saw the e - sports possibility early on and developed a
game expressly to profit on a fast - growing e - sports industry that has the potential to grow
into a multi – billion-dollar business in the long run.121
2.3 Similarities to regular industry
119
Themotleyfool.com. 6 Things Activision Blizzard Does Right by John Ballard, Jul. 31, 2018. 6 Things Activision
Blizzard Does Right | The Motley Fool
120
Ibid
121
Ibid
Activision Blizzard
Features that have been discussed above make Activision Blizzard stand out among
other video game publishers within the industry. However, video games publishers have many
similar things in common because all of these companies share history and corporate culture
with each other. Activision Blizzard’s main big competitors are Electronic Arts, Ubisoft, Epic
Games, Take Two Interactive, Nintendo, Sony, Microsoft.
Price. First and most important similar thing that all of these big video game
companies have in common is price. Well, obviously the price range can be abyssal within the
industry however, if we take into consideration big companies above and the newer games
that they release, they all share similar prices. The usual price nowadays for a new game is
around $60 and the reason for that is that they have gotten much more complicated to make
over time than 20-30 years ago. Depending on the product, whether it is a deluxe version or
standard edition, the entry level price for a blockbuster game will be $60. The $60 pricing is
mostly due to customer expectations, so if you're Nintendo, Activision Blizzard, Sony,
Microsoft, or any of the other game publishers, and you release your game with a base price
of $70, $80, or more, there's a good chance people won't purchase it. $60 price tag benefits
both buyers and game publishers to some extent, not because it is $60, but because it
establishes a norm.122
Release Consistency. Next similarity is a release consistency. All gaming companies
strive to release their games annually so they will not fall behind. Every year they release a
new game, new downloadable content, new in – game purchasable features, etc. Video games
companies follow trends and always try to appeal to their fanbase whether it is when they add
a real-life actor or singer in their games or whether they add a real-life event.
122
Businessinsider.com, Here's the reason most new console video games cost $60 by Michelle Yan Huang and
Ben Gilbert, Oct 29, 2018. Why Video Games Always Cost $60 (businessinsider.com)
Activision Blizzard
Culture. Video game culture nowadays has become more prevalent and it existed
since late 1970s. What these big video game companies share in common is that their games
shaped video game culture that has impacted the world. As video games grew more popular
over time, they have had a big impact on popular culture. People who play video games are
known as “gamers” which can mean a person who enjoys video games or someone passionate
about it. The video game culture presence is very strong and one of the main characteristics of
it are: online gaming, e – sports, streaming video services, cosplaying, annual exhibitions,
video games museums and their own slang and terminology that is used in games.
Franchise. Another similar characteristic that all video game companies have is video
game franchises. Franchises are key thing that identifies a company and shows their true self.
With no doubt can be said that franchises are the most lucrative tool that these big companies
have in their arsenal. The most bestselling franchises in the world include: Pokémon - $90
billion, Mario - $30.25 billion, Call of Duty - $17 billion, Wii - $14.808 billion, Pac Man -
$14.107 billion, Space Invaders - $13.93 billion, Dungeon Fighter Online -$11.8 billion,
Street Fighter - $11.279 billion, Final Fantasy - $10.656 billion, Warcraft - $10.627 billion.123
Marketing strategies. Traditional commercials on television, in newspapers, and in
other forms of mass media are no longer as successful as they once were. That’s why
developers have to search for a new ways of video games promotion. Nowadays, marketing
strategies that are used by biggest video games companies are very similar though depending
on the game their target audience can differ. There are several marketing strategies that are
often used within the industry. Firstly, it is influencer promotion. Many millennials are not
only enthusiastic gamers, but they also follow at least a couple of social media influencers.
These individuals might include bloggers, streamers, Instagram celebrities, etc. Their
cooperation is now incredibly valuable in the video game advertising. Secondly, social media
123
Titlemax.com, The Top 50 Highest-Grossing Video Game Franchises by Carly Hallman. The Top 50 Highest-
Grossing Video Game Franchises | TitleMax
Activision Blizzard
advertising still remains a good option for the developers. Social media marketing works as a
pop-up ad on popular social media platforms such as Facebook, Instagram, Twitter, YouTube
and many other. The users are constantly scrolling through the news feed and see ads as
regular posts. Furthermore, SMM tool capabilities allow the company to target very particular
audience. They can customize their campaign to a certain gender, age, nationality, job,
preferred hobby and a variety of other factors. SMM campaigns that are precisely target can
result in a significant rise in clients. Therefore, one thing can be said that video game
companies are heavily dependent on online marketing strategies and social media.
2.4 SWOT Analysis
To provide a full and comprehensive evaluation, the strategic study of the LEGO
Group's market position must be maintained in the form of a SWOT analysis. Below is the
SWOT analysis for the video game company Activision Blizzard which is in the video game
industry.124
Strengths: Weaknesses:
 Multi-platform presence  Reliance on its key franchises (Call
 Diversified global market of Duty, World of Warcraft,
 One of the esports leaders Overwatch)
 Large company with a big portfolio  High dependance on hardware
of products and services manufacturers (Example: Sony,
Microsoft)
Opportunities: Threats:
 Growing mobiles game market  Intense competition
 Positive outlook on online gaming  Fast technological changes
124
Swotandpestel.com. ACTIVISION BLIZZARD SWOT & PESTLE ANALYSIS by SWOT & PESTLE.com, 2021.
Activision Blizzard SWOT & PESTLE Analysis | SWOT & PESTLE (swotandpestle.com)
Activision Blizzard
market  Piracy
 Leveraging on robust games market
Strengths
Multi–platform presence. Through its presence across several platforms, the
company has positioned itself for long-term success. The company creates and distributes
video games for a variety of consoles, portable devices, and the PC platform. Activision
Blizzard develops games for all major console platforms, including the Sony PlayStation 4,
Nintendo Wii, Nintendo Wii U, and Microsoft Xbox 360. Furthermore, the company provides
a diversified portfolio of online subscription-based games in the massively multiplayer online
role-playing game (MMORPG) genre. Blizzard Entertainment, the company's division,
produces and distributes PC-based computer games and operates an online-game-related
service called Battle.net.
Diversified global market. The company has a strong global present within the
industry. Activision Blizzard operates in the United States, Canada, the United Kingdom,
France, Germany, Ireland, Italy, Sweden, Spain, the Netherlands, Australia, South Korea, and
China. To gain further customer base across other locations, the company continues to deliver
both online and physical software and games with localized content. The company's presence
in many regions protects it from the dangers associated with negative economic trends in a
particular location.
Esports. Activision Blizzard is one of the first movers in the esports market and are
well known for the Overwatch League and Call of Duty League. Activision Blizzard has
Activision Blizzard
already partnered with Twitch, YouTube and acquired Major League Gaming in 2015.
Blizzard must keep its expansion into the esports market, especially in mass media. Esports’
market is currently lacking mass media awareness because of differences in media
consumption, however this could change as millennials and gen Z age into the market.
Large company. Activision Blizzard is one of the largest video game companies in
the world with a revenue total of $8,8 billion as of 2021. Their closest competitors are
Electronic Arts with total revenue of $5.6 billion and Epic Games with total revenue of $5.1
billion. This shows that Activision Blizzard has a significant scale compared to them.
Activision Blizzard has a history of successful video game series that made them in a strong
market position. Due to this successful series, the company can create sequels which are less
risky than new series.
Weaknesses
Reliance on its key franchises. Activision Blizzard has consistently derived a
considerable share of company revenues from products based on a very limited number of
popular video game series, and these products make for a relatively high percentage of their
sales. A small number of well-known video game series will continue to provide a relatively
large share of revenues and earnings. Because of its reliance on a small number of series, the
company is dependent to the performance of these series, which can have a major impact on
business and financial outcomes.
High Dependance on hardware manufactures. A major part of company’s business
operations comes from selling video games on video game hardware platforms manufactured
by third-party companies such as Microsoft’s Xbox platforms and Sony’s PlayStation.
Therefore, the profitability of the company’s operations is largely affected by the availability
of an adequate supply of certain hardware platforms as well as manufacturer’s constant

Activision Blizzard
support for these platforms. Moreover, the company’s success is dependent on its ability to
foresee which platforms would be viable in the market so that they can develop commercially
successful products for them. If the manufacturers won’t release their platforms on time or
they won’t be available in specific quantities to meet demand as anticipated by Activision
Blizzard, then the company’s sales can decline.
Opportunities
Growing mobile games market. As of 2021, the global mobile games market in
revenue is estimated at $93.2 billion and is expected to grow till $200 billion in 2024. The
mobile gaming market is becoming greater, more profitable, and more diversified than ever
before. In 2021, the overall number of smartphone users will be 3.9 billion worldwide.
Activision Blizzard can capitalize on the expanding mobile gaming industry. The company is
also a mobile publisher with a global presence. Therefore, market share and revenues will rise
in the future years as the end market expands.125
Positive outlook on online gaming market. The worldwide digital media market has
been steadily expanding, with gaming accounting for the majority of market income. In 2020,
the worldwide online gaming market earned around 21.1 billion US dollars in sales,
representing a 21.9 percent increase over the previous year. This increase was, of course,
owing to the worldwide COVID-19 epidemic, which drove many consumers to remain at
home and shift to interactive content and various ways to communicate with others. There are
currently an estimated 1 billion online gamers globally, with China, South Korea, and Japan
having the largest demographic reach for online gaming. Online gaming audiences are
expected to exceed 1.3 billion by 2025.126 For Activision Blizzard, majority of its revenue
comes from online gaming activities. Therefore, the company’s online activities will make it
125
Venturebeat.com. Newzoo: Mobile games will grow 4.4% in 2021 to $90.7B by Dean Takashi, Sep. 23, 2021.
Newzoo: Mobile games will grow 4.4% in 2021 to $90.7B | VentureBeat
126
Statista.com. Online gaming - statistics & facts by J. Clement, May 7, 2021. Online gaming - statistics & facts
| Statista
Activision Blizzard
to capitalize from the anticipated growth while also increasing their revenue by supporting its
core business.
Leveraging from robust games market. The gaming market was estimated at
$198.40 billion in 2021 and it’s predicted to grow to $339.95 billion by 2027, growing at an
8.94% between 2022 and 2027. Because of the worldwide lockdowns imposed as a result of
the COVID-19 outbreak, some people turned to video game platforms to pass their time. As a
result, these video game platforms drew hundreds of thousands of additional users to web
traffic. Recently, video gaming trends have seen a significant increase in both gamers and
income.127 Activision Blizzard is well known in the worldwide video game industry. Their
daughter company, Activision Publishing operates in publishing interactive products and
other downloadable content. Activision Publishing develops video games on a variety of
consoles, mobiles and PC, utilizing both internally developed series and licensed content. The
company develops and publishes games for Xbox series, PlayStation series and Nintendo
series platforms. The positive outlook for the global video game industry will lead into
increased demand for the company’s products and will support its growth.
Weaknesses
Intense competition. Activision Blizzard operates in a highly competitive industry.
The company competes with other video game publishers. These competitors vary in size
from small to a giant corporation such as Sony, Microsoft and Nintendo with a greater
financial and marketing resources. For example, companies like Sony, Microsoft and
Nintendo compete directly with Activision Blizzard in the development of video game titles
for their own hardware platforms.
127
Mordorintelligence.com. GAMING MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2022-
2027) by Mordor Intelligence. Gaming Market Size, Share, Growth (2022 - 27) | Industry Statistics
(mordorintelligence.com)
Activision Blizzard
Fast technological changes. The fast technological changes as well as shifts to other
newer hardware platforms may impact the company’s success. The company’s market is
defined by constant technological changes, evolving technical standards, frequent product
releases and products short life cycle. New products introduced by Activision Blizzard might
not meet up to market acceptance or achieve sufficient sales to recover development,
manufacturing, and marketing costs. In addition, delays in product releases or disruptions in
the release of one or more new products could adversely affect the operating results of the
company. Short lifecycles of products have been negatively affecting the video game
business, and these trends are expected to further increase their impact in the future.
Piracy. Currently, continuing piracy issues impact the growth for players in the video
game industry. Unauthorized distribution of Activision Blizzard's titles and reverse
engineering of the products would enable duplicating of the programming techniques
proprietary to the company and creation of similar competitive products. Furthermore, in
some countries where Activision Blizzard's products are sold, the laws do not protect the
company's products and intellectual property rights to the same extent as the laws of the US.
Legal protection of Activision Blizzard's rights may be ineffective in such countries.
Moreover, the rapid expansion of broadband internet access may worsen these problems by
making it possible to transmit digital files faster and more easily
\
Activision Blizzard
Chapter III. Critical analysis
3.1 Porter’s Five Forces Analysis
According to Porter’s Generic Strategies, the strategy that Activision Blizzard is using
is Differentiation.128 The company delivers products that are different from those offered by
rivals, and it is constantly looking for new and creative strategies to keep its customers
interested. Its games, such as Call of Duty, World of Warcraft, Overwatch and Candy Crush,
must keep millions of customers entertained. It also hosts online competitions to keep
customers
involved, and it is always introducing new products and improvements to current games in
order to attract new customers and maintain existing ones.129
Activision Blizzard is an important player in the Video Game Entertainment software
industry. Therefore, the industry can be analyzed via Porter’s five forces analysis.
Threat of New Entrants – High
The threat to enter the industry is high since entering this industry does not need a
significant financial investment however intellectual resources are the most valuable resource,
and anybody with the necessary abilities may work in the Video Game industry. Furthermore,
128
Ifm.eng.cam.ac.uk. Porter's Generic Competitive Strategies (ways of competing) by University of Cambridge.
Porter's Generic Competitive Strategies (ways of competing) (cam.ac.uk)
129
Investor.activision.com. Gamers from Around the World Gather for Gaming, Esports, and More This Week at
BlizzCon® 2017 by Activision Blizzard, October 30, 2017. Activision Blizzard | Gamers from Around the World
Gather for Gaming, Esports, and More This Week at BlizzCon® 2017
Activision Blizzard
these newcomers frequently join with a reduced-price strategy, capturing market shares from
current firms. To combat the threat of new entrants, Activision must develop unique goods on
a regular basis in order to maintain existing customers while also attracting new ones. In order
to enhance its products, it must also lower costs through economies of scale. However, in this
business, innovative goods are the key to success, thus Activision must continue to engage in
research and development in order to provide customers with new and interesting products.130
Bargaining Power of Supplier – Low to moderate force
Businesses within the industries primarily dependent on intellectual assets and unique
gaming and entertainment goods are their key selling point. Various suppliers such as
software makers and other technological goods and service providers, give raw materials to
the industry's businesses. Because there are so many providers of these components, the
supplier power is relatively low. Furthermore, Activision's sheer size gives it more leverage as
a buyer. However, suppliers in a dominating position, such as those with a significant product
or service innovation, can charge higher prices for their products or services, and Activision
would be forced into buying from such suppliers on their terms in order to compete
successfully in the market.131
Bargaining Power of Buyers – High
In this industry, the bargaining power of buyers is high because customers in this
market are highly demanding and often seek new products, plus there are many rivals in the
market contending with more original products. As a result, each business must continue to
provide new products according to market trends and customer’s desires. Moreover,
130
Medium.com. Porter’s five forces analysis — Video game by Keyue Zhuo, December 12, 2017. Porter’s five
forces analysis — Video game | by keyue zhuo | Medium
131
Ibid
Activision Blizzard
businesses also need to offer discounts and products at a lower price in order keep their
customers.132
Threats from Substitute Products and Services – Low
Threat from substitute products is low in the industry because most of the video game
producing companies offer games on all platforms. The substitute for the video games can be
physical games or other entertainment like movies and dramas. Therefore, the threat of
substitute products is quite low in the industry.133
Rivalry among the Existing Competitors – High
The rivalry among the existing competitors is very high in the video game industry.
The industry competes mostly on the basis of new and innovative products. Due to the fierce
competition, prices are reduced which result in an increased demand for industry products.
Nevertheless, it has the potential to reduce income for industry’s players. Another cause for
the fierce competition is that the industry lacks customer’s loyalty and customers may quickly
leave and switch to another seller if they aren’t happy with the product. Activision Blizzard
must stay competitive by developing new products that will keep people interested.134
3.2 Financials
Below is the financial analysis for Activision Blizzard. The income statement can be
found on appendix page. Overall, 2021 was a good year for Activision Blizzard, despite the
COVID-19 pandemic.
132
Investopedia.com. Porter's Five Forces and Electronic Arts (EA) by Greg Depersio, July 7, 2020. Porter's Five
Forces and Electronic Arts (EA) (investopedia.com)
133
Ibid
134
Ibid
Activision Blizzard
Annual revenue increased by 8.8% to $8,803 billion in 2021 compared to $8,086
billion in 2021. In 2021, operating income with $3,259 billion increased from $2,734 billion
in 2020 which results in 19.2% growth. The operating margin in 2021 was 37% increased
from 33.8% in 2020. The interest and other expense were slightly higher than in 2020 which
resulted in $95 million spending in the interest and other expenses in 2021, compared to $87
million in 2020. Income before tax income expense was $3,164 billion in 2021, higher than
$2,616 billion in the previous year.
Income tax expense in 2021 was $465 million, higher compared to $419 million in
2020. Therefore, the effective tax rate for Activision Blizzard for 2021 was 14.7% which is
not very high and is helpful for distribution of profits and dividends.
In 2021, the company had an increase in net income to $2,699 billion compared to
2020 $2,197 billion which is a significant increase in 22.8% in net income and had a
shareholder’s equity total of $17,599 billion in 2021 which was higher compared to $15,037
billion in 2020.
Ratio Analysis
Liquidity Ratios. Liquidity ratio is a financial ratio that is used to evaluate a
company’s ability to meet its short-term debts.135
The current ratio for Activision Blizzard in 2021 was 5.21, which was increased by
1.8, compared to 3.41 in 2021. Since the current ratio is greater than 1, it means that
Activision Blizzard was not in risk in both years and had an ability to meet up its short-term
debts.
The quick ratio for Activision Blizzard in 2021 was 0.55 compared to 0.42 in 2020
meaning that it saw a slight rise in 0.13. Similar to current ratio, the value is greater than 1
135
Corporatefinanceinstitute.com. What is a Liquidity Ratio? By Corporate Finance Institute. Liquidity Ratio -
Overview, Types, Importance, Example (corporatefinanceinstitute.com)
Activision Blizzard
which tells that Activision Blizzard was poor on paying its short-term debts. Receivable’s
turnover raised by 0.19 in 2021, with 8.51 in 2021 raised up to 8.7 in 2021. Since Activision
Blizzard provides online services, it holds no inventory and therefore there is no inventory on
the balance sheet, inventory turnover, day’s inventory on hand. Days’ sales uncollected in
2021 was 41.9 days and 42.9 days in 2020 which means it increased by one day and
Activision Blizzard needed 41.9 days to receive cash for sales. Payable’s turnover raised by
0.3 times from 7.7 in 2020 to 8.0 times in 2021 which tells us that Activision Blizzard was 0.3
times efficient at paying its short – term debts. Days’ payable decreased by 1.8 days from
47.4 in 2020 to 45.6 in 2021 which tells us that Activision Blizzard needed 45.6 days to pay
accounts payable.
Profitability Ratios. Profitability ratio is a financial ratio used to evaluate the ability
of a company to make income relative to revenue, assets, operating costs and shareholders’
equity during a specific period of time.136
Gross margin for Activision Blizzard in 2021 was 73.7%, which grew by 1.6%
compared to 72.1% in 2020. Profit margin was positive for both 2021 with 30.7% and 2020
with 27.2% therefore a big increase in 3.5% in 2021. Asset turnover for Activision Blizzard
didn’t change and was same for both 2021 and 2020 with 0.4. Return on assets saw an
increase in 0.7%, from initial 2020 results of 13.2 to 2021 results of 13.9%. Return on equity
raised by 0.7 from 2020’s 15.8% to 2021’s 16.5%.
Long-term solvency Ratios. Long-term solvency ratio is a financial ratio that is used
to evaluate if the company can pay its financial long-term obligations.137
136
Corporatefinanceinstitute.com. What are Profitability Ratios? By Corporate Finance Institute. Profitability
Ratios - Calculate Margin, Profits, Return on Equity (ROE) (corporatefinanceinstitute.com)
137
Corporatefinanceinstitute.com. What is a Solvency Ratio? By Corporate Finance Institute. Solvency Ratio -
Overview, How To Compute, Limitations (corporatefinanceinstitute.com)
Activision Blizzard
Debt to equity in 2021 was 0.42 and 0.54 in 2020 which reduced by 0.12. The lower
the debt to equity, the more is a reliance on equity for financing a company.
Cash Flow Adequacy Ratios. The cash flow adequacy ratio is used to evaluate if the
cash flows generated by company’s operations are sufficient to pay for its ongoing
expenses.138
Cash flow to net income in 2021 was 0.9 which decreased by 0.12 compared to 2020’s
1.02. Cash flows to sales decreased by 0.5%, with 27.4% in 2021 and 27.9% in 2020. Cash
flows to assets reduced by 0.5% with 10% in 2021 and 10.5% in 2021.
Below are the all calculations presented in a table. Please note that all answers are rounded.
*All the numbers for Year 2019 were taken from Activision Blizzard’s annual report for Year
2019.
Ratio Formula Dec. 31, 2021 Dec. 31, 2020
Liquidity Ratios
Current Ratio Current Assets /Current 12,556/2,411 = 5.21 10,565/3,100 = 3.41
Liabilities times times
Quick Ratio (Cash + Marketable (354+0+972) (268+0+1,052)
Securities + Receivables) / /2,411=0.55 times /3,100=0.42 times
Current Liabilities
Receivable Net sales/Average 8,803/1,012=8.7 8,086/950 = 8.51

Turnover Accounts Receivable* times times
Inventory Cost of Sales/Average Not applicable Not applicable
Turnover Inventory*
Days’ Inventory Days in Year/Inventory Not applicable Not applicable
on hand Turnover
Days’ sales Days in year/Receivable 365/8.7 = 41.9 days 365/8.51 = 42.9 days
uncollected turnover
138
Accountingtools.com What is the Cash Flow Adequacy Ratio? By Accounting Tools. Cash flow adequacy ratio
definition — AccountingTools
Activision Blizzard
Payable’s Cost of goods sold +/- 2,317+0/(285+295)/2 2,260+0/(295+292)/2

turnover Change in = 8.0 times = 7.7 times
Inventory/Average
Accounts Payable
Days’ payable Days in year/Payables 365/8.0 = 45.6 days 365/7.7= 47.4 days
Turnover
Profitability Ratios
Gross Margin (Gross Profit / Revenue) x (6,486/8,803) x100= (5,826/8,086) x100=

100 73.7% 72.1%
Profit Margin (Net income / Net Sales) x (2,699/8,803) x100 = (2,197/8,086) x100 =
100 30.7% 27.2%
Asset Turnover Net Sales / Average Total 8,803/24,082.5 = 0.4 8,086/21,477 = 0.4
Assets* times times
Return on Assets (Net Income / Average (2,699/24,082.5) (2,197/21,477)
Total Assets*) x 100 x100=13.9% x100=13.2%
Return on Equity (Net Income / Average (2,699/16,318) (2,197/13,921)
Owners’ Equity*) x 100 x100=16.6% x100=15.8%
Long-term Solvency Ratios
Debt to Equity Total Liabilities / Owner’s 7,457/17,595=0.42 8,072/15,037=0.54
Equity times times
Cash Flow Adequacy Ratios
Cash Flows to Net Net Cash Flows from 2,414/2,699=0.9 2,252/2,197 = 1.02
Income Operating Activities / Net times times
Income
Cash Flows to (Net Cash Flows from (2,414/8,803) x100 = (2,252/8,086) x100 =
Sales Operating Activities / Net 27.4% 27.9%
Sales) x 100
Cash Flows to (Net Cash Flows from (2,414/24,082.5) (2,252/21,477)
Assets Operating Activities / x100 = 10% x100=
Average Total Assets*) x 10.5%
100
Activision Blizzard
3.3 Position of the company today within the industry
Activision Blizzard undoubtfully is one of bigger players and holds a strong position
within video game industry. In 2021, Activision had a steady revenue and ranked fifth place
in the list of top ten video game companies in the world, with a revenue of $8.8 billion as of
2021. The top three companies in the list are Sony, Microsoft and Nintendo with a total
revenue of $24.9 billion, $16.3 billion and $15.3 billion. 139 As mentioned before, Activision
Blizzard is divided into three subsidiaries which are Activision, Blizzard Entertainment and
King. Activision is mostly famous for its Call of Duty series, Blizzard Entertainment for
legendary game series like World of Warcraft, Diablo and Overwatch, and finally King is
known for its famous mobile game Candy Crush Saga.
Esports. It’s important to note that Activision Blizzard has two games involved in
esports which are called Call of Duty and Overwatch. Overwatch League was launched in
2018. It has a structure similar to that of a regular sports league, but it has a far greater scope,
with teams representing major cities all around the world. Activision Blizzard has sold 20
teams to entrepreneurs who are in charge of running them like a company. The Blizzard
studio has set up the league in such a way that when the league expands, both the corporation
and the club owners will benefit. Other distinguishing feature of the Overwatch League is that
it is entirely owned and run by Blizzard Studios, as opposed to many other esports events that
are arranged by third parties that do not hold the game's intellectual rights. Because Blizzard
owns both the intellectual property (Overwatch and Call of Duty) and the league, it is in their
strongest position to profit from the esports market's growth. Call of Duty League was
launched in 2020 with 12 city teams. Activision Blizzard's Hearthstone and World of
139
Alltopeverything.com. The 10 Biggest Video Games Companies in the World 2022 (at a glance) by All Top
Everything. Top 10 Biggest Video Game Companies in the World - All Top Everything
Activision Blizzard
Warcraft are also esports leaders, but the corporation is focusing most of its resources on first-
person shooters since they are a popular gaming genre with action-based gameplay that
appeals to a broad audience. Activision Blizzard may generate revenue in a variety of ways
thanks to the increase in popularity of esports. Advertising, sponsorships, team sales, media
rights sales, merchandising, and ticket sales are the primary sources of revenue. Advertising
and sponsorships are the two most important components right now, and Activision Blizzard
has already recruited a number of large consumer companies to sponsor Overwatch League.140
Microsoft Acquisition. In January 18th, 2022, Microsoft announced that it will acquire
Activision Blizzard for $95.00 per share, in an all-cash transaction estimated at $68.7 billion.
When the transaction is finalized, Microsoft will be the third largest gaming company in the
world by revenue and it will be the largest acquisition in the video game industry. Last
summer in 2021, Activision Blizzard was engulfed in accusations that senior management
employees overlooked sexual harassment and discrimination in its workplace. This
controversy eventually hit its CEO, Bobby Kotick. The company was pressured from all
places which includes Microsoft. In the end Microsoft leveraged on Activision Blizzard issues
and offered them a bid which they firstly rejected but then came to an agreement. 141 Microsoft
intends to make all Activision Blizzard titles available through Xbox Game Pass, a popular
service among gamers. Xbox Game Pass is the first of its type, giving gamers unrestricted
access to a library of games for a monthly fee of $9.99. 142 In January 2022, the number of
Xbox Game Pass subscribers topped 25 million, and Activision Blizzard games today have
about 400 million monthly active gamers. Microsoft's rise in console gaming will be aided by
140
Themotleyfool.com. 4 Things to Know About Activision Blizzard’s $1 Billion Esports Opportunity by John
Ballard, March 12, 2020. 4 Things to Know About Activision Blizzard’s $1 Billion Esports Opportunity | The
Motley Fool
141
Theverge.com. Read exactly how Microsoft’s $68.7 billion deal for Activision Blizzard came together by Jay
Peters, Feb, 18, 2022.
142
Finance.yahoo.com. What Microsoft's Acquisition of Activision Blizzard Means For Its Gaming Future by
Derek Lewis, Feb, 2022. What Microsoft's Acquisition of Activision Blizzard Means For Its Gaming Future
(yahoo.com)
Activision Blizzard
making the most legendary gaming series in history more accessible at a low cost.143 Video
games are one of the fastest growing industries and Microsoft obviously wants a piece of the
action. With the potential to leverage Activision Blizzard’s assets, Microsoft will have
practically limitless possibilities to pursue. Microsoft believes that purchasing Activision
Blizzard will provide them a competitive advantage in the gaming market and allow them to
swiftly develop their gaming division. The acquisition was also positively received by
investors, with Activision Blizzard’s stock rising over 25% the day after it was announced.144
Call Of Duty Endowment (CODE). CODE is a non-profit organization which was
co-founded by Bobby Kotick in 2009 to help U.S military veterans to find high – quality jobs.
It helps former soldiers to transition to civilian careers after their military service and also
raises awareness about the value that veterans bring into the workplace. CODE currently
partners with nine US-based NGOs and two UK-based organizations. It has given out $36
million in grants over the previous nine years to help more than 54,400 veterans find well-
paying jobs. In 2018, the organization provided $5.2 million to assist in the placement of
10,700 people, at a cost of $522 in services per job obtained. “That's about one-sixth of what
the federal government spends per job placement through its own Department of Labor
programs”, according to CODE. CODE’s ultimate objective is to help at least 100,000
veterans to find job by 2024.145
3.4 Difficulties the company faces.
Despite an increase of revenue in 2020 and 2021, Activision Blizzard has been
struggling with several problems that hurt their image in public.
143
Ibid
144
Ibid
145
Fastcompany.com. Call of Duty’s virtual soldiers are helping real ones get back to work by Ben Paynter, May
4, 2019. The Call of Duty Endowment helps soldiers get back to work (fastcompany.com)
Activision Blizzard
Geopolitical instability. Since the beginning of the Russian special-operation in the
Ukrainian territory, many companies announced that they will exit the Russian market and
video game companies are no exception. On March 4th, 2022, Activision Blizzard announced
that they suspend all new sales and micro-transaction in Russia.146 This can negatively impact
on the company because since Russia is a very big country covering Europe and Asia and that
total revenue of Activision Blizzard combined with EMEA and Asia Pacific for 2021 is
$3,872 billion, it is obvious that Activision Blizzard can lose a share amount of revenue. Plus,
even when this conflict is over and they will allow sales in Russia again, there is no guarantee
that their previous Russian customers will come back to them buying their services.147
Discrimination and harassment scandal. On July 20th, 2021, the California
Department of Fair Employment and Housing filed a lawsuit against Activision Blizzard after
a two-year investigation. The reason for this lawsuit was that supposedly the company was
promoting a gender-based discrimination and sexual harassment against female employees.
Despite the fact that women made up around 20% of Activision Blizzard's employees, they
faced continuous sexual harassment, uneven pay, and punishment. One of the most shocking
revelations was the widespread prevalence of so called "cube crawls, in which male
employees became intoxicated, crawled their way across desks, and engaged in "inappropriate
conduct with female colleagues. Many male employees are also said to have openly joked
about rape and assigned their jobs to their female coworkers in order to relax and play video
games. The disclosure that one anonymous female Activision employee killed herself while
on a working vacation with an unnamed "male colleague" is likely the most frightening
allegation in the complaint. She was allegedly subjected to "severe sexual harassment," with
nude photos of her being distributed during a corporate holiday party. All of this event led to
146
Activisionblizzard.com. SUPPORTING THE UKRAINIAN PEOPLE by Daniel Alegre, March 04, 2022. Supporting
the Ukrainian People (activisionblizzard.com)
147
Statista.com. Net revenue generated by Activision Blizzard from 2007 to 2021, by region by J. Clement, Feb
15, 2022.
Activision Blizzard
Activision Blizzard’s staff protesting and demanding to fire current CEO Bobby Kotick.
Many charges against Activision Blizzard's CEO, Bobby Kotick, have recently surfaced. For
example, he once threatened to murder one of his assistants in a frightening voicemail. He is
also accused of knowing about sexual harassment in his workplace and doing nothing about
it. Eventually, he appears to have protected the offenders and refused to disclose the instances
to the board of directors of the corporation. This prompted investors to launch a new
complaint, accusing Kotick of "issuing materially false and misleading statements during a
class action period.”148 In the end, it heavily impacted Activision Blizzard’s face in public
opinion that resulted in many talented employees leaving the company. Finally, Activision
Blizzard and the US government have struck a $18 million settlement over charges of sexual
harassment and discrimination against female employees at the company.149
Influence of Third-Party platform providers. When Activision Blizzard create
video game products for companies like Sony and Microsoft’s hardware platforms, the
tangible products are strictly copied by hardware platform’s manufacturer. Certain
agreement’s provisions such as approval rights over all software products and related
materials, so as the ability to change fees they charge for manufacturing, allow the
manufacturers significantly influence on the cost and release dates of video games. Sony and
Microsoft also own online networks in where digital goods are sold. This control can also
impact Activision Blizzard on the availability of their products or the number of sales made
through these networks.
3.5 Suggestions for current performance improvement
Here are some suggestions that can be used to improve current status and position of
Activision
148
Denofgeek.com. Everything You Need To Know About The Activision Blizzard Scandal by Aaron Greenbaum,
Jan. 20, 2022. Everything You Need To Know About The Activision Blizzard Scandal | Den of Geek
149
Npr.org. Activision Blizzard Strikes An $18 Million Deal Over Its Workplace Harassment Lawsuit by Jaclyn
Diaz, Sep. 28, 2021. Game Maker Activision Blizzard Will Pay $18 Million In A Deal With The EEOC : NPR
Activision Blizzard
Blizzard.
Create more accountable workplace. Due to previous scandals that Activision
Blizzard faced, it is obvious that the management staff must ensure a zero-tolerance policy
towards sexual harassments, discrimination, and sexism. Any employee found guilty should
be fired immediately. Also, employees must be encouraged to report such activities. Another
thing is to increase a percentage of women employees by 50% and make salary equal for both
men and women on similar positions.
Hiring creative talents. The companies’ success is dependent on its employees
especially in a video game industry. Activision Blizzard should be focusing on hiring more
creative and talented employees and giving them more autonomy in regard of what video
game final form will be. The key to success is the great games and management and
developers can have a very different views in this regard.
Become less dependent on their franchises. Since Activision Blizzard’s success is
very dependent on how their key video game franchises are doing, it’s important to create a
resort plan if the sales and popularities of their franchises will decline. That’s why it is
important for the developers to start working on a brand-new project and developing new
games that will meet customers’ expectations.
3.6 Recommendations for future growth
Metaverse. After the Microsoft purchase Activision Blizzard, the Microsoft’s CEO
Satya Nadella said that they have some plans on the metaverse. Microsoft has centered
Activision acquisition on the metaverse. Although the concept of metaverse is relatively new
and was first introduced and launched into the market by Meta Inc., previously known as
Facebook. However, analyst do believe that the metaverse idea is questionable since
Activision isn’t recognized in this new market. Metaverse is a broad term that encompasses a
Activision Blizzard
variety of technologies including VR, cloud gaming and computing. Nowadays, Activision
Blizzard is still dependent on other third-party hardware platform manufacturers and that it is
hard for them to enter metaverse market, therefore the company will need Microsoft’s
technological weight in cloud computing and VR to market as a metaverse play. So, in the
near future Microsoft will control all of Activision Blizzard’s assets and that’s when they
should be focusing on this new market – metaverse.150
150
Investopedia.com. Will Activision Really Boost Microsoft's (MSFT) Metaverse Ambitions? By Rakesh Sharma,
Jan 24, 2022. Will Activision Boost Microsoft's Metaverse Ambitions? (investopedia.com)
Activision Blizzard
Conclusion
The main point of this paper was to identify the everchanging and never stopping
video game industry with the emphasize on the company called Activision Blizzard. Although
many things have changed and due to the recent news Activision Blizzard will be soon owned
by Microsoft. However, it still left a huge impact on the industry and gamers worldwide. It’s
video game series left a great feeling of nostalgia to a veteran player and give a great feeling
of excitement to new players. The company is a synonym to a top-notch action and adventure
games that all gamers know or ever heard of. Although the company had its ups and downs,
regardless it will still be relevant in the next 50 years. It’s hard to believe that gaming has
been around only a few decades. It looks like it has been a part of our live forever. More
importantly, gaming will become more popular in the future. The future of gaming is looking
very interesting and exciting with all these rapid technological changes and new devices
emerging every time. With that being said, the video game industry will be always evolving,
whether we want it or not, it will play a significant part in our life.

Activision Blizzard
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Appendix
Activision Blizzard

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RUNNING HEAD: Activision Blizzard

Senior Honors Project

Student: Saparmurat Khadzhimurzaev

Moscow Touro University

Chapter 1. General Provision of the Video Game Industry 5

1.1 History and Development of the Video Game Industry 5

1.2 Objectives, Principles and Priorities of the Video Game Industry 17

1.3 PESTEL Analysis 20

Chapter 2. Characteristic Features of Activision Blizzard 26

2.1 History and Organization of Activision Blizzard 26

2.2 Differences from Regular Industry 40

2.3 Similarities to Regular Industry 41

2.4 SWOT Analysis 44

Chapter 3. Critical Analysis 50

3.1 Porter Five Forces Analysis 50

3.3 Position of the company today within the industry 56

3.4 Difficulties the company faces 59

3.5 Suggestion for current performance improvement 61

3.6 Recommendations for future growth 62

through Activision Blizzard.

external and internal factors that influence the company.

for improving company’s performance and growth.

Chapter I. General Provisions of the Video Game Industry

1.1 The History and Development of the Video Game Industry

successful entertainment enterprises.8

Meanwhile, Nolan Bushnell, a brilliant young entrepreneur recalls playing

would be a profitable coin-operated machine. 19 Despite the failure of Computer Space,

reached an agreement with Magnavox. 22

industries that kept Japanese companies up to date on technological breakthroughs in the

more advanced gameplay. 25

Following the saturation of the ball-and-paddle industry in 1975, game developers

microprocessors instead of analog components. Tomohiro Nishikado, who had previously

established a number of restrictions on third-party games created on its platform, assisting in

thanks to Nintendo's domination.34 Simultaneously, personal computer software producers

it's been released on practically every console since. 45 46

hotly debated topic.47

the foreseeable future.

graphics, and consoles appears to outperform the preceding. 55

including elderly in nursing homes.57

revenue streams, resulting in monthly revenue of $40 million or more.61 62

As affordable broadband Internet access became more widely available, several

publishers resorted to online games as a method to differentiate themselves. RuneScape,

which is compounded by a persistent shortage of semiconductors. 69 With 120Hz frame rates,

industry, with the capability of allowing gamers to "live" in an interactive, immersive 3D

landscapes in a completely new way.71 In the field of language-processing artificial

interpret commands through a headset.75

1.2 Objectives, principles and priorities of the Video Games Industry

and the positive influence of games on society. 76 Another important organization is

Entertainment Software Rating Board (ESRB) which is a self-regulatory organization which

unacceptable material. ESRB ratings currently include: EC (Early Childhood), E (Everyone),

E10+ (Everyone ten or older), T (Teens), M (Mature), AO (Adults only), RP (Rating

future of game development.79 Furthermore, many industry experts, such as Gamasutra,

Lastly, the introduction of 5G is expected to usher in technological advances and promote

innovation in the videogame development process. 5G will be essential for supporting

money just by streaming their favorite games at home.

1.3 PESTEL Analysis

Analysis of the Video Games Industry

revenues of approximately 36.92 billion US dollars.82

There are different legislations to regulate video games depending on a country. As

to First Amendment protection. As a matter of fact, in Brown v. Entertainment Merchant

determined by the Entertainment Software Ratings Board (ESRB).84

must verify that real – name verifications methods are in place.86

Electronic Entertainment Expo which is organized annually by the ESA. In E3 many

possibilities to for building realistic textures, physical characteristics and in-game