Because of the many scandals in his company, the manager is under public pressure.
(Photo: imago/ZUMA Press)
san francisco Bobby Kotick’s life’s work got a surprisingly big price tag on Tuesday. For more than 30 years, Kotick has led the US game manufacturer Activision Blizzard and its predecessor companies. Now the group, which is responsible for well-known video game series such as Warcraft, Diablo, Call of Duty or Candy Crush, is being sold. The technology group Microsoft can potentially cost almost 70 billion US dollars for the takeover.
Kotick is also set to move to Microsoft as CEO of the new subsidiary, the Redmond-based company announced when the deal was announced. Shortly thereafter, Kotick told business broadcaster CNBC that the partnership between Microsoft and Activision Blizzard dates back to the development of the first Xbox in the early 2000s. After the rise of the Metaverse hype, they decided: “Now is the right time for this combination.”
For Microsoft, the deal with Activision Blizzard is above all an opportunity to strengthen its own entertainment business, which, according to many industry representatives, will increasingly shift to the Metaverse in the future – i.e. the virtual extension of reality in which people will film together in the future watch, play games, work together and visit each other virtually.
“Today, gaming is the most dynamic and exciting category in the entertainment sector, across all platforms,” said Microsoft boss Satya Nadella, explaining the calculation behind the purchase. The gaming industry will play a key role in the development of the Metaverse, the manager said. With the purchase of Activision Blizzard, the largest game manufacturer in the world, Microsoft is now at the top.
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Scandals tarnish the game developer’s reputation
But what role Kotick will play in this is uncertain. There is already speculation on Wall Street that the 59-year-old could leave the company after the 18 months the deal is expected to close. Because recently Kotick came under pressure from numerous scandals in his company. Parts of the leadership are said to have been guilty of abuse of power and sexual harassment.
The Wall Street Journal revealed at the end of last year that Kotick is said to have known about the misconduct of some of his employees for several years without taking action. The Wirtschaftsblatt quoted from an e-mail in which Kotick was informed about a rape and did not react. Some of the accused employees simply stayed with the group – while the victims are said to have been fired.
Speaking to CNBC, Kotick reiterated that he takes any misconduct by his employees seriously in this regard. However, in individual cases, the manager apparently exceeded his own limits with his behavior. He is said to have threatened an assistant with death in a call in 2006 – for which he claims to have apologized 16 years ago.
Around 2,000 of the 10,000 employees went on the barricades because of the allegations – and signed a petition in November demanding the dismissal of their CEO. From the point of view of Jefferies analyst Brent Thill, this is a hurdle for the merger. The “different corporate cultures” of Microsoft and Activision Blizzard posed a risk for the Redmond-based group, according to a study on Tuesday.
Share price rises sharply
The culture of the game manufacturer is closely linked to Kotick as a person. In 1990, the college dropout, together with a partner, acquired around 25 percent of the shares in the software manufacturer Mediagenic, which Kotick then led as CEO and renamed Activision. The purchase is said to have cost the then young entrepreneur less than one million US dollars; the capital injection saved the company from bankruptcy.
In 2008, Kotick merged with competitor Vivendi Universal Games to form what is now Activision Blizzard. With annual sales of more than eight billion US dollars, the group is now the largest games manufacturer in the world – and Kotick is one of the most successful managers in the industry, having increased the company’s value a hundredfold during his tenure.
However, this also includes the jump in price of more than 25 percent that the share made to $82.31 on Tuesday after the plans became known. Microsoft even pays a decent premium with its offer of $95 per share – but remains below the previous high of more than $103 from last February, before the scandals sent the share price plummeting.
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