For Bobby Kotick it all started with a handshake in a parking garage under an Atlantic City casino. And the story of Kotick is the story of video game juggernaut Activision. A tale of chance meetings and unbelievable circumstance, of Apple founder Steve Jobs and millionaire recluse Howard Hughes.
But before the story there’s the cheesecake.
Activision CEO Bobby Kotick is sitting next to me at a table in the back of a surprisingly average deli in Beverly Hills.
We were supposed to meet in his office in Activision’s Santa Monica headquarters, but the multimillionaire wasn’t feeling well. So we moved the meeting closer to his house, to an unassuming deli in a very assuming neighborhood.
I’m sipping on water, gently crushing ice between my teeth, when Kotick ambles into the deli. He’s wearing a blue blazer over a white polo shirt. His hair and his smile are both slightly askew. There are, despite some popular gamer opinion, no horns poking out from his hair, and his eyes are neither red nor glowing.
He sits down and asks if I want anything to eat. I pass.
“Nothing? They have the best cheesecake I’ve ever had,” he says, settling in his seat.
I dutifully order a slice.
Kotick likely wouldn’t be running Activision today if it weren’t for a chance meeting with casino mogul Steve Wynn.
Wynn, one of the richest and most influential men in the world, had and continues to have such a deep impact on Kotick that when I ask the head of Activision if he stays in touch with Wynn, Kotick looks genuinely shocked.
“He’s like my dad,” Kotick says.
The two met by chance, sharing a table at the annual fundraising Cattle Baron’s Ball in Dallas, Texas. Kotick was bound for New York the next day to meet with potential investors in a company he was getting off the ground with a college roommate.
Kotick and his roommate had developed a piece of software that allows the Apple II to deliver the easy-to-use interface of Apple’s Lisa computer at a fraction of the price
“It was a mouse and an application suite,” he said. “It was a really good idea and a really bad product. We had no idea what we were doing and it was hard to do.
“He was the techie, I was the entrepreneur, we had grad students work on it and they did a pretty good job.”
Kotick and his buddy managed to wrangle a meeting with Steve Jobs to show off their idea.
“I was really scared about the meeting because he was like my hero,” Kotick said. “I showed it to him and he started screaming at us. He threw it on the floor and said it was a piece of shit and then he started criticizing it.”
“He said, ‘This is shit, but I’m gonna show you something really cool.'”
Jobs then took out a blue case from under a table in his office, unzipped it and pulled out a prototype of the Macintosh.
“It was really the coolest thing I’ll ever see,” Kotick said. “I’ll always remember that. What I was wearing. The color of the case…”
Jobs told the two to go back to the drawing board and come up with something that copied the Mac, not Lisa for the Apple II.
“Steve doesn’t get enough credit for how many incredible ideas he has stolen from other people and turned into great consumer products,” Kotick says, laughing.
Despite Jobs’ disinterest in the concept, Kotick and his partner pushed forward with their idea. They just needed the money to prototype the device. They hoped that a group of investors in New York with back them.
The day after the Cattle Baron’s Ball, Wynn heard that Kotick was bound for New York and offered to give him a ride on his new jet, a DC-9. During the flight Wynn told Kotick about his own run in with fortune and fame and how it helped to launch his career.
In 1971, Wynn, now a multi-billionaire casino mogul and real estate developer, was just a small share holder in the New Frontier Casino. He was also the night manager. So when a call came in from a man asking to talk to the person in charge. Wynn took it.
The man on the other end tells Wynn that “that damned hotel of yours is blocking my view. I’m gonna buy it.” The caller ends up being Howard Hughes.
More important than the cash Wynn gets from the eventual deal, is the friendship he forms with Hughes’ banker. Eventually the financier decided to invest in Wynn.
“He told Wynn, ‘I’m going to help you out but some day you need to help out a young guy like I’m doing for you,'” Kotick said.
So during that flight, Wynn tells Kotick that Kotick is the one Wynn is going to help. But there’s a problem: Those investors in New York.
Kotick turns the deal down, instead asking for a room at one of Wynn’s many Casinos for an upcoming trade show in Vegas. But Wynn’s offer is heavy on Kotick’s mind and he ends up blowing the deal with his investors.
Wynn jumps on the news when Kotick calls, and tells Kotick and his partner to go to Wynn’s New York offices.
“We get to this limo and two gorilla guys say, ‘Get in,’ and they take us to this building that has a helicopter waiting, and the gorillas say, Get in’.”
The helicopter takes them to Atlantic City and another car drives the two to the bottom of a parking garage under one of Wynn’s casinos, where he keeps his office.
Kotick explains the idea and says he needs $300,000 to make a prototype. Wynn writes them a check and then invites them to dinner.
“I said, ‘We have all the contracts here, we’ll change the name and get them to you by tomorrow,'” Kotick said. “He looks us in the eye and says contracts, smontracts. You’re my family now! And he walks out.”
“I’m sitting there thinking, ‘Alright what’s wrong with this picture. We’re in the basement of a parking garage in Atlantic City with a guy with a pinky ring who just gave us $300,000 who said we’re his family now. We’re gonna die.'”
Kotick laughs, adding that Wynn looked like a movie star, complete with a pinkie ring, when he walked into his own underground basement that fateful day.
“Every time I tell that story Steve tells me that he never had a pinkie ring, but I remember it.”
Electronic Arts Rivalry
Kotick is a natural storyteller. As he wraps up his explanation of Howard Hughes, Steve Wynn and that denied pinkie-ring handshake, the table is silent, everyone at the table is rapt.
And it’s not just me sitting with Kotick. There are two public relations and communications folks sitting across from, and next to Kotick. Andy Doyle, vice president of finance for Activision, sits at the other end of the table.
The reactions of this small gathering of Activision insiders gives some insight into Kotick. He’s a leader used to speaking his mind, not mincing words, sometimes to his own detriment.
Throughout the interview, Kotick is exceedingly forthcoming, perhaps too forthcoming. Three times he goes off the record to talk with me about things he wants to, has to, tell me, but can’t as the head of a multi-billion dollar company.
Twice he catches himself using words that he’s been told aren’t “nice.” One of them is “sucked.”
“Oops, I can’t say that,” he says, then after a short pause and a glance to the table adds, “but it sucked.”
It’s apparent that Kotick, an old-school gamer and entrepreneur, isn’t used to having so many everyday people, so many gamers, paying attention to him.
It feels at times that Kotick still sees himself as the scrappy underdog, the unnoticed ideas man.
But the fact is, he heads up Activision, now the largest third-party publisher in the world, a goal he set for himself years ago.
Activision was founded in 1972 by a group of developers unhappy with the fact that Atari didn’t credit them in games for their work. The company put out a number of huge hits, including Pitfall! But in the late 80s the struggling company expanded its business to include business programs.
Kotick headed up a group that purchased a nearly bankrupt Activision in 1991. Those early years were plagued by debtors and financial struggles, but Kotick had a plan.
“I remember in the early 90s we had this business plan that was a road to a billion,” Kotick said. “I don’t remember the exact inspiration of that as an objective but I think it had more to do with we want to be as big as EA but now, I think it’s the luxury of the success we have or the balance sheet we’ve achieved that I’m not really as concerned about revenues… I want to make sure every one of the games is a lasting franchise that is the very best game it could be.”
It’s just been in the past year or two that Kotick feels the company has the “luxury” of sitting on a game until it shines.
” For a long time we didn’t always have that luxury,” he said. “We had to be opportunistic to make payroll. That didn’t mean you would necessarily agree to compromise the quality of the game up front, but you’d get to a point where you just didn’t have any more money to invest.”
That’s not the case anymore, Kotick says.
“Now we’re in this great position where, you know, we don’t have to make anything but the best games,” he said. “It’s a great feeling to say, ‘That’s not ready for primetime, go back and make it great.'”
That doesn’t mean they always make the right decision, and Kotick knows that.
Activision’s rivalry with Electronic Arts isn’t just about Kotick’s personal goal of toppling the publisher from the top spot, it’s also driven by the experience Kotick said he had developing software for EA.
Before he bought into Activision, Kotick ran a company that developed business programs for EA, like Deluxe Write for the Amiga.
“Actually that totally shaped my thinking about how to be an effective publisher,” he said. “The EA model was to have lots of independent developers but oppress them.”
Kotick says the fact that he started out as a developer and later became a publisher gives him a unique perspective.
“I always said I don’t want to do what was done to me,” he said. “Where I’m beholden to the publisher. So part of the whole philosophy of Activision was whether you’re owned outright or not, if you’re a studio you have control of your destiny, you could make decisions about who to hire, flexibility on what products to make, how to make them, schedules appropriate to make them, budgets.
“You still have responsibilities two make great games and make a profit doing them. But it was the opposite philosophy of EA at the time. They very much wanted to commoditize the product development process. They’d buy a developer and it’d become EA this, EA Vancouver regional, and we like the idea that you’re an entrepreneur, you have an identity, keep your identity. That spirit is what helps to be successful in making great games.”
Kotick and Activision got into the habit of working with studios he thought were potentially worth purchasing, and if they did well, buying them out.
“I used to call it, we like to date before we get married,” he said.
The Hate Mail
Kotick isn’t a big fan of the artful interpretations of his Activision headshot that are making the rounds on Internet forums, gaming websites and photoshop contests.
There are quite a few: Kotick with horns poking out of a cloud of brown hair, a smiling Kotick with crimson eyes, Kotick with a goatee and devlish eyebrows.
But his three daughters love the pictures.
“How can I not be aware (of the things people say about me).. it certainly bothers me personally,” he said.
The negative image, the hate for Kotick among some gamers is driven by several things, Kotick tells me. Being the top person at the top third-party game developer brings with it a certain level of attention and animosity. And it doesn’t help that Kotick can be quite, colorful in the way he talks to analysts.
“There are four to five things that I’ve said that can totally be taken out of context,” he said. “Like ‘Taking the fun out of making video games.’ I’ve used that line for a really long time with the investment community to explain that ‘Hey, we’re mindful of our responsibility to provide a return to our investors.'”
“It was kind of like a joke!”
Kotick’s inflammatory comments, like that he would charge more for a game if he could, come often because he forgets the size of his audience when he’s talking during a panel or investor call. He doesn’t seem to grasp just how closely people follow him these days.
“The world has changed,” he tells me, defending his word choice. “I never really think to edit what I’m saying because it’s going to be taken out of context because somebody’s going to hear it in a different way.. But you don’t build a successful business by overcharging your customers. And you certainly don’t build a successful business that requires a tremendous amount of creativity and inspiration and innovation by figuring out how to take the fun and joy out of what people do. It’s like an obvious thing to me to think if you hear something like that, you’re going to think it’s funny, it’s not meant to be serious.”
I’m not totally sold on what Kotick is selling and I tell him so. You can’t use a word like exploit and expect people not to be riled up by it, I point out.
Do you, I ask Kotick, sometimes say these things because you want a reaction. Maybe you’re poking the Internet to see what happens.
“No, I’m not like that,” Kotick says. “I love to poke people to get a reaction but, monetization, exploit, those are the words the investment community uses.
“You know what, I look at that and say, exploit is a bad choice of words. I don’t mean that to be that way, I was not thinking about it in a way, or using it in a way that it was misconstrued. I actually think there’s a better choice of words that more accurately describes what I was thinking at the time. It’s not a big deal.”
The hate mail, the negative articles in blogs and the pictures quickly hit home when Kotick started seeing them.
“Oh yeah, I think (gamers’ perspective of me) is totally inaccurate,” he says.
But he didn’t try to do anything about it until he had dinner with a bunch of folks from Blizzard. He found himself talking to some of the developers about the processing speed of the Amiga and the person he was talking to was blown away that he was “technical.”
“I said, ‘I’ve been doing this for 25 years, yeah I’m technical. And he said, ‘No one knows that, I mean, people don’t know that you’re a developer. They don’t know that you are technical, they don’t know that you are deeply involved with that kind of making products. You know, the perception of you is that you’re just like this greedy business guy.'”
Kotick sometimes borrows trouble. Like when he told a gathering of developers that he doesn’t play games.
That’s not exactly true.
“I have three kids, I’m a single dad,” Kotick said. “If they want to play video games I would love to play with them but if they don’t I gotta do what they want to do. I also have an addictive personality.”
But much more importantly, both for Kotick and the many developers who work for him, he knows that if he plays a game, he might very well ruin it.
“I really like video games and that passion has never really gone away,” said Kotick, who rattles off an impressive list of consoles he’s owned in the past and games he loved. “If I go play Modern Warfare, I’ll find a hundred different things I’d like done differently. And I don’t have the discipline to not express my opinion.”
As the interview is winding down I point out to Kotick that he has achieved his goal, traveled down that road to a billion. So why not retire?
“I’m not really thinking about that,” he says, after I point out he could use the time to play more games. “I have a big objective for the next ten years. You know the thing that’s really exciting is that when you look at what’s happened to our medium, we’re finally now at a point where we have all the characteristics of mass market, mass media opportunities. And I think it’s three things for me that are really driving how you make video games as appealing as TV.”
The first is making video game characters real, something he feels still hasn’t happened.
“You can’t put dialogue in these characters in a way where it’s believable,” he says. If we can get the facial animation to be compelling, the dialog to be believable, I think you can satisfy that emotional connection between the audience and the character that gives you the characteristic attributes of film and television.”
The second is physical interface, like what Guitar Hero brought to gaming. Something that Kotick believes strongly has a lot more opportunities.
“Physically tying you as a player to what you see on the screen, I can tell you a hundred fantasies I’ve always had whether it’s like conducting an orchestra or unleashing as a rock star, really having a driving experience, like with a helicopter flying experience that is real,” he said. “So physical interface is really just scratching the surface of opportunity there.”
Finally, tapping into the ever increasing importance of social interaction, whether that means Facebook and Twitter, multiplayer gaming or including voice and video in a game.
“And so those things I think combined give you the ability to have a media that is much more broad appeal than video games are today and that’s really exciting,” he said. “I think it’s getting better but there’s a whole part of the population that still does not want to be challenged by the TV.
“I think that’s, there’s more opportunity over the next ten years to make interactive entertainment a true mainstream form of entertainment than I’ve seen in 20 years of doing this.”
We’re out of time. In fact we’ve been out of time for nearly an hour. Kotick has waved off the hints, ignored the reminders, blown of meetings. But his handlers are getting impatient.
Kotick wanders off, walking through the diner to disappear onto the streets of Beverly Hills.
I stay for my untouched slice of cheesecake.
This story originally ran on Kotaku on June 14, 2010.