Activision Blizzard
Activision Blizzard, Inc.[a] is an American video game holding company based in Santa Monica, California.[3] Activision Blizzard currently includes five business units:[4] Activision Publishing, Blizzard Entertainment, King,[5] Major League Gaming,[6] and Activision Blizzard Studios.[7][8]
Company type
Nasdaq: ATVI (2008–2023)
- Activision, Inc.
- Vivendi Games
July 9, 2008
- Call of Duty series
- Crash Bandicoot series
- Guitar Hero series
- Skylanders series
- Spyro the Dragon series
- Tony Hawk's series
- Diablo series
- Hearthstone
- Heroes of the Storm
- Overwatch series
- StarCraft series
- Warcraft series
- Candy Crush Saga
US$7.53 billion (2022)
US$1.67 billion (2022)
US$1.51 billion (2022)
US$27.4 billion (2022)
US$19.2 billion (2022)
17,000[1] (2023)
Vivendi (2008–2013)
Microsoft Gaming (2023–present)
Activision Blizzard Consumer Products Group
Activision Blizzard Esports
Activision Blizzard Media
Founded in July 2008 through the merger of Activision, Inc. (the publicly traded parent company of Activision Publishing) and Vivendi Games, the company owns and operates additional subsidiary studios, as part of Activision Publishing, including Treyarch, Infinity Ward, and High Moon Studios.[4] Among major intellectual properties produced by Activision Blizzard are Call of Duty, Crash Bandicoot, Guitar Hero, Tony Hawk's, Spyro, Skylanders, World of Warcraft, StarCraft, Diablo, Hearthstone, Heroes of the Storm, Overwatch, and Candy Crush Saga. Under Blizzard Entertainment, it invested in esports initiatives around several of its games, most notably Overwatch and Call of Duty. Activision Blizzard's titles have broken a number of release records.[9][10][11] As of March 2018, it was the largest game company in the Americas and Europe in terms of revenue and market capitalization.[12]
The company has also been involved in multiple notable controversies, including allegations of infringed patents and unpaid royalties.[13][14][15] In late July 2021, it was sued by the California Department of Fair Employment and Housing on allegations of sexual harassment and employee discrimination.[16] The suit triggered an investigation by the U.S. Securities and Exchange Commission,[17] multiple workplace walkouts,[18] the resignation or dismissal of several employees, the loss of multiple company event sponsors,[19][20] and hundreds of workplace harassment allegations.[21]
Microsoft announced its intent to acquire Activision Blizzard for $68.7 billion on January 18, 2022. The acquisition was completed on October 13, 2023.[22] Activision Blizzard is a subsidiary of Microsoft Gaming along with Xbox Game Studios and ZeniMax Media.[23]
History
Background and formation (2007–2008)
The original Activision company was founded in 1979, as a third-party developer for games on the Atari Video Computer System. In 1988 the company expanded into non-gaming software and renamed itself Mediagenic. This venture was not successful, incurring heavy losses. In 1991 a group of investors led by Bobby Kotick bought the company. Kotick instituted a large restructuring to reduce debt, including renaming the company back to Activision and moving it to Santa Monica, California. By 1997 the company was profitable again. Kotick spent the next decade expanding Activision's products through acquisitions of around 25 studios. This resulted in Activision publishing several successful series of games, including Tony Hawk's, Call of Duty, and Guitar Hero. However, by around 2006, the popularity of massively multiplayer online (MMO) games started to grow. Such games provide a constant revenue stream to their publishers, rather than only a single purchase, making them a more valuable proposition. None of Activision's subsidiaries had an MMO or the capability to make one quickly. Activision was also facing tougher competition from companies like Electronic Arts, as well as slowdowns in sales of their key game series.[24]
Around 2006, Kotick reached out to Jean-Bernard Lévy, the CEO of the French media conglomerate Vivendi. Vivendi at that time had the games division Vivendi Games, a holding company principally for Sierra Entertainment and Blizzard Entertainment. Kotick wanted to get access to Blizzard's World of Warcraft, a successful MMO, and suggested a means to acquire this to Lévy. Lévy instead offered that he would be willing to merge Vivendi Games with Activision, but only if Vivendi kept majority control of the merged company. According to those close to Kotick, Kotick was concerned about this offer as it would force him to cede control of Activision. However, after talking to Blizzard's CEO Mike Morhaime, Kotick recognized that Vivendi would be able to give them inroads into the growing video game market in China.[24]
Kotick proposed the merger to Activision's board, which agreed to it in December 2007. The new company was to be named Activision Blizzard and would retain its central headquarters in California. Bobby Kotick of Activision was announced as the new president and CEO, while René Penisson of Vivendi was appointed chairman.[25] The European Commission permitted the merger to take place in April 2008, approving that there weren't any EU antitrust issues in the merger deal.[26] On July 8, 2008, Activision announced that stockholders had agreed to merge, and the deal closed the next day for an estimated transaction amount of US$18.9 billion.[27]
Activision Blizzard is divided into three key business segments:[78][79]
There are also two non-reporting segments within Activision Blizzard. Activision Blizzard Studios oversees the production of film and television entertainment based on the company's properties. Activision Blizzard Distribution provides logistical support for Activision Blizzard's distribution within Europe.
Esports initiatives
Activision Blizzard owns the Call of Duty and StarCraft franchises, both of which have been popular as esports.[6][80] On October 21, 2015, Activision Blizzard announced the upcoming establishment of a new e-sports division.[7] Named Activision Blizzard Media Networks, the division is led by sports executive Steve Bornstein and Major League Gaming (MLG) co-founder Mike Sepso, with assets from the acquisition of the now defunct IGN Pro League. Bornstein was appointed the new division's chairman.[6][80] On December 31, 2015, it was reported that "substantially all" of Major League Gaming's assets would be acquired by Activision Blizzard.[6][80] The New York Times reported that the acquisition was intended to bolster Activision Blizzard's push into e-sports, as well as its plan to develop an e-sports cable channel.[81] Reports indicated that MLG would be shuttered and that the majority of the purchase price would go towards paying off the company's debt.[6][80] Activision Blizzard acquired MLG on January 4, 2016[81] for $46 million.[6][80]
In November 2016, Blizzard Entertainment, a subsidiary of Activision Blizzard, announced the launch of Overwatch League,[82] a professional video gaming league. The league's first season began during the second half of 2017 with 12 teams.[83] The league's structure is based on traditional sports structures, including recruiting traditional sports executives as team owners, such as Robert Kraft, owner of the New England Patriots, and Jeff Wilpon, COO of the New York Mets.[84]
The inaugural Overwatch Grand Finals was played at the Barclays Center in Brooklyn in July 2018 and attracted 10.8 million viewers worldwide.[85] The league hopes to have 18 teams competing during the second season in 2019, with the ultimate goal of 28 teams across the world.[86]
In 2018, Activision Blizzard signed a multi-year deal with The Walt Disney Company to stream Overwatch League games on both ESPN and Disney XD cable channels.[87][88] The company also secured an exclusive multi-year deal with Google to stream all subsequent Activision Blizzard esports events, including Call of Duty and Overwatch events, through YouTube, and to use Google's cloud services for its game hosting infrastructure; this came after a prior two-year deal with Twitch for the Overwatch League had concluded. The deal with YouTube was estimated to be valued at US$160 million, double what it had with Twitch.[89][90]
Other legal disputes
Worlds, Inc.
Worlds, Inc. was issued several United States patents around 2009 related to "System and method for enabling users to interact in a virtual space", which generally described a method of server/client communications for multiplayer video games, where players would communicate through avatars. In early 2009, Worlds, Inc. stated its intent to challenge publishers and developers of MMOs, naming Activision as one of its intended targets.[95] Worlds, Inc. had already challenged NCSoft for its MMOs in 2008. The companies ultimately settled out of court by 2010.[96]
Worlds, Inc. launched its formal lawsuit against Activision Blizzard, including both Blizzard Entertainment and Activision Publishing, in March 2012, stating that Call of Duty and World of Warcraft infringed on their patents.[14][13] Activision Publishing filed a separate patent infringement lawsuit in October 2013, asserting that Worlds, Inc. was using two Activision-owned patents in its Worlds Player software,[13][97][98] but this suit was dismissed with prejudice by June 2014.[99]
In Worlds, Inc. case against Activision, the judge issued a summary judgement in Activision's favor, as they had demonstrated that Worlds, Inc. had demonstrated the technologies of their patents in their client programs AlphaWorld and World Chat, released before the 1995 priority date, though this was related to filing irregularities that were subsequently corrected by the Patent Office.[100] Activision did not challenge the updated patents through an inter partes review (IPR), and subsequently after a statutory one-year waiting period, Worlds, Inc. filed a subsequently lawsuit against Activision, asserting Call of Duty: Ghosts violated their resolved patents.[101] Later, Worlds, Inc. stated the intent to add Bungie to the lawsuit contending that Destiny also fell afoul of their patents. Bungie subsequently filed three IPRs with the Patent Office for each of the three Worlds, Inc. patents at the core of the lawsuit. While Bungie initially won its IPR ruling at the USPTO, on appeal in September 2018, Worlds, Inc. won a ruling questioning whether Bungie had legal standing to file its IPRs.[102][103]
The new Worlds, Inc. case against Activision Blizzard was heard on October 3, 2014. With Bungie's IPRs pending at the Patent Office, the judge put the trial on hold pending the outcome of the IPRs. Worlds, Inc. challenged the IPRs at the Patent Office, as they did not include Activision as an interested party, a requirement that would have been necessary given the publisher/developer relationship between Activision and Bungie. The Patent Office did not accept this argument, and subsequently agreed with the Bungie IPRs that portions of Worlds, Inc. patents were invalid. Worlds, Inc. appealed to the Federal Circuit Appeals Court, challenging the validity of the IPRs due to the lack of Activision's involvement. The Federal Circuit court ruled in favor of Worlds, Inc. in September 2018, invalidating the Patent Office's decision.[104] Worlds, Inc.'s case presently remains at the Patent Office stage, which is re-reviewing the IPRs in consideration of the Federal Circuit's ruling.[105] The lawsuit was dismissed in 2021, when a US district court ruled that "Worlds' patents were abstract ideas that were not sufficiently transformative to be legally patentable."[106]
Infinity Ward
In early 2010, Activision fired Vince Zampella and Jason West, two of the founders of its studio Infinity Ward, on the basis of "breaches of contract and insubordination"; the move caused several other Infinity Ward staff to resign. Zampella and West created a new studio, Respawn Entertainment, with help from Electronic Arts' partner program, hiring the majority of those that departed Infinity Ward in their wake.[107][108][109]
Zampella and West filed a lawsuit in April 2010 against Activision, claiming unpaid royalties on the studio's Call of Duty: Modern Warfare 2. Activision filed a countersuit against the two, accusing the pair of being "self-serving schemers".[15] Activision later sought to add Electronic Arts to their suit, discovering that Zampella and West had been in discussions with them while still working for Activision, and further added claims against Zampella and West that the two had not returned all material related to Call of Duty while they were working at Respawn. A separate lawsuit was filed against Activision in April 2010 by several current and former members of Infinity Ward on the same basis of lack of unpaid royalties.[110]
All parties came to an undisclosed settlement to end all suits by May 2012. Electronic Arts and Activision had settled separately on Activision's charges of poaching employees, while the suits between Activision, Zampella, West, and the Infinity Ward employee group were settled by the end of May 2012. All settlements were made for undisclosed amounts.[111]