Activision Blizzard chief executive Bobby Kotick used his company’s first-quarter conference call to justify to investors why his company fired the two leaders of the company’s most lucrative game series, Modern Warfare.
Bobby Kotick said in a call that the company had no regrets about firing Jason West and Vince Zampella, the cofounders of the company’s Infinity Ward game development studio. The studio made Modern Warfare 2, which has generated $1.5 billion in sales since November, making it the best-selling video game of all time.
Since the firing, about 35 staffers have quit to join West and Zampella at their new studio, Respawn Entertainment, which is reportedly funded by rival Electronic Arts.
“There was no gray area,” Kotick said, regarding the reasons for termination. “We did not make this decision lightly. There was nothing that would have allowed us to retain them.”
He said the reasons were outlined in the company’s cross complaint, or response to a lawsuit filed by West and Zampella. In that report, they alleged that the firing was related to Activision Blizzard’s unwillingness to pay them $36 million in bonuses. Kotick said today that the firing was not related to the bonuses. (The company has alleged the two men were secretly planning to leave and set up a rival studio.)
“We are honestly disappointed about this,” Kotick said.
Kotick made the remarks against the backdrop of an outstanding financial report. The company had better than expected revenues for the first quarter and raised its estimates for revenues in the coming year. The quarterly revenues were better because of strong sales of the Call of Duty: Modern Warfare 2 map pack and growth in the World of Warcraft online game’s base subscribers. Full told, gamers have played more than 1.7 billion hours of multiplayer Modern Warfare 2 on Xbox Live alone since the game launch in November. Call of Duty remained a bestseller in the first quarter. The first map pack sold 1 million units on its first day for $14.99 each; a second one is coming later this year. So far, Activision Blizzard has sold 17 million map packs.
Overall, the company reiterated that it expects economic uncertainty to mute growth for the overall game industry in 2010. Kotick said the company would continue to invest heavily in Call of Duty and in the Infinity Ward studio. On top of that, the company’s Treyarch studio is working on Call of Duty Black Ops for the fall and another new studio is working on a new Call of Duty game for 2011.
In the first quarter, profit was $381 million, or 30 cents a share, or double the $189 million, or 14 cents a share a year earlier. Revenue was $1.31 billion, up 33 percent. It was down 1.4 percent when excluding deferred revenue. For the current second quarter, the company expects earnings of 4 cents and sales excluding deferred revenue impacts of $700 million. Analysts had expected 9 cents and $767.7 million.
The company raised its 2010 earnings guidance to 72 cents a share from 70 cents. Analysts were looking for 73 cents, according to Thomson Reuters. Four games are being released in the second quarter: racing game Blur; Shrek Forever After, based on a new DreamWorks Animation film; an original Transformers game, Transformers: War For Cybertron; and the time-travel shooting game Singularity.
For the future, Activision Blizzard’s big bet is on Bungie, the maker of the Halo games. After Bungie finishes its Halo:Reach game this fall, it will work on a new game universe that will have games published over a 10-year span. Activision Blizzard will be the publisher of those games. About 200 Bungie people are already working on the new game universe, which will yield multiple games.
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