GB: Your talk was also interesting in that, traditionally, I have come to see the two sides of the game business as consisting of business people and creative people. And the creative people are the developers making the game, and they tend to have an attitude about all business people. They would lump the marketing people in with the business people. But I guess from your talk, it seems like you’re identifying with creative marketing people.
EH: Well, there’s a difference between marketing people in a corporation and people who actually write and create ads. That is pure creativity, and they’re on the hook for developing and producing the creative product that is the company’s lifeblood in a very similar way to game developers. So I think that my background is not just a marketing background, but a truly creative person’s background, and that’s been my experience my whole career. And so I bring that point of view to my new role. I don’t pretend to be a game designer. I’m not, but I certainly think I have more empathy for creative people. I have a different perspective on the games and on the creative process than someone who has a different background. And someone who has a different background would have other strengths that I don’t have. But the point of the talk was just that, in creative businesses, it might be good to consider a creative person’s point of view in leadership roles.
GB: It is also interesting. This is maybe one of these areas where Apple was really good too. Not just the creators of the products were really good, but also the people who thought about, “How do you get these products in front of people?”
EH: Yeah. I don’t know if you read the Walter Isaacson biography on Steve Jobs, but I thought it was really a fascinating dynamic described between Steve Wozniak and Jobs, where Wozniak was this engineer, knew how to build things, and Jobs was this guy who knew how to make them culturally impactful. He had that kind of nuclear imagination when he looked at the potential of a product to change behavior. It’s something I certainly admire.
GB: How did this perspective make a difference with how you looked at Skylanders?
EH: Everyone at the company realized that the idea of bringing a toy to life, and the elegance with which Toys for Bob figured out how to do it. They made it instantaneous, very satisfying, swappable from character to character in a very seamless way. That was a huge idea, and that was new and differentiating and transcended any other analysis of the product or the category. I don’t think there would be any way to have predicted that a new intellectual property in the kids sector could have that kind of performance, but it was the X factor of that magical idea. And so that was differentiating, and that gave the company the boldness it took to make all those extra investments that I talked about, and to make it a much bigger and much riskier proposition. Because everyone believed that, if we got it right, it could become a really meaningful franchise for us.
GB: Skylanders sold than 20 million toys, right?
EH: Yeah. More than 20 million toys total. What they noted was if you took the toys into account, it would be the tenth-biggest game of 2011.
GB: But you didn’t talk about unit numbers. Any particular reason for not just saying what the units are?
Activision PR: We don’t ever really talk about units on any of our calls. Just dollars typically. So I don’t think it was a specific omission. But I mean, the data’s out there if you want to find it.
EH: Yeah. It was the biggest game in a single year, ever.
GB: So these hit, I guess, then, the high end of what you expected? Both Call of Duty and Skylanders?
EH: They both exceeded our projections. So obviously we’re pleased with that.
GB: For 2012, what is your encore? You’ve got Skylanders: Giants coming?
EH: Earlier this week we went to Toy Fair, we went to New York before Toy Fair and revealed the next chapter in Skylanders, which is Skylanders: Giants. The game is looking just incredible. The simple shift of super-sizing the characters leads to all these new gameplay mechanics and powers and strategies within the game. The way Toys for Bob is designing it is so cool, because you would think, oh, these are just invincible Skylanders, but they’re not, they can’t do things that the little guys can do, and they can do things that the little guys can’t do, so it adds a whole new layer to the strategy of what character you choose at what time within the game. The character design is looking incredible, the game itself is looking really fun. As you heard on the earnings call yesterday, the toys seem to evaporate the day they arrive on store shelves. It’s a great thing. We’ve got a hit on our hands in both the video game space and the toy space, with one property. We really want to keep bringing new, cool ideas to kids.
GB: The XP event sounds like it really paid off.
EH: It was definitely a big gamble and we definitely got a good return on our investment. We went all in. It was not a small vision or undertaking. But as you saw, we got some pretty incredible return on investment in terms of media impressions and PR impressions and social media engagement.
GB: So is it a given, then, you’d do Call of Duty XP every year, or every time a Call of Duty game launches?
EH: Haven’t announced that yet. [laughter] Sorry. I hate that answer as much as you do.
GB: It is interesting to me, the whole change in thinking that has happened around these big titles. It seems to go hand in hand with all the other stuff that’s happening in the game industry. You can’t just do things the old way.
EH: I think that there’s a lot of hand-wringing in the industry about fewer and fewer titles being able to deliver that high-level performance. But I look at it through a different lens. Those fewer titles are generating more engagement and more willingness to buy additional content and more willingness to stick with a game than ever before. Games have always been a less disposable medium than other forms of entertainment, and they’ve become exponentially less disposable, because people are showing this desire to go deeper and deeper into the worlds that they love. There’s no other medium that can deliver that hundreds and hundreds of hours of engagement. And so I think that’s a big opportunity. It’s a shift in mindset, because it leads you to invest more and create more innovation within the pillars of the franchise, as opposed to creating more of a grazing experience for people, with lots of different titles. But I don’t think that means that there can’t be just as much, if not more innovation within particular games.
GB: I cover chips as well, and these analog chip-makers talk about getting designed into something. And then once they get designed into something it’s like one- or two-dollar chips for each product. You can design into something for like 15 years because nobody wants to redesign something so trivial. They just make a decision, they get it from a vendor, and the vendor makes that product for 15 years. So this kinda makes me think that you can try and get your games designed into a user’s mind. This user is always going to play this game.
EH: I do think that games have much more in common with sports teams we love and follow, or hobbies that we love and follow, than it does with other forms of entertainment. There’s at least the possibility that games can become a much more constant part of your life.
GB: Once you get them, you’ve got them for life. But it’s yours to lose.
EH: You have to continually keep delivering engagement and new things for them to do, or you will lose them.