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Activision Blizzard CEO Bobby Kotick: Mobile Is The Future Of Gaming

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CNBC Transcript: CNBC’s Becky Quick Interviews Activision Blizzard CEO Bobby Kotick From The CNBC Evolve Conference In Los Angeles Today

WHEN: Today, Tuesday, November 19th

Following is the unofficial transcript of an on-stage CNBC interview with Activision Blizzard CEO Bobby Kotick live from the CNBC Evolve conference in Los Angeles on Tuesday, November 19th.


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Bobby Kotick on the gaming industry

TYLER MATHISEN:  Okay.  Ladies and gentlemen, we're going to now move to a session with a company that is evolving itself; and if it didn't, it could have been left in the dust, really.  It's Actvision Blizzard, one of the leading gaming companies, World of Warcraft, Guitar Hero, Candy Crush, among the titles that the gentleman you're going to meet next has led to fame.  Now, he's reorienting the company into the very exciting world of live gaming, basically, competitive gaming, filling arenas around the country, around the world.

It's an industry that in some may be worth some $200 billion in revenue within the next couple of years.  So how does Bobby Kotick stay ahead of the game, literally?  Let's find out as we welcome Becky Quick and Bobby Kotick of Activision Blizzard. Thank you for coming.  Guys.

BECKY QUICK:  Thanks.  All right.  Good to see everybody again.  Bobby, thank you for joining us.

BOBBY KOTICK:  Thank you.  Thank you for having me.

BECKY QUICK:  Okay.  If you guys don't know Bobby, you may not realize his story.  He bought Activision back in 1990, and has been CEO since 1991.  If you count that out, that's 28 years as the CEO of a technology and video game company.  And in my view, being a CEO in technology and video games, that's kind of like dog years because things are changing so quickly.  So, by my math, you've been the CEO for 196 dog years.

BOBBY KOTICK:  And I've been eating Alpo for like 50 of them.

BECKY QUICK:  What have you done to evolve over the last two centuries in dog years?

BOBBY KOTICK:  So, there was a moment in time where we had a very large shareholder that was a French company.  It was Vivendi.  It was my first board meeting there, and they asked the same question:  What is it that you've done to be able to sustain and grow the business for this long period of time that other video game companies have been unable to do? And the chairman of the company was a terrifically charismatic guy, and he said: You know, Bobby, you can please for me to tell those board member how you make the success over this long time. So I said:  Well, you know, it's not that complicated.

We are ruthless prioritizers of opportunity; we don't get distracted; and we know what our business is; we find the best talent, and we make sure that we keep our talent focused and not distracted; and we really do a great job of prioritization.  You know, that's sort of the secret to our success.  And I couldn't say more than that.  I left the room, and I overheard him saying, This Bobby Kotick, he's going to fu** us, he's going to fu** us, he's going to fu** us. I go:  This is my first board meeting, and this is horrible.

This is my new partner.  So I took him aside, and I said:  Jean-Rene', I heard you, and it's really disappointing that this is how you think of me at our first board meeting.  And he said, But, Bobby, I don't know what you're saying.  And I said: Well, I heard you say, "This Bobby Kotick, he's going to fu** us, he's going to fu** us."  And he started laughing.  He said, No, Bobby.  What I was telling them is we admire your focus, admire your focus.

BOBBY KOTICK:  So that's probably the best answer to how we've been successful over those 28 years is the maniacal focus.

BECKY QUICK:  We will say that very carefully and very slowly, "maniacal focus."  All right.  So, Bobby bought Activision back in 1990, he and just a few other shareholders who bought into this, for $440,000.  The company now has a market capitalization of over $40 billion.  So, 440,000 to $400 billion.  Was that part of your plan when you started?

BOBBY KOTICK:  Definitely not.  You know, I don't think I really spent a lot of time thinking about anything other than how we were going to make great games and figure out how to get the biggest audiences to actually play them.  And we're always mindful of our responsibilities to our stakeholders, our gamers, our shareholders.  But, you know, I don't think I really spent a lot of time thinking about it.  And I think today, when you realize the scale and the opportunity that we have, we -- I look at our business, and I just see -- you know, today we have roughly 350 million customers in 190 countries, there is not a good reason why that number shouldn't be a billion in the next five years.


BOBBY KOTICK:  So, it starts with more frequent release of content, taking franchises that we have and growing them onto new platforms.  And this is probably the single biggest change in the business in almost 30 years that I can recall, which is that up until very recently, five years ago, to play video games, you had to spend $300 for a PlayStation or an Xbox or $1,000 for a personal computer. When games became available on phones, the market exploded, and the audience size went from a few hundred million to billions of potential consumers.  And so we have these great franchises that have evolved over long periods of time.

Many of those franchises, though, are not on phones yet.  So, we launched our game Call of Duty for the first time on a mobile phone in October.  In a month, we signed up 100 million consumers.  In a month.  And so you realize that as these franchises go from consoles to PCs to phones, the growth in the audience is going to be staggering.

BECKY QUICK:  How do you play Call of Duty on a phone?  I'm just trying to think of --

BOBBY KOTICK:  It's really fun to play.  You know, it's your typical good guys and bad guys, and you're running around playing good guys and bad guys; and it's really fun.

BECKY QUICK:  Where is your growth potential both in terms of who's playing and where they're playing in terms of geography?

BOBBY KOTICK:  Surprising statistic, but 50 percent of our customers are female.

BECKY QUICK:  As of when?

BOBBY KOTICK:  As of about three years ago.  And it's driven by mobile and games like Candy Crush.

BECKY QUICK:  I hear some laughing out here.  Yeah.

BOBBY KOTICK:  So if you think about, though, where the growth is going to come from, it's every region, every geography, getting those games onto mobile, making sure that the communities -- the social connections that are happening between players are extraordinary.  And those social connections are deepening engagement.  And it's unlike any other form of entertainment or even a sport because if you look at sport, most spectator sports, you may have at one time played them --

BECKY QUICK:  Basketball, football?

BOBBY KOTICK:  Basketball, football and baseball are great examples.  Or even soccer.  But they're not sports you're going to play for the rest of your life. Video games, you see multigenerational experience now where kids are playing with their parents.  And I think the audience size and the audience potential is enormous.  And what's happened in Esports is the same sense of purpose and belonging and meaning that you get from sport, you get in video games.

But it's funny, I was doing a panel like this, and I was having a hard time explaining to the audience what Esports was, and I was sitting next to Alex Rodriguez, who was on the panel, who actually owns an Overwatch team in San Francisco, one of our teams, and I was thinking, I need a visual to explain what Esports actually is.  I said:  Alex, can you stand up? For those of you who know what Alex looks like, he's a great human specimen.


BOBBY KOTICK:  So he stood up, and I said:  In professional baseball, there are 1200 of him.  And, truly, there are probably ten in history who played like he played, looked like he looks, are smart, articulate and capable, a 10.  And then I said:  Look at me.  There are a billion of me.  But I want that.  I want the sense of belonging and purpose and meaning.  And I want to be part of a team.  I want to feel like I can actually have a sense of accomplishment, and I want to be celebrated for that accomplishment. So, there are way more people, many more people, who can actually get that same joy, that same satisfaction, from what we do than what you can see in traditional sport.

BECKY QUICK:  It hadn't struck me until you just said something, that generations are playing with each other.  In my family, it's pinocle, that I play with my parents, my grandparents, my siblings, cousins.  This is the new pinocle, right?

BOBBY KOTICK:  Well, I think it's different.  You're looking at a screen -- unless you're playing something like Guitar Hero, which is more of a party or social game.  But you are looking at a screen, so it's very focused in a lot of instances, but the social experience is getting much more significant.

There's much more engagement, you can have voice over IP, you can have video over IP, so you can see and talk to the people today you're playing.  And I think you'll see one of the evolutions of gaming will be more games that can be played together.  Guitar Hero is one of those unusual phenomena that really encourage people to play together in front of a television.

BECKY QUICK:  When you think about your content growth, because you've got to constantly feed the beast, come up with new content, do you think of it as being extensions of these franchises that you have had out there for a very long time?  Do you think of it as being new games that you're creating?  Do you think of it as being acquisitions that you're making outside, like a Candy Crush or something?  Where do you think the main pipeline is going to be?

BOBBY KOTICK:  It's all of those things.  We've had a pretty disciplined history of company acquisitions.  But we think that you can't even consider a game a franchise unless it's durable in perpetuity.  So, we think of our game franchises much more like baseball, football and basketball, but the only difference is, the rules can change slightly year on year, and some of the dynamics of the game can change slightly.  That's the entertainment component to it.  But essentially it's the game construct.

So unleash your inner rock star, or unleash your inner soldier, or unleash your inner wizard.  So those are constructs that will last forever, and I think that they are very enduring ideals. And then we have to create new content that keeps people engaged.  So we perpetuate our franchises, then we selectively introduce new ones.  And then if there are categories of business that we don't think we have the skills to be able to create a game around, we may do an acquisition.  But those are rare.

BECKY QUICK:  I heard you say a few years ago -- actually, it's more like ten years ago.  You said it had only been a few years that you had been able to pick and choose when you put a game out.  If a game's not ready, it's not going out.  But you hadn't had that luxury for very many years at that point because to that point you were really trying to make sure you were meeting payrolls, you had other things that were out there.  It seems to me like the demand for content, the call for it, from Wall Street and from your audiences, has stepped up.  Do you still feel like you have the luxury of saying we will sell no game before its time?

BOBBY KOTICK:  It's not even a luxury; it's an absolute discipline.  My view is, if you're an audience member, one of our players, and you've made the commitment that you make an hour or two hours per person per day, in some instances, our responsibility is to only deliver you great content.  It's an iterative medium where we can test that.  So there isn't any good excuse for not delivering great content.  I've been doing this for 28 years, I will be doing it for many, many more years.  So my view is, you know, we're not going to -- to make a quarter or to make a year, we're not going to compromise the quality of the experience or the responsibility to the player.

BECKY QUICK:  There had been a point where you were kind of demonized on the internet by gamers.  They looked at you as the business guy, and in their terms, that's kind of a curse word, an epithet.  They looked at you as somebody who was focused on that.  But you're somebody who's actually had some time in the development.  You're somebody who knows the technical side of these things. Do you think of yourself as a developer or as an entrepreneur?

BOBBY KOTICK:  I don't think they're mutually exclusive.  I think of myself as a creative person who has entrepreneurial DNA. And, I think money making is easy.  I think the principles that you have to establish for creativity and the environment that you need to create for inspiration, that's what differentiates us as a business.  And it was a very unfortunate thing, it was a long time ago, but what happened was I was at a conference and somebody asked me why I hired all these executives from Proctor and Gamble.  Just jokingly I said:  To take the fun out of making video games.  Of course I didn't mean it.

I was laughing, and everyone laughed at the joke.  Not that many people did hear, but, you know, the vocal minority of people took it out of context, and that's what caused the demonization.  But within the company, I think -- you know, this company couldn't be successful without that rigid adherence to creating a culture that fosters inspiration and creativity.  And that's the essence of the business.

BECKY QUICK:  You have had business leaders who have helped you along the way and have really been role models who have helped you in a great way.  Steve Wynn comes to mind.  How did you meet him?  What happened?

BOBBY KOTICK:  Steve and I met when I was 19.  I didn't know who he was, I had never been to Las Vegas or Atlantic City.  I was sitting next to him at a charity fund-raiser that a friend of mine had invited me to.  And I was pretty out of place, a kid from Roslyn/Long Island, at the Southfork Ranch in Dallas at the American Cancer Society's Cattle Baron Ball.  And I found the whole thing amazingly amusing, but I was sitting next to this very charismatic guy.  He asked me what I did, I told him this story.  I was a student, a sophomore in college, and I started a software company that made computers easier to use.

The next morning, I saw him at breakfast, and he asked me a little bit more about the business, and then out of the blue said:  So, are you going back to Ann Arbor?  Where I was in school.  I said:  No, I'm going to New York.  He said:  Why don't you come with me?  I said:  How does that work?  He said:

Well, you come on my plane.  I had never been on a private plane before.  I said it's got to be better than American Airlines.  Of course I'm focused on can I get a refund for my ticket. So I said:  Okay.  And I get on this plane and we start talking and he tells me this story of how he got started.  I don't know if, you know, this is a widely-known story, but a mentor, who was Howard Hughes's banker took a liking to him, loaned him money and gave him the capital to buy Golden Nugget.

This was when he was in his 20s.  But that mentor, this guy named Perry Thomas, said that Steve had to repay him by investing in another young entrepreneur.  So he was telling me this story.  I tell him about my business.  He said:  I would like to invest.  I said:  I have investors.  In fact, that's why I'm going to New York.  My father introduced me to these professional venture capitalists, and they are investing in my business, and so I'm very grateful, but thank you, I'm set. And I couldn't stop thinking about him the next day.

He was a very compelling guy, and -- with an unusual balance of creativity, inspiration and commercial instincts. And I had a friend whose father was a famous singer.  I saw her the next day, and I asked the father about Steve Wynn, and he said:  If you can be in business with that guy, you should. And so I went to my father's office the next morning with these professional venture capitalists, and I blew the deal with my father's friends, and my father, of course, thought I was an idiot, and probably in that moment I was.  But I called Steve and I said:  I really -- I blew the deal with these investors.

I would love for you to invest.  He said:  Where are you?  I told him, and he said:  A car will be there in 15 minutes.So, I go downstairs, and this limo pulls up and these gorillas get out of the car, two of them, and said:  Get in. And I thought:  What is this?  My business partner, who was French, my college roommate, we get into this car, and they drive us to the 61st Street heliport in Manhattan.  There is a Golden Nugget helicopter waiting.  The gorillas say:  Get in.  I thought, I've never been in a helicopter.  It goes with my new private plane experience.  I'm starting to like this.  My business partner says:

What are we doing?  I said:  We're going to meet this investor.  We go to Atlantic City, we get driven to the basement of a parking garage at the casino, we go in and wait three hours.  He comes out with his fancy suit, with his pinky ring and perfect hair.  He said:  Okay, fellas, what do we do?  I said:  Well, we make software that makes computers easy to use.  He said:  How much is it going to be for a prototype?  I said:  $300,000.  He writes a check out for $300,000.  He says:  All right.  We're partners; a third, a third, a third.  You guys do the work, I'll raise the money.

Who's hungry? I said:  Mr. Wynn, we have the contracts prepared for the investors, so we can have them sent over.  He said:  Contracts-shmontracts.  You're my family now.  And he walks out.  I look at my college roommate and I said:  All right.  We're in the basement of a parking garage in a casino, and this guy with a pinky ring just gave us $300,000 and said we're his family now. We're going to die. And, you know, he was there every step of the way.  And I've been very fortunate, you know, to have great mentors.

Warren Buffett has been a great mentor for a long time, and -- you know, so I've been very, very lucky.  And I think it's one of the things that has helped me most in building the business is having the access to extraordinary people and great business people who can give you great advice about how to grow and build your business.

BECKY QUICK:  I think one of the conditions that Steve Wynn gave when he signed up with you was that you should pay it forward at some point, too.  I've never asked you this.  Have you taken somebody under your wing, somebody who became your person that you push forward?

BOBBY KOTICK:  Two people, and they both work for me.  One is the president of our company, who started out as an assistant to me, and then chief of staff, and been with the company for over a decade.  And the second one, who is now running our ads business, which is a complex business to run.  And he was a guy I met, he was young and brilliant and inspired.  So two people at the company and then a few people outside of the company.

BECKY QUICK:  You know, Bobby, what has been your experience as expectations for CEOs and for leadership, I think, have -- they have really ratcheted up, I think in part because politicians aren't doing as much.  I think people are turning to business leaders and expecting them to lead on a variety of subjects, and that can take you anywhere from Hong Kong and democracy to gaming additions and beyond.  How do you grow into that role?  What do you do?

BOBBY KOTICK:  Well, you start with, our mission as a company is "Bringing the World Together Through Epic Entertainment."  You know, that's a big mission.  It has some similarities to, let's say, a Facebook.  But, you know, we're not the operator of the world's town halls.  We're the operator of the communities that allow you to have fun through the lens of a video game. And you know, I -- my responsibility is to make sure that our communities feel safe, secure, comfortable and satisfied and entertained.

And so I don't -- I don't -- that doesn't convey to me the right to have a platform for a lot of political views, I don't think.  I think my responsibility is to satisfy our audiences and our stakeholders, our employees, our shareholders.

But I think there are some business people who are incredible examples of character and integrity and principle and have what you see are the great attributes of leadership, and I think that they are incredibly inspiring for me.  But I think, you know, they do have the right to articulate views and visions and voices about government and policy and politics, and I love engaging with those people.

BECKY QUICK:  In an interview about ten years ago, you said -- it was nine and a half years ago, just under that -- you said that your hopes for games, for video games, would be that they would be as appealing as television.  You thought that we would get there in ten years.  It's almost ten years later.  Are we there yet?

BOBBY KOTICK:  Oh, yeah.  We're there.  You know, I would say that if you think about the difference between active engagement in entertainment and passive engagement in entertainment, in traditional movies and television, a story unfolds, you suspend your disbelief, you create an emotional connection with a character on a screen.  It is a very hard thing to do, but it doesn't require you to do anything other than believe what you see on the screen. Our engagement is something entirely different.

It requires you to be actively invested in something that is going to actually move your mind.  And you are thinking constantly and being challenged and, you know, there's a competitive component to it, so there's a different type of reward and satisfaction than what you get from story-based entertainment. But when you think about the number of people that are playing, the hours of engagement, I think we're at a place now where it is as much a form of mainstream entertainment as film and television.

BECKY QUICK:  What comes next?

BOBBY KOTICK:  Well, I think for us, pushing the envelope on innovation, creating new ways that fulfill our mission of bringing people together through epic entertainment.  And there's so much that is happening now in technological change.  You know, VR is in the very, very earliest stages of having impact.

Today it's a very small audience, cumbersome headsets, confusing business models.  You know, whenever you have a delivery experience where 20 percent of the people that try it get nauseous, you're not really ready for vast markets yet.  But we're getting there.  I think VR is one; AR is another.  The social changes that have taken place in gaming where -- you know, I can compete and communicate with someone in any country in the world any time of the day, and you start to see like the tolerance and the understanding that comes from being able to have these connections.

We had an event in Anaheim, California for 35,000 players, and I think there were 150 weddings of people who met online.  And so, you know, I still think we're just scratching the surface of how you bring people together.  We have 350 million customers today, but I see that number growing to a billion in the not-too-distant future.

BECKY QUICK:  Bobby, it has been a pleasure.  Thank you, everybody.

BOBBY KOTICK:  Becky, thank you so much.

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