The Show Goes On

Activision's dramatic slashing of non-performing IP makes some business sense - but the long-term impact looks grim.

Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

When an event is described as sending "shockwaves" through the industry, it's commonly a piece of hyperbole - but it's truly no exaggeration to suggest that Activision's extraordinarily aggressive pruning of its product line-up has done precisely that this week. The discontinuation of the Guitar Hero and True Crime franchises is a remarkable step, while the UK development market - still reeling from Activision's decision to close Bizarre Creations last month - would feel the downsizing of DJ Hero developer FreeStyleGames particularly acutely.

All of this is taking place against a backdrop of what looks like a wholescale retreat from risk on Activision's part. The company and its outspoken CEO, Robert Kotick, have made many bombastic pronouncements in the past about only being interested in the biggest-selling, most profitable games. This substantial retrenchment of the entire business is a dramatic placing of Activision's money where its mouth used to be.

Once the dust settles, then, what's left? Well, there's Call of Duty - and there's Blizzard. Somewhere down the line, there's the eventual fruits of a publishing deal with Bungie to look forward to... And that's about it. That's now the entire headline line-up of the world's biggest third party publisher.

It's not hard to see what Activision is trying to accomplish in the short term. The company's executives are focused firmly on one goal - earnings per share, the all-important profit margin which, if boosted sufficiently, should send the firm's shares skyrocketing. Putting aside concerns or questions about creativity or artistry - because such things are irrelevant to executives whose primary responsibility is to shareholders - the company's decision making process is actually quite defensible. Up to a point.

That point is reached when you start thinking about the long-term forecast for a company which has, in the past few years, killed more headline franchises than it has created. Tony Hawk and Guitar Hero have been milked dry and unceremoniously cast to one side. That's not wicked, or evil - let's not fall into the trap of anthropomorphising game franchises, here - but unless you have something to replace them with, it's a somewhat short-sighted business strategy.

Yet Activision lacks a replacement for either of those franchises - not least because that replacement should probably have come from the ranks of games like True Crime, an undeniably flawed product which arguably held the seeds of a decent franchise, if given sufficient time and care. That's a debatable point, of course - what's not really debatable is that Activision has demonstrated that it has no appetite for the tough slog of franchise-building. It wants instant gratification from its IP, a hit with the first game followed by a tight development schedule allowing for annual updates until the cash-cow is exhausted.

From a profitability point of view, that's perfectly reasonable. There's a school of thought in business management which says that if something isn't working out, you cut it off entirely before inertia or sentiment allows good money to get thrown after bad. It's a school of thought that probably works very well in certain markets. In a business that's all about creativity, image and consumer sentiment, it may be a flawed strategy.

Comments (50)

Comments for this article are now closed, but please feel free to continue chatting on the forum!