With the demise of the Guitar Hero franchise – and its associated developers – a small retrospective of Activision's business is in order. As M2 Research's Billy Pidgeon observed, Activision has "pretty much driven the [Guitar Hero] franchise into the ground with title after title after title." WoW seems fine for the long term, but what about Beenox, High Moon, Raven, Sledgehammer, Toys for Bob, and Treyarch? (Of the six, I bet you've never heard of three.)
Sledgehammer and Raven are deep into CoD 8, Treyarch is probably already working on CoD 9, and Activision has just announced the formation of Beachhead Studios "to create an online community and suite of services for fans." That sounds a lot like a digital distribution platform (which may portend subscription fees and/or micro-transactions).
Have a look at the list below of developers that Activision has bought and shuttered over the years. Then, take a moment to think about what market oversaturation and short development cycles did for some of these franchises, and the people that made them.
- 7 Studios (Guitar Hero) – acquired in 2009 – closed in 2010
- Bizzare Creations (Blur) – acquired in 2007 – closed in 2011
- Budcat Creations (Guitar Hero, Band Hero) – acquired in 2008 – closed in 2010
- FreeStyleGames (DJ Hero) – acquired in 2008 – future uncertain
- Gray Matter (Call of Duty, Tony Hawk, Return to Castle Wolfenstein) – acquired in 2002 – merged into Treyarch in 2005
- Infinity Ward (Call of Duty) – acquired in 2003 – imploded in 2010
- Infocom (Zork) – acquired in 1986 – closed in 1989
- Luxoflux (True Crime, Transformers) – acquired in 2002 – closed in 2011
- Neversoft (Guitar Hero, Tony Hawk) – acquired in 1999 – closed in 2011
- Radical Entertainment (Prototype) – acquired in 2005 – staff reduced by 50% in 2011
- RedOctane (Guitar Hero) – acquired in 2006 – closed in 2010
- Shaba Games (Tony Hawk, Spiderman) – acquired in 2002 – closed in 2009
- Sierra (Timeshift, World in Conflict, the publisher of Half-Life) – acquired in 2007 – closed in 2008
- Underground Development (Guitar Hero, Call of Duty) – acquired in 2002 – closed in 2010
- Vicarious Visions (Guitar Hero, Tony Hawk) – acquired in 2005 – staff reduced by 25% in 2011
Ah but their stock continues to pay a 1.48 % dividend yield, and has held steady despite the recession. They know how to do business.
ReplyDeleteThere's no question Activision knows how to make money. In fact, I'd argue that they were smart to do what they did with Guitar Hero. Music games were a fad, and Activision knew it, so they milked the fad for all it was worth while it lasted.
ReplyDeleteThe problem is this: Activision's focus on "exploiting the core" maximizes short term profits but makes them very risk-averse. They acquire small developers to acquire those developers' competencies, then burn out the market those competencies serviced. Once the market is gone (i.e., the fad is over), the competencies are depreciated, and the developers lose their jobs.
Long-term profitability in this model requires the market to sustain itself. That's fine for franchises like WoW and Call of Duty, but it sucks for niche market games. Activision doesn't allow them to mature into "mainstream" IP's: it exploits their novelty until they're dead.
That's bad for gamers that prefer innovation to yearly cookie-cutter releases. And it's really bad for people who got into the business to be creative.
I should add that I'm expecting WoW and Call of Duty to burn out, too. It will take longer than it did with Guitar Hero, but they're headed in the same direction.
ReplyDeleteSave us VaLve! From this cookie cutter shit.
ReplyDelete