Activisio Essay, Research Paper
ActiVision, Inc., is a developer and
publisher of interactive entertainment software. As one of the industry’s
first independent, third-party developers, ActiVision has produced numerous
hit titles for companies such as Atari, Nintendo and Sega, and for personal
computers. Some of its best known titles include the Zork and
MechWarrior series, and Spycraft: The Master Game. ActiVision
is a multi-platform developer, producing software compatible with various
gaming consoles as well as for use with personal computers.
Following its founding in 1979, ActiVision’s
early success was meteoric. As developer and publisher of a series of
hits such as Pitfall!, Kaboom! and River Raid, ActiVision
soon became the largest video game software company and the fastest-growing
company in American history. During its peak year in 1983, ActiVision
attained revenues of about $150 million. Faced with intense competition
from Sega and Nintendo, and the rise of the PC as an alternative platform
for games, Atari collapsed the following year and took ActiVision with
ActiVision declined steadily throughout the rest of the 1980s. In 1988
the company changed its name to Mediagenic and undertook an ill-advised
foray into personal and business computing software. Publishing word processing
software, paint packages and applications for Macintosh, Mediagenic failed
spectacularly in a business and personal software market that tends to
be dominated by a few firms. Accumulating losses that eventually totaled
$60 million, the company was virtually insolvent by 1991.
During its decline, Mediagenic made some good moves that would serve
its later recovery. Not least of these was to sign license agreements
with Nintendo of America (in 1987) and with Sega of America (in 1988).
These agreements opened up significant mass-market possibilities. Mediagenic
also published the first interactive entertainment on CD-ROM, a game called
The Manhole, thus beginning a move toward the kind of high-tech,
multi-platform production that would be essential in the 1990s market.
The main architect of ActiVision’s comeback was software entrepreneur
Bobby Kotick, who along with partner Howard Marks and casino mogul Steve
Wynn, led an investment group and management team that filed a plan
of reorganization for ActiVision. Kotick’s group filed their plan
on the same day, October 4, 1991, that Mediagenic was placed into prepackaged
bankruptcy. The company, again under its original name ActiVision, began
its impressive recovery in short order.
Kotick, who was 30 when he took the reigns at ActiVision, has been described
as resembling Woody Allen
in both speech and personality. In 1983 he and Marks had run a software
company out of their dorm room at the University
of Michigan. They obtained financing for their small operation from
Steve Wynn, the legendary developer of the Las Vegas Strip. Kotick pitched
his idea to Wynn at an exclusive party to which he and Marks had managed,
by some subterfuge, to obtain an invitation. The 52-year old Wynn recalls,
“They were so fetching and cute, I wanted them to be my sons-in-law.”
Although the venture flopped, Wynn maintained confidence in his young
colleagues and backed another of their enterprises, a company that translated
packages and manuals for overseas delivery. This operation turned out
to be more successful, netting $2 million on $12 million sales in 1991.
In 1985 Kotick and Marks turned down an offer from Sony
to write software for new CD-based entertainment system because they believed
the base of CD players was then too small to support the effort. Only
a few years later the time would be right for ActiVision, under Kotick’s
leadership, to take the industry lead in publishing titles for CD-ROM.
Kotick and Marks had been eyeing ActiVision for some time because of
its broad licensing agreements with Sega and Nintendo.
The two were able to acquire a 25% stake in ActiVision for $500,000, and
then were able to boost their share to 54% by folding in their computer
packaging business. With $5 million of additional backing from Wynn, Kotick
set about adopting ActiVision to the new multimedia, PC-based environment.
He based his faith in ActiVision’s future on a belief that video
games could and would be made to appeal to more than the segment of the
young, male population “that can’t get a date on Saturday night.”
He therefore gambled that the market would reward investment in superior
technology and creativity.
the Hollywood Formula
Kotick’s plan was to upgrade the level of audio, video and programming
technology as well as the artistic imagery of ActiVision’s games.
He began by recruiting a core of the highest caliber programmers, selected
both for their creative and technical competency. Production methods were
borrowed from the Hollywood movie industry, and the company was relocated
from Menlo Park in Northern California to Los Angeles in order to take
advantage of Hollywood’s talent base.
Kotick suggests that his formula for ActiVision relies more on Hollywood
creativity than on advanced Silicon Valley programming technology, and
has noted that the budget and creative team for one of ActiVision’s
high-level multimedia games is comparable to those for a low- budget motion
picture. Accordingly, ActiVision’s new generation of games are often
based on television and films, using cinematic sequences in conjunction
with advanced 3-D and color graphics as well as overdubs from live actors.
Kotick’s first project was to update ActiVision’s old Zork
games. Whereas the classic adventure game had users type in responses
to questions on a monochrome screen, Return to Zork used digital
sound and video with 3-D color graphics to bring the imaginary empire
of Zork to life. With sounds and images of actors from TV shows
like Twin Peaks
Wonder Years, Return to Zork was an immediate hit which
has generated a series of equally successful sequels and spin-offs. Recently
the relationship between ActiVision’s games and Hollywood’s
films has been reversed as the company has signed deals to base film and
television programs on the highly successful Zork franchise and
on their espionage game, Spycraft: The Great Game.
Spycraft arose from an unlikely but fortuitous collaboration.
One day at an informal lunch, Kotick told a literary agent that he was
working on an espionage game. The agent suggested Kotick contact former
CIA chief William
Colby, who happened to be one of his clients. The master spy was soon
on a visit to ActiVision’s L.A. headquarters where he proved a quick
study and original strategist on a CD-ROM-based version of Return
to Zork. At one point, when Kotick suggested Colby take the opportunity
to eliminate a troublesome adversary, Colby replied, “Let’s
not kill him now. We may need him later.”
Kotick’s collaboration with Colby soon assumed historic proportions
when Colby’s one-time adversary, former major-general of the KGB
Kalugin, was enlisted to participate in the project. The final product,
for which Colby and Kalugin both served as consultants and played themselves,
embodies unprecedented levels of authenticity and production values. Taking
place in a partly-fictionalized post-Cold War world, Spycraft
contains over 100 cinematic sequences, and is based on events about which
we can only speculate.
ActiVision has continued to update and extend its most popular titles,
and has produced and published a continuing series of innovative and successful
products. Recent years have seen the latest in the highly successful Zork
and MechWarrior series as well as many new and original games
that are playable on all currently popular platforms including PC, Mac,
Sony PlayStation and Sega Saturn.
Noteworthy among recent additions are futuristic sports game Hyperblade,
Muppet Treasure Island featuring Tim Curry, Kermit the Frog and other
Muppet characters, Sacred Ground, second in a series of Santa
Fe mysteries, Power Move Pro Wrestling, Blast Chamber, a futuristic
life and death game in which players can compete against the program or
real opponents, and Blood Omen Legacy of Kain which uses classically-trained
actors in a gothic adventure for mature audiences. The year 1996 also
saw the release of action games with unprecedented network capabilities,
including MechWarrior 2: Mercenaries which permits up to eight
players to compete simultaneously over the Internet.
and Growth into the Next Century
ActiVision remains one of the most proactive game publishers with respect
to the ever-changing technological environment. The company had reprogrammed
two of its top titles for DVD-ROM technology, using
MPEG video compression technology
which will offer “an unparalleled visual experience.” With respect
to the growing global market, ActiVision has been increasing its presence
and now has operations all over the world.
Video game software is a highly competitive industry with what many analysts
consider “too many” companies vying for shares of a limited
market. In a war of attrition against other firms specializing in game
software as well as against media giants like Viacom,
Time Warner and Disney
who are moving into software development, margins are becoming increasingly
Inspite of increasing revenues, ActiVision has reported shrinking net
profits and some quarterly net losses in recent years because of the high
cost of product research and development. With its established record
of successful titles and its dynamic approach to the technological environment
and the international market, top industry analysts consider ActiVision
to be one of a small group of entertainment software development firms
best positioned to survive and grow into the next century.
Author not attributed. “Mediagenic Announces Confirmation
of Plan of Reorganization: Will Renew use of ‘ActiVision’ Name,”
Business Wire, December 19, 1991.
Author not attributed. “ActiVision Signs Agreement
with Universal Pictures to Develop Feature Film Based on Acclaimed CD-ROM
Espionage Thriller Spycraft the Great Game,” PR Newswire. June 19,1996.
Author not attributed. “ActiVision OEM Sales, CD-ROM
Titles Bolster First Quarter Revenues,” PR Newswire. August 9, 1996.
Author not attributed. “ActiVision’s Mech Warrior
2 Mercenaries Explodes Onto North American Retail Market. PR Newswire.
October 9, 1996.
Author not attributed. “T’was the Month Before
Christmas and All Through the Land, ActiVision’s New Games Lay Waiting
for Shopper’s Hands,” PR Newswire. November 14, 1996.
Author not attributed. “ActiVision Unleashes Crystal
Dynamics’ Blood-Sucking Epic Adventure, ‘Blood Omen Legacy of
Kain,’ Across North America,” PR Newswire. November 18, 1996.
Author not attributed. “Spycraft The Great Game and
the Muppet Treasure Island DVD-ROM Offered Initially for the OEM Channel,”
PR Newswire. November 18, 1996.
Author not attributed. “ActiVision Pile Drives Power
Move Pro Wrestling Onto Holiday Retail Shelves Throughout North America,”
PR Newswire. November 18, 1996.
Ginsberg, Steve. “CD-ROM Video Games Technology Gives
ActiVision a New Lease on Life,” Los Angeles Business Journal,
Vol. 16, No. 2, January 17, 1994.
Hamit, Francis. “New Imaging Opportunities: Grabbed
Real-World Images Invade Interactive Games,” Advanced Imaging,
Vol. 9, No. 10, October,1994.
Lohr, Steve. “Market Place: Home Software’s
Treasure Hunt,” The New York Times, December 28, 1993.
Palmeri, Christopher. “Let’s Not Kill Him Now,”
Forbes, January 31, 1994.
Schonfeld, Erick. “Robots on the Rise!: Videogame
Rivals are in the Midst of a Shootout. Here are the Likely Victors,”
Fortune, December 9, 1996.
Snyder, Bill and Valerie Rice. “Busy Going Hollywood:
ActiVision Chief Executive Bobby Kotick,” PC Week, Vol.
10, No. 47, November 29, 1993.
Sundius, Ann. “NBC Private Financial Network Interview
With ActiVision (ATVI) Chief Executive Officer from the Gerald Klauer
Mattison Interactive Entertainment Conference,” NBC – Professional,
October 28, 1996.
Yee, Bernard H. “This Time You Fight for Money: ActiVision’s MechWarrior
2: Mercenaries War Game: Software Review,” PC Magazine, Vol. 15,
No. 21, December 3, 1996.
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