During a 45-minute presentation today at the Deutsche Bank Securities Technology Conference in San Francisco, Activision Blizzard CEO Robert Kotick covered a substantial amount of ground. For one, the executive explained how he expects Activision games--specifically Guitar Hero--to bypass consoles altogether. The executive also showed off animation technology he hailed as the future of storytelling in games, pegged the next generation of consoles as being two years out or more, and explained openly why he wants a company culture infused with skepticism, pessimism, and fear.
On the Guitar Hero topic, Kotick told analysts and investors about some potentially big changes in store for the rhythm franchise. When asked about a Guitar Hero game that didn't need a console to operate, Kotick bluntly appraised its benefits.
"I think what the untethered Guitar Hero does is equal the playing field a little more and give you some leverage with first parties when it comes to downloadable content and the business model," Kotick said.
The executive also told attendees to "expect many of our products to be playable independent of a console," specifically saying he'd been impressed with media hub functionalities shown by 1080p TVs that let users stream content from their PCs. He also suggested a day in the not-too-distant future where players' Facebook profiles will be integrated into Guitar Hero, letting them make songs to share with friends, post high scores or favorite songs on their profile pages, and so on.
While games like Guitar Hero have proven popular for the tactile experience of their peripherals, Kotick said Activision is also working to push the envelope in emotional game experiences. He showed the audience a clip of Call of Duty: World at War, saying his friends in the movie industry all react by pointing out how unreal the mouth movement looks. The executive said game makers just haven't reached a point yet where the mouth movement and facial animation of game characters is good enough to establish a compelling emotional attachment from the player.
To remedy that, Kotick noted a real-time rendering and mouth movement technology Activision has been working on. He showed a clip of the technology, saying it could represent nothing less than a transformation of the medium. While Kotick said the technology wouldn't surface until the next generation of games, he did say it would be ready before the next generation of hardware.
Kotick added that publishers don't take advantage of the full capabilities of today's hardware and said it might be some time before the next generation arrives. Typically, console makers give publishing partners about two years' notice when they plan to introduce new hardware, Kotick said. But so far, the console makers haven't given him specs or white papers on new hardware nor have they consulted him on design decisions, leading him to believe their current priority is instead to reduce the cost of each system.
When he wasn't promoting the company's games or technology, Kotick was celebrating its laserlike focus on the bottom line. He pointed to changes he implemented in the past as being particularly beneficial, such as designing the employee incentive program so it "really rewards profit and nothing else."
"You have studio heads who five years ago didn't know the difference between a balance sheet and a bed sheet who are now arguing allocations in our CFO's office pretty regularly," Kotick said.
He later added, "We have a real culture of thrift. The goal that I had in bringing a lot of the packaged goods folks into Activision about 10 years ago was to take all the fun out of making video games."
If that sounds like it would create a corporate culture that isn't all sunshine and hugs, then it's mission accomplished for Kotick. The executive said that he has tried to instill into the company culture "skepticism, pessimism, and fear" of the global economic downturn, adding, "We are very good at keeping people focused on the deep depression."
[UPDATE] Below is the question which prompted Kotick's response and his full answer, verbatim from the archived conference audio.
Jeetil Patel, Deutsche Bank Securities - Analyst
"What do you think the retailers' willingness these days is to hold inventory on the video game side? Are they building positions today or are they still very reluctant and very careful of how they are buying?"
Bobby Kotick, Activision Blizzard, Inc. - President and CEO
"I don't think it is specific to video games. I think that if you look at how much volatility there is in the economy and, dependent upon your view about macroeconomic picture and I think we have a real culture of thrift. And I think the goal that I had in bringing a lot of the packaged goods folks that we brought in to Activision 10 years ago was to take all the fun out of making video games."
"I think we definitely have been able to instill the culture, the skepticism and pessimism and fear that you should have in an economy like we are in today. And so, while generally people talk about the recession, we are pretty good at keeping people focused on the deep depression."