A History of Activision

Being the creative powerhouse that Activision is today, it's not hard to see how much of an impact they've left on the gaming industry. They have produced great innovations and changed the way games are made, marketed and sold. Like all companies, however, they didn't get the way they are now in a night. This is the story of Activision.

When Atari launched their VCS console in 1977, it delivered a whole new way to play games at home. Along with rival consoles like the Intellivision, it's inexpensive cartridges could bring massively diverse games, with something for everyone on the market. Game designers could create whatever they liked on this new found hardware, tweaking every detail to how they saw fit. The only problem was, these game designers were not given a sales percentage from selling their game. Instead they were given a lump sum of around $30, 000 no matter how well their work had sold. Since at this time video games were still seen as toys, unlike today where they are as popular as film or television, most of the game designers were electronics engineers who had previously designed toys and gadgets. This meant that they were paid the exact same salary as their previous jobs, despite games making a considerably higher profit. David Crane, one of the top 4 game developers at Atari at the time, had found out that him and the other three power players, Bob Whitehead, Larry Kaplan and Alan Miller were responsible for around 60% of the company's game sales and wanted to be paid as such. "We looked at each other and said 'We know we're pretty good at this and our games sell well, but Atari sold $100 million units worth of cartridges last year. So we four guys making about $30,000 a year made Atari $60 million? There's something wrong here!'", Crane recalls. They then decided to pay the then-President of Atari a visit, in hope of claiming even a slice of Atari's metaphorical money cake. "He looked us in the eye and said 'You guys are no more important to this product than the people on the assembly line who put the cartridges together.'" These are the famous final words that lead the now-famous "Gang of Four" to leave Atari and move on. The four refugee developers knew they could form a small company for making software, but also had bigger visions of developing VCS games of their own to go head-to-head with Atari's offerings. After meeting with Jim Levy, an experienced businessman and having suggested they make cartridges for Atari's system. Levy's investors loved the idea and the now-"Gang of Five" created Activision.

David Crane

Even after created their own unofficial tools and techniques to create their games, Atari filed several lawsuits against Activision. This didn't slow them down, however, it just pushed them further to prove they had what it took to compete with Atari's big-name arcade games. They might have had no brands to their name, but these developers knew the hardware better than even Atari themselves. They created original content using the stronger points of the console, instead of trying to badly replicate things it couldn't handle. Activision started putting their brand name and logo on their boxes and in their games to create more loyalty with their consumers, as well as to form a strong identity.

One of Activision's most famous games, Pitfall

Over the years, many more companies tried the same route as Activision, but none could top their work. When Nintendo had released the NES, the Atari was basically dead. Activision had well over 300 employees by now, but with the video gaming industry changing rapidly, Levy thought it was also time for a restructure. He went on to 'hire' employees from Activision in the new version of the company, where most would get revised roles, and the people who didn't fit into the new structure were laid off. Unfortunately the transition was much harder than they'd first thought.

"Activision was never the same after that," says Garry Kitchen, the man who proved people wrong when games such as 'Donkey Kong' could not be done justice on Atari's primitive hardware. "People weren't just questioning what we were doing wrong, they were questioning what we were doing right." After many circumstances that were beyond anyone's control, Crane says, "It completely ruined the creative environment at the company."The new CEO, Bruce Davis, rebranded the company "Mediagenic", despite the incredible market value of the Activision brand. Afraid for their jobs, Crane and the rest of Activision's East Coast team left the company and formed "Absolute Entertainment". By the time the console market had swung back into full force, Activision no longer had the employees or resources to create Atari games. Atari themselves were also in the same situation, where there was nobody left at the company who knew how to make Atari games. Absolute soon jumped on the bandwagon and started to make games for the Atari 2600, which made the other two companies want in on the action. Activision and Atari then contracted with Absolute, the very same people they'd have leave their companies in the past. "At one point there were three companies doing 2600 games, Atari, Activision and Absolute, and we were developing all of them," Kitchen explains. Activision carried on publishing computer games over the next few years, even jumping on the NES train with some quality titles like Mechwarrior. Despite this, however, they continued to bleed money and were relegated to primarily production and publishing of games. By 1990, Mediagenic were an empty shell on the brink of bankruptcy.

With an added lost court case, Mediagenic would soon be forced to sell on or shut down. An aspiring software businessman, Bobby Kotick, had been looking for several companies to develop. After seeing the state of Mediagenic, he saw an opportunity to revive one of gaming's most beloved brands. He was sold 25% of the company's shares and appointed himself the new CEO of Activision. Crane mentioned "I had breakfast with [Kotick] shortly thereafter and he said 'I may have spent [$440, 000], but I think I'm $20 million in debt now.'" Slowly building the company back up was a painful process for Kotick, with Activision's output dropping to practically nothing during 1991 and 1992. By 1995, they were in possession of a world-class development team. They had once again become a brand that stood for quality, being a notable name on both PC and consoles. 

By the end of the '90s, Activision had formed many strong partnerships with independent studios that took them to a much higher level. They went on to develop a reputation for high profile annual releases such as Tony Hawk's Pro Skater, Guitar Hero and Call of Duty. Bobby Kotick, however has since become known  to be outspoken with his business philosophies which has landed him a very controversial relationship in the gaming press and media. "Kotick was primarily interested in Blizzard, and not Vivendi itself, and treated the developer with the utmost respect, tolerating its development culture and notoriously vague (and languid) release schedule out of respect for their success. The rest of Vivendi was not so lucky. The production and publishing staff was gutted, and games like Brutal Legend, WET, and Ghostbusters that didn't fit in with Activision's annual franchise business plan were summarily dropped, while long-declining series like Spyro the Dragon and Crash Bandicoot were kept because of their yearly release schedule."

The press' view on Bobby Kotick, likened to Satan. (Destructoid)

Activision has yet to show any signs of struggle, with consumers and investors generally unphased by the fine print in the companies management and the fact that they continue to sell copious amounts of units for almost every game they publish. "The business is so different now, with literally hundreds of people working on each game, it's hard to say who's really responsible," says David Crane. They may have dropped several franchises such as Guitar Hero and Tony Hawk due to declining sales, but that is barely a dent in an otherwise thriving company. It might be all about the money with Activision and Kotick nowadays, but it sure seems to be working for them.

Reference:

Fahs, Travis (1st October, 2010) The History of Activision. Available from:
<http://uk.pc.ign.com/articles/112/1124885p1.html>
[Accessed 11th January 2011]