Bobby Kotick exits on December 29 and Microsoft details other management changes

Activision Blizzard CEO Bobby Kotick formally announced that December 29 will be his last day at Microsoft Gaming after decades of running Activision and Activision Blizzard.

Microsoft bought Activision Blizzard for $68.7 billion on October 13, 20 months after announcing the deal that led to a tangle with regulators over antitrust concerns. Kotick and Brian Kelly bought a 25% stake in the near-bankrupt Activision (then Mediagenic) in 1990. In 1991, Kotick became CEO and they changed the name back to Activision and restructured it. Over the years, Kotick built it into the largest third-party publisher of games.

In 2006, Activision started talks with Vivendi to acquire its games business, which included Blizzard Entertainment and Sierra Entertainment. By 2008, the deal was approved, and Activision Blizzard was formed with Kotick as the CEO.

One of his biggest deals was funding Infinity Ward, a team of first-person shooter experts (led by Grant Collier, Vince Zampella and Jason West) who broke off from 2015, maker of Medal of Honor: Allied Assault, which was published by archrival Electronic Arts. The Infinity Ward team, later fully acquired by Activision, created Call of Duty on the PC in 2003. It became a rival to Medal of Honor and outlived that franchise (now dormant under EA’s ownership). And now on its 20th anniversary, Call of Duty has sold more than 425 million copies (2021 numbers) and become the juggernaut of the whole games industry.

To make Call of Duty so big, Kotick engaged in controversial tactics. He got in a dispute over royalty payments and creative control with Zampella and West (Collier had left), who had delivered a blockbuster game with Call of Duty 4: Modern Warfare. In 2010, Activision fired them, and a lawsuit ensued. The lawsuit was settled but Zampella and West left to start rival Respawn Entertainment, which created legendary games such as Titanfall and Apex Legends.

Meanwhile, Kotick set up multiple studios — Infinity Ward, Treyarch and Sledgehammer Games — to deliver a Call of Duty game every year, with each studio getting three years to work on a title and rotating the yearly release among them. That worked fine until PlayerUnknown’s Battlegrounds disrupted the shooter genre with a battle royale game created by Brendan Greene. Call of Duty adapted and eventually created Call of Duty: Warzone and Call of Duty: Mobile — free-to-play titles that became huge hits and funneled players to the premium annual releases.

Over time, Call of Duty grew so big that it now requires the work of 10 studios and 3,000 employees. All of this success happened as many other rivals withered and gave way. Electronic Arts stands as the biggest rival with Apex Legends and Battlefield, but the Battlefield franchise doesn’t relaunch each year.

Beyond Call of Duty, Activision also developed franchises such as Skylanders, now dormant, and on the Blizzard side it saw enduring success with World of Warcraft and more recently Overwatch. Activision Blizzard acquired MLG and created the Overwatch League, which had a burst of a start and then eventually was shelved.

The number of new titles from the company dwindled as triple-A development became more expensive and demanding, with studios like Toys for Bob (Skylanders) converted into Call of Duty development. Over time, Kotick drew both admiration and condemnation for his dealmaking and business tactics.

Sexual harassment case

In July 2021, the California Department of Fair Employment and Housing sued Activision Blizzard due to claims of sexual harassment and discrimination. Activision Blizzard said at the time that the charges were false and there was no evidence of systemic problems at the company. The allegations tainted the company’s reputation and had long-reaching consequences.

The Communications Workers of America, which was long unsuccessful in organizing game workers, succeeded in unionizing multiple departments at Activision Blizzard. In November 2021, an article in the Wall Street Journal alleged that Kotick was aware of past allegations of harassment and protected one employee, accused of sexual harassment, from being fired. Kotick denied that allegation and others related to the sexual harassment case.

Leaders at big game companies such as Sony and Microsoft said they were evaluating their relationships with Activision Blizzard. As the company’s stock price dropped, Activision Blizzard became a target. And Microsoft negotiated a deal to acquire Activision Blizzard in January 2022. As noted, that deal finally closed in October, and all along Kotick was expected to transition out of the CEO role.

At the time of the deal’s first announcement, Kotick noted in an interview with GamesBeat that the big changes coming from AI and Microsoft’s wealth of AI expertise was a major reason why the company decided to sell itself. During the long transition, Activision Blizzard and Microsoft were not allowed to make plans together, but Kotick’s departure was always designated for after the deal’s close.

Goodbye note

Activision Blizzard CEO Bobby Kotick addressed his departure email to employees as “extraordinary people.”

“Over the years, my passion for video games has often been attributed to Pitfall!, River Raid, and Kaboom!. I love those Atari 2600 games, but the game that first captured my imagination was Mystery House, developed by Roberta and Ken Williams. I played it on a borrowed Apple II night after night while in college at the University of Michigan,” Kotick wrote.

He said that Mystery House was a text adventure with some primitive sprite-based graphics.

“Fittingly, we now own Mystery House and the company that published it, Sierra On Line,” he wrote. “The world in which the game was played was largely left to the player’s imagination. I envisioned rich, vast worlds with all sorts of interactive, animated life that would enable players to fulfill their varied aspirations—all in a simulated universe that offered unlimited possibilities for challenge, connection, and fun.”

He added, “Forty years later, as my last day leading this company inches closer, I marvel at how far the talented people at our company have come toward realizing the great potential of games. You have transformed a hobbyist form of entertainment into the world’s most engaging medium. It has been the privilege of my lifetime to work alongside you as we broadened the appeal of games.”

He said the most important part of his job has been to help bring talented people together, provide the best resources possible, and foster an environment that encourages inspiration, creativity, and unwavering commitment to excellence.

“I cannot adequately express the pride I have in the people who continue to contribute to our success and all those who have helped throughout my 32 years leading this company,” he wrote. “We are now part of the world’s most admired company. That isn’t an accident.”

He added, “Phil Spencer has appreciated the magic of ABK for decades. When he approached Brian and me two years ago and proposed acquiring the company, it was immediately obvious that the combination of our businesses would enable us to continue to lead as the list of capable, well-resourced competitors grows. Phil shares our values and recognizes our talents. He is passionate about our games and the people who make them. He has bold ambition.”

He said the company could not be in better hands and said he was grateful to those who built the company and said he was “confident you will keep inspiring joy and uniting people through the power of play.”

Organizational changes

Phil Spencer, head of games at Microsoft, issued a statement saying, “Under Bobby’s watch, Activision Blizzard in its many incarnations has been an enduring pillar of video games. Whether it’s Call of Duty, World of Warcraft, Candy Crush Saga or any number of other titles, his teams have created beloved franchises and entertained hundreds of millions of players for decades. I’d like to thank Bobby—for his invaluable contributions to this industry, his partnership in closing the Activision Blizzard acquisition and his collaboration following the close—and I wish him and his family the very best in his next chapter.”

Spencer also laid out organizational changes coming with Kotick’s departure. Most executives are staying in place.

Thomas Tippl (vice chairman, Activision Blizzard), Rob Kostich (president, Activision Publishing), Mike Ybarra (president, Blizzard Entertainment) and Tjodolf Sommestad (president, King) will report to Matt Booty (president, Game Content and Studios).

The leadership teams for Activision Publishing, Blizzard and King will remain in place, with no changes to the structure of how the studios and business units are run, Spencer said.

Brian Bulatao (chief administrative officer at Activision Blizzard) will report to Dave McCarthy (chief operations officer, Microsoft Gaming).

Julie Hodges (chief people officer at Activision Blizzard) will report to Cynthia Per-Lee (corporate vice president, gaming human resources at Microsoft).

Grant Dixton (chief legal officer at Activision Blizzard) will report to Linda Norman (corporate vice president, gaming CELA at Microsoft).

Armin Zerza (chief financial officer) will continue to report to Tim Stuart (corporate vice president, finance at Microsoft), as previously announced.

Thomas, Brian, Julie, Grant and Armin will continue to help with the transition through March 2024, Spencer said.

Lulu Meservey (executive vice president, corporate affairs and chief communications officer) will be leaving Activision Blizzard King at the end of January. She has agreed to support Kari Perez (general manager, communications) on a leadership transition plan for the ABK Communications team, which will report to Perez. Additionally, Humam Sakhnini (vice chairman of Blizzard and King) will depart at the end of December. Spencer thanked them for their leadership over the past year.

“For most of you, your day-to-day work will remain the same—it’s still business as usual in bringing more groundbreaking experiences to more players around the world,” Spencer said. “At the leadership level, these changes will provide the clarity and accountability that is necessary to achieve our ambitious goals and foster a culture that is welcoming, empowering, and committed to Gaming for Everyone. We have an exciting 2024 lineup of games across Activision, Bethesda, Blizzard, King and Xbox Game Studios, and I know that we all look forward to sharing more details with our player communities when the time is right.”