Activision Blizzard, Inc. is an American video game company based in Santa Monica, California. The company includes three main divisions: Activision, Blizzard Entertainment, and King.
It was formed in July 2008 when Activision, Inc. and Vivendi Games merged. The company owns and operates several other studios, including Infinity Ward, Treyarch, and Sledgehammer Games. Some of the major video games created by Activision Blizzard include Call of Duty, Crash Bandicoot, Guitar Hero, Skylanders, Spyro, Tony Hawk's, Diablo, Hearthstone, Heroes of the Storm, Overwatch, StarCraft, World of Warcraft, and Candy Crush Saga. Blizzard Entertainment has supported competitive gaming events for games like Overwatch and Call of Duty. Activision Blizzard's games have set many records for sales and popularity. As of March 2018, it was the largest video game company in the Americas and Europe based on revenue and market value.
The company has faced several legal and workplace issues, including claims of patent violations and unpaid fees. In late July 2021, it was sued by the California Department of Fair Employment and Housing for allegations of sexual harassment and discrimination in the workplace. This led to an investigation by the U.S. Securities and Exchange Commission, employee protests, the loss of some sponsors, and hundreds of harassment claims.
On January 18, 2022, Microsoft announced it would buy Activision Blizzard for $68.7 billion. The purchase was completed on October 13, 2023. Activision Blizzard is now part of Microsoft Gaming, along with Xbox Game Studios and ZeniMax Media.
History
The original Activision company was created in 1979 as a third-party game developer for the Atari Video Computer System. In 1988, the company expanded into non-gaming software and changed its name to Mediagenic. This effort was not successful and caused the company to lose a lot of money. In 1991, a group of investors, led by Bobby Kotick, purchased the company. Kotick made major changes to reduce debt, including renaming the company back to Activision and moving its headquarters to Santa Monica, California. By 1997, the company became profitable again. Over the next decade, Kotick expanded Activision’s products by acquiring about 25 studios. This led to the publication of several successful game series, including Tony Hawk's, Call of Duty, and Guitar Hero. However, by around 2006, the popularity of massively multiplayer online (MMO) games began to grow. These games provide a steady income for publishers, unlike traditional games that depend on a single purchase. At that time, none of Activision’s subsidiaries had an MMO or the ability to create one quickly. Activision also faced stronger competition from companies like Electronic Arts and saw slower sales of its key game series.
In 2006, Kotick contacted Jean-Bernard Lévy, the CEO of Vivendi, a French media company. Vivendi owned Vivendi Games, which included Sierra Entertainment and Blizzard Entertainment. Kotick wanted to gain access to Blizzard’s popular MMO, World of Warcraft, and proposed a way to acquire it. Instead, Lévy suggested merging Vivendi Games with Activision, but only if Vivendi retained majority control of the new company. Kotick was concerned about losing control of Activision. However, after discussing the matter with Blizzard’s CEO, Mike Morhaime, Kotick realized that the merger could help Activision enter the growing video game market in China.
Kotick presented the merger proposal to Activision’s board, which approved it in December 2007. The new company was named Activision Blizzard and kept its headquarters in California. Bobby Kotick became the president and CEO, while René Penisson of Vivendi was named chairman. The European Commission approved the merger in April 2008, confirming no antitrust issues. On July 8, 2008, shareholders agreed to the merger, and the deal was completed the next day for about $18.9 billion.
Vivendi became the majority shareholder of the new company, owning 54% of outstanding shares (or 52% if fully diluted). Other shares were held by institutional and private investors and later traded on the NASDAQ under the ticker symbol ATVID, then ATVI. Lévy replaced Penisson as chairman of Activision Blizzard. While Blizzard kept its independence, other Vivendi Games divisions, such as Sierra Entertainment, were shut down. Kotick stated that if a Sierra product did not meet Activision’s standards, it would likely not be kept. Some Sierra games, like Crash Bandicoot and Spyro, were retained and published by Activision.
In early 2010, Bungie, an independent studio, signed a 10-year publishing deal with Activision Blizzard. By the end of 2010, Activision Blizzard became the world’s largest video game publisher. The 2011 release of Call of Duty: Modern Warfare 3 earned $400 million in the U.S. and U.K. alone during its first 24 hours, making it the biggest entertainment launch of all time. This was the third consecutive year the Call of Duty series broke its own record, with Black Ops (2010) earning $360 million on day one and Modern Warfare 2 (2009) earning $310 million. In 2015, Call of Duty: Black Ops III earned $550 million worldwide during its opening weekend, becoming the biggest entertainment launch of the year.
In 2011, Activision Blizzard launched the Skylanders franchise, which introduced a new "toys-to-life" category. The first game, Skylanders: Spyro's Adventure, was nominated for two Toy Industry Association awards in 2011: "Game of the Year" and "Innovative Toy of the Year." The series was released for major consoles, PC, and mobile devices.
On July 25, 2013, Activision Blizzard purchased 429 million shares from Vivendi for $5.83 billion, reducing Vivendi’s ownership from 63% to 11.8%. After the deal, Vivendi was no longer the parent company, and Activision Blizzard became independent. Bobby Kotick and Brian Kelly retained a 24.4% stake in the company. Kotick remained president and CEO, while Kelly became chairman. On October 12, 2013, the company completed the buyback as planned. Vivendi sold half its remaining shares in May 2014, reducing its ownership to 5.8%, and fully exited in 2016.
Activision Blizzard released Destiny on September 9, 2014, which earned over $500 million in retail sales on its first day, setting a record for the biggest first-day launch of a new gaming franchise. In November 2013, the company released Call of Duty: Ghosts, written by screenwriter Stephen Gaghan, which sold $1 billion on its first day. In 2014, Activision Blizzard was the fifth-largest gaming company by revenue worldwide, with total assets of $14.746 billion and total equity estimated at $7.513 billion.
Activision Blizzard joined the S&P 500 stock index on August 28, 2015, becoming one of only two gaming-related companies on the list, alongside Electronic Arts. In September 2015, the company released the next Skylanders game, which added vehicles to the "toys-to-life" category. On September 15, 2015, Activision and Bungie released Destiny: The Taken King, the follow-up to Destiny. Two days later, Sony announced the game broke the record for the most downloaded day-one game in PlayStation history, in terms of both total players and peak online users.
In November 2015, Activision Blizzard acquired King, the creator of Candy Crush Saga, for $5.9 billion. The company also announced the formation of Activision Blizzard Studios, a film production division that would create movies and TV shows based on its franchises. The division is co-headed by producer Stacey Sher and former Disney executive Nick van Dyk.
In June 2017, Activision Blizzard joined the Fortune 500, becoming the third gaming company in history to do so, after Atari and Electronic Arts. During its 2018 fiscal year earnings call in February 2019, Kotick stated that despite a record year in revenue, the company would lay off about 775 employees, or 8% of its non-management workforce, to "de-prioritize initiatives that are not essential."
Corporate structure
Activision Blizzard is organized into three main business areas:
- Activision, which creates, makes, and shares video games from its studios that work for Activision. It also includes the Call of Duty League.
- Blizzard Entertainment, which creates, makes, and shares Blizzard's games. It also takes care of Battle.net, organizes BlizzCon, and includes the Overwatch League.
- King, which creates and shares its mobile games.
Esports initiatives
Activision Blizzard owns the Call of Duty and StarCraft game series, which are popular in esports. On October 21, 2015, Activision Blizzard announced the creation of a new esports division called Activision Blizzard Media Networks. The division was led by Steve Bornstein, a sports executive, and Mike Sepso, a co-founder of Major League Gaming (MLG). The division used assets from the purchase of the now-closed IGN Pro League. Steve Bornstein became the chairman of the new division. On December 31, 2015, it was reported that Activision Blizzard would buy most of MLG’s assets. The New York Times stated that this purchase aimed to strengthen Activision Blizzard’s efforts in esports and to create an esports cable channel. Reports said MLG would be closed, and most of the money from the purchase would be used to pay off MLG’s debts. Activision Blizzard officially acquired MLG on January 4, 2016, for $46 million.
In November 2016, Blizzard Entertainment, a part of Activision Blizzard, announced the launch of Overwatch League, a professional video game league. The first season of the league began in the second half of 2017 with 12 teams. The league’s structure is similar to traditional sports leagues, including hiring executives from traditional sports teams as team owners, such as Robert Kraft, owner of the New England Patriots, and Jeff Wilpon, COO of the New York Mets.
The first Overwatch Grand Finals took place at the Barclays Center in Brooklyn in July 2018 and was watched by 10.8 million people worldwide. The league planned to have 18 teams in its second season in 2019, with a long-term goal of having 28 teams globally.
In 2018, Activision Blizzard signed a multi-year agreement with The Walt Disney Company to broadcast Overwatch League games on ESPN and Disney XD cable channels. The company also made an exclusive multi-year deal with Google to stream all Activision Blizzard esports events, including Call of Duty and Overwatch, on YouTube. Google’s cloud services were also used for hosting Activision Blizzard’s games. This followed a two-year deal with Twitch for the Overwatch League, which ended in 2018. The YouTube deal was estimated to be worth $160 million, twice the value of the Twitch agreement.
Due to lower viewership and profits during the COVID-19 pandemic, Activision Blizzard closed Major League Gaming by January 15, 2024.
Call of Duty Endowment
Since 2009, when Kotick started the Call of Duty Endowment (CODE), more than 50,000 veterans have found good jobs. In 2013, CODE created the "Seal of Distinction" program to honor nonprofit groups that help veterans get quality jobs. These groups receive a $30,000 grant to use for their job placement work. CODE's goal is to help 100,000 veterans in the United States and United Kingdom find good jobs by 2024. The endowment supports soldiers as they move to jobs outside the military by giving money to nonprofit organizations and letting employers know how valuable veterans are in the workplace.
Other legal disputes
Worlds, Inc. received several United States patents around 2009 related to "System and method for enabling users to interact in a virtual space." These patents described a way for servers and computers to communicate in multiplayer video games, where players would use avatars to interact. In early 2009, Worlds, Inc. said it planned to challenge companies that made and published massive multiplayer online games (MMOs), including Activision. Earlier, in 2008, Worlds, Inc. had challenged NCSoft for its MMOs. The companies later reached a settlement without going to court by 2010.
In March 2012, Worlds, Inc. officially filed a lawsuit against Activision Blizzard, which included Blizzard Entertainment and Activision Publishing. It claimed that games like Call of Duty and World of Warcraft violated its patents. In October 2013, Activision Publishing filed its own lawsuit, saying that Worlds, Inc. used two of its patents in its software called Worlds Player. However, this lawsuit was dismissed in June 2014.
In the case against Activision, a judge ruled in favor of Activision because it showed that Worlds, Inc. had used the technology described in its patents in programs called AlphaWorld and World Chat, which were released before 1995. However, there were problems with the patent filings that were later corrected by the Patent Office. Activision did not challenge the updated patents through a legal process called an inter partes review (IPR). After a one-year waiting period, Worlds, Inc. filed another lawsuit, claiming that Call of Duty: Ghosts violated its patents. Later, Worlds, Inc. said it would add Bungie to the lawsuit, saying that Destiny also broke its patents. Bungie filed three IPRs with the Patent Office for the three key patents in the case. Initially, Bungie won its IPR ruling, but in September 2018, a court ruled that Bungie did not have the legal right to file the IPRs.
In October 2014, a new lawsuit between Worlds, Inc. and Activision Blizzard was heard. The judge paused the trial because Bungie’s IPRs were still being reviewed by the Patent Office. Worlds, Inc. argued that the IPRs should not have been filed because Activision was not included as an interested party, which is required because Activision and Bungie have a business relationship. The Patent Office did not accept this argument and agreed that parts of Worlds, Inc.’s patents were invalid. Worlds, Inc. appealed to the Federal Circuit Appeals Court, saying the IPRs were invalid because Activision was not involved. In September 2018, the Federal Circuit ruled in favor of Worlds, Inc., invalidating the Patent Office’s decision. The case is still being reviewed by the Patent Office, which is re-evaluating the IPRs based on the court’s ruling. In 2021, a U.S. district court dismissed the lawsuit, stating that "Worlds’ patents were abstract ideas that were not sufficiently transformative to be legally patentable."
In early 2010, Activision fired Vince Zampella and Jason West, two co-founders of its studio Infinity Ward, for "breaching contracts and insubordination." This caused several other employees at Infinity Ward to resign. Zampella and West later started a new studio called Respawn Entertainment with help from Electronic Arts’ partner program and hired most of the employees who left Infinity Ward.
In April 2010, Zampella and West sued Activision, saying they were not paid royalties for Call of Duty: Modern Warfare 2. Activision responded by filing a countersuit, accusing them of being "self-serving schemers." Activision later tried to add Electronic Arts to its lawsuit, claiming Zampella and West had discussed joining Electronic Arts while still working for Activision. Activision also accused them of not returning all materials related to Call of Duty while working at Respawn. In April 2010, several current and former Infinity Ward employees also sued Activision for not paying royalties.
All parties reached an agreement to end all lawsuits by May 2012. Electronic Arts and Activision settled separately over claims that Activision had lured employees away. The lawsuits between Activision, Zampella, West, and the Infinity Ward group were also settled by the end of May 2012. The amounts of the settlements were not made public.
In May 2024, families affected by the 2022 Uvalde school shooting filed a lawsuit against Activision Blizzard, Meta, and the gun manufacturer Daniel Defense. The suit against Activision Blizzard claimed that the company promoted specific gun brands to teenagers through its Call of Duty games. Activision Blizzard defended itself, saying that Call of Duty games are protected by the First Amendment and asked the court to dismiss the case under anti-SLAPP protections, which shield companies from lawsuits aimed at stopping public participation.