Activision
Activision Publishing, Inc. is an American video game publisher based in Santa Monica, California. It serves as the publishing business for its parent company, Activision Blizzard, and consists of several subsidiary studios. Activision is one of the largest third-party video game publishers in the world and was the top United States publisher in 2016.
The company was founded as Activision, Inc. on October 1, 1979, in Sunnyvale, California, by former Atari, Inc. programmers for the popular Atari Video Computer System home video game console. Upset at their treatment by Atari, they left to develop games for the same system. Activision was the first independent, third-party, console video game developer. The video game crash of 1983, in part created by too many new companies trying to follow in Activision's footsteps without the experience of Activision's founders, hurt Activision's position in console games and forced the company to diversify into games for home computers, including the acquisition of Infocom. After a management shift, with CEO Jim Levy replaced by Bruce Davis, the company renamed itself to Mediagenic and branched out into business software applications. Mediagenic quickly fell into debt, and the company was bought for around by Bobby Kotick and a small group of investors around 1991.
Kotick drastically revamped and restructured the company to get it out of debt: dismissing most of its staff, moving the company to Los Angeles, and reverting to the Activision name. Building on existing assets, the Kotick-led Activision pursued more publishing opportunities and, after recovering from its former financial troubles, started acquiring numerous studios and various types of intellectual property over the 1990s and 2000s, among these being the Call of Duty and Guitar Hero series. A holding company was formed as Activision's parent company to manage both its internal and acquired studios. In 2008, this holding company merged with Vivendi Games and formed Activision Blizzard, with Kotick as its CEO. Within this structure, Activision manages numerous third-party studios and publishes all games besides those created by Blizzard. In October 2023, Microsoft acquired parent company Activision Blizzard, maintaining that the company would continue to operate as a separate business. While part of the larger Microsoft Gaming division, Activision retains its function as the publisher of games developed by their studios.
History
Founding (1979)
In 1976, Warner Communications bought Atari, Inc. from Nolan Bushnell to help accelerate the Atari Video Computer System to market by 1977. That same year, Atari began hiring programmers to create games for the system. Prior to Warner's acquisition, the company did not award bonus pay to programmers who worked on profitable games, nor credit the programmers publicly, to prevent them from being recruited by rival game companies. Warner Communications' management style was also different from Bushnell's. According to developer John Dunn, Warner management treated developers as engineers rather than creative staff, creating conflicts with staff. Atari's CEO Ray Kassar, named to that position following Warner's acquisition in 1978, was committed to keeping production costs minimal for Warner.In early 1979, Atari's marketing department circulated a memo listing the best-selling cartridges from the previous year to help guide game ideas. Crane noted that the games he was fully responsible for had brought in over for the company but he was still only receiving a salary. Out of a development staff of thirty-five, four programmers, had produced games that had accounted for 60% of Atari's sales.
Crane, Kaplan, Miller, and Whitehead became vocal about the lack of recognition within the company and became known as the "Gang of Four". The group met with Kassar in May 1979 to demand that the company treat developers as record labels treated musicians, with royalties and their names on game boxes. Kaplan, who called the others "the best designers for the in the world", recalled that Kassar called the four men "towel designers" and claimed that "anybody can do a cartridge".
The four made the decision to soon leave Atari and start their own business, but were not sure how to go about it. In 1979, the concept of third-party developers did not exist, as software for video game consoles were published exclusively by makers of the systems for which the games were designed; thus the common thinking was that to make console games, one needed to make a console first. The four decided to create their own independent game development company. They were directed by their attorney to Jim Levy, who was at the time raising venture capital to get into the software business for early home computers. Levy listened to their plans, agreed with its direction, and helped the four to secure about in capital from Sutter Hill Ventures. They also checked with legal counsel on their plans to develop games for the Atari VCS, and included litigation fees in their capital investment.
By August, Crane and Miller had left Atari, with Whitehead joining them shortly after. Kaplan had also quit Atari in August, but initially decided not to join as he did not like the starting business plan; he came back later to join Activision that December. Activision was formally founded on October 1, 1979, with Levy serving as CEO. The company was initially named "Computer Arts, Inc." while they considered a better title. The founders had thought of the name VSync, Inc., but feared that the public would not understand or know how to say it. Levy suggested combining "active" and "television" to come up with Activision.
Early years (1980–1982)
Activision began working out of Crane's garage in the latter half of 1979, each programmer developing their own game that was planned for release in mid-1980: Dragster, Fishing Derby, Checkers, and Boxing. The four's knowledge of the Atari 2600, as well as software tricks for the system, helped them make their own games visually distinct from Atari-produced games. To further distinguish themselves, Activision's boxes were brightly colored and featured an in-game screenshot on the back cover. Instruction manuals for games devoted at least one page to credit the developer. Additionally, for nearly all of Activision's games through 1983, the instruction manuals included instructions for sending the company a photograph of a player's high scores to receive a patch in return.Ahead of the release of the first four games, Activision obtained space at the mid-year 1980 Consumer Electronics Show to showcase their titles, and they quickly obtained favorable press. The attention afforded to Activision worried Atari, as the four's departure had already created a major dent in their development staff. Atari initially tried to tarnish Activision's reputation by using industry press at CES to label those that took trade secrets as "evil, terrible people", according to Crane, and then later threatened to refuse to sell Atari games to retailers that also carried these Activision titles. By the end of 1980, Atari filed a formal lawsuit against Activision to try to stop the company, claiming the four had stolen trade secrets and violated non-disclosure agreements. The lawsuit was settled by 1982, with Activision agreeing to pay royalties to Atari but otherwise legitimizing the third-party development model.
Following the first round of releases, each of the founders developed their own titles, about once a year, over the first few years of the company. While their 1980 games were modest hits, one of the company's first successful games was Kaboom!, released in 1981, which was Activision's first game to sell over a million units. Activision's breakout title was 1982's Pitfall!, created by Crane. More than four million copies of the game were sold. Near the end of 1982, Kaplan left Activision to work on the development of the Amiga personal computer as he wanted to be more involved in hardware development.
Total sales for Activision were estimated at and revenues at ahead of its June 1983 initial public offering; at this point Activision had around 60 employees. Danny Goodman stated in Creative Computing Video & Arcade Games in 1983, "I doubt that there is an active owner who doesn't have at least one Activision cartridge in his library". The company completed its public offering in June 1983 on NASDAQ under the stock ticker AVSN.
The video game market crash (1983–1988)
The success of Activision, alongside the popularity of the Atari 2600, led to many more home consoles third-party developers as well as other home consoles. Activision produced some of its Atari games for the Intellivision and ColecoVision consoles, among other platforms. However, several new third-party developers also arose, attempting to follow the approach Activision had used but without the experience they had; according to Crane, several of these companies were founded with venture capital and hired programmers with little game design experience off the street, mass-publishing whatever product the developers had made. This was a contributing factor to the video game crash of 1983.For Activision, while they survived the crash, they felt its effects in the following years. These third-party developers folded, leaving warehouses full of unsold games, which savvy retailers purchased and sold at a mass discount. While there was still a demand for Activision games, uneducated consumers were more drawn to the heavily discounted titles instead, reducing their income. Their quarterly revenue dropped from in mid-1983 to about by the end of 1984, according to Levy, and they were forced to lay off staff, going from about 400 employees to 95 in that period. Because of this, Activision decided that they needed to diversify their games onto home computers such as the Commodore 64, Apple, and Atari 8-bit computers to avoid completely going out of business like other third-party developers. There still was a drain of talent through 1985 from the crash. Miller and Whitehead left in 1984 due to the large devaluation of their stock and went on to form Accolade.
With the video game crash making console game development a risky proposition, the company focused on developing for home computers with games like Little Computer People and Hacker, while Levy tried to keep expenditures in check as they recovered. Looking to expand further, Activision acquired, through a corporate merger, the struggling text adventure pioneer Infocom in June 1986. This acquisition was spearheaded by Levy, who was a big fan of Infocom's titles and felt the company was in a similar position as Activision. About six months after the "Infocom Wedding", Activision's board decided to replace Levy with Bruce Davis. Davis was against the purchase of Infocom from the start and was heavy-handed in its management, and even attempted to seek a lawsuit to recover their purchase from Infocom's shareholders. Crane also found Davis difficult to work with and was concerned with how Davis managed the closure of Imagic, one of the third-party development studios formed after Activision's success in 1981. Crane left Activision in 1986 and helped Garry Kitchen found Absolute Entertainment. In late 1986, Activision adopted the Electric Dreams brand, usually used for British software, for titles outside of English for the American market.