It’s been a tough year for the games industry, with software sales and hardware sales below what was achieved in 2008.
In the final part of our chat with Activision Blizzard’s UK management team, the company discuss the challenges of the market, the impending release of Modern Warfare 2 and the publisher’s relationship with Infinity Ward…
From left to right, UK Managing Director Andrew Brown, UK Marketing Director David Tyler and UK Sales Director Roy Stackhouse
The market is down so far this year, has this been felt by Activision?
David Tyler: The market is down about 13 per cent so far year-on year, so things have been tough for everyone. We’re seeing some dynamics emerging on certain platforms that weren’t really a factor last year. It is important for us to see first party platform holders keep investing in their platforms, and they are doing a great job of that and in helping to drive organic growth for the industry as a whole. The recent price adjustments on consoles is all good news for us and the breadth and depth of our portfolio has undoubtedly played in our favour so far in 2009
One of the market dynamics we do benefit from is that the big are getting bigger, so the established franchises like Call of Duty and Hero will help. On our evergreen franchises we’ve had a pretty good time of it this year. Guitar Hero continues to perform and we continue to invest in that franchise, with various media and trade based re-heat programmes to refresh the offer. Call of Duty back catalogue has continued to be a huge success story for us all year and have regularly delivered top ten placements in ChartTrack’s All Formats Chart despite competition against much newer titles that have launched.
How has the exchange rates affected Activision this year?
Andrew Brown: It has affected all of us actually. From what it costs to buy a physical product produced in Euros, and you’ve got to buy it in sterling, then that has affected us because the pound is so weak. If your parent company is in the US, then you feel it because the sterling you send back when it is converted to dollars doesn’t look as good either. So there are massive price increases on the back of the pound, and cost increases when we buy hardware from China. We’ve suffered from that, the industry suffered from that. It’s improved a little bit because the pound has strengthened.
In February Activision released its Wii casual range. How did that go down?
Roy Stackhouse: I would say it has been fairly successful. It was released in probably the most cluttered marketplace of all.
We spoke to retail about the Fun4All range in August/September last year. We believe it has a place in the market, and we needed to position it right so we worked with retail on that. The range was targeted at the casual marketplace, which is far more price-sensitive and very competitive. But we believe it delivers, and we were talking to retail to continue to evolve that part our portfolio. There are more titles being released this year, and within that sector it continues to be successful. But it will never be a Call of Duty or a Guitar Hero.
Is the Modern Warfare behemoth a difficult thing to maintain?
David Tyler: Certainly expectations are extremely high and rightly so. The calibre of the team at Infinity Ward and the sheer quality of the game fuels a very positive acknowledgement throughout the market place of everything we do in relation to Modern Warfare 2.
We work very closely with our global brand team in the US and sometimes with the studio directly to construct marketing, trade and PR programmes that are as hard-hitting as we can make them. We are always looking for new ways to really drive standout on a game like Modern Warfare 2 where we have to make sure we are being fresh and different. If you look at how we implemented the reveal for Modern Warfare 2 here in the UK earlier this year, we were keen to be original and aggressive with our marketing programme. This resulted in us running our first TV ad during the Champions League final to really drive it out there.
Activision teased the game and set a date for it really early. Is that a major change for you? It seems that many publishers this year are teasing on twitter or leaking something…
David Tyler: Yeah, we have observed that this year. Assassin’s Creed II ran a TV reveal earlier in the year and more publishers are starting to take that approach when the game justifies it. Everyone is seeking early engagement for their titles. We’ve always wanted to engage as early as possible for appropriate titles with our core audience. Of course there are often some valid constraints on being able to achieve this, but it is our preferred approach.
The reason Infinity Ward dated Modern Warfare 2 so early is that they knew they were producing something very special and it was part of the strategy to actively lay claim on a certain date that we can get retail and consumers focussed in on.
And that’s something they do in the movie industry too…
David Tyler: Exactly, and it helps everyone, including other publishers and first parties who can then make their own decisions around how to optimise launch timings on their own products
Roy Stackhouse: And it really helps from a retail perspective. One of the biggest criticisms from retail is that a date can come so late that it’s difficult – unless you’re a games specialist – to react. To have a date set so far out and to know what the strategy is great for everybody involved – From building the product, to getting the in-store right, to talking to the consumer.
It also gives continuity to retail, so they can put that launch to bed and focus on the rest. So everybody wins from it.
Infinity Ward has a lot of control on the franchise too don’t they?
David Tyler: Their track record of developing high quality games is pretty much unsurpassed. The mindset they bring to the table is to drive the highest possible quality of standards across the whole process, be it the development process, the creation of marketing and PR assets, the showcasing of the game to the press or retail, the marketing programmes, in-store executions… you name it the standards and expectations are set very, very high. It’s this mindset and attention to detail and unrelenting focus on being the best that drives success on the scale it does
Finally, why should retail be excited about Activision’s Q4 line-up?
Roy Stackhouse: First of all is the amount of different consumers our portfolio talks to. We are in the music genre, the casual arena, the sports genre, the racing sector, RPG, first person shooters… so from a retailer’s perspective we’re talking to pretty much every consumer that’s walking through their front door.
You’re absolutely right there are logistical headaches involved whenever you bring something new to the market. But doing this helps reinvigorate the sector. It takes it to the next step and engages more consumers. And this is ultimately what we need to do in the category as a whole. If you look at Q4, not just us, if you look at games such as Assassin’s Creed II, you can see games that will push the boundaries. And this will hopefully lead to a fantastic 2010 for everybody.
David Tyler: Our portfolio is really broad now, combine that with some of the biggest products in the market, some profound innovation, some solid retail plans, as well as media and PR programmes, then we can look forward to a really strong Q4. We’ve got a new PR agency, Frank PR, who is driving creative feature ideas in the national press, which we didn’t have in previous years.
Roy Stackhouse: One game I’d like to mention in terms of innovation and moving into a different area is Bakugan. Because this is a different sector of the market for us. It is going to be a huge toy franchise, and what we’re doing with Bakugan from a peripheral perspective is offering something for the board game that you can’t get unless you buy the video game. So we’re trying to bring the two together. We’ve got real big hopes for Bakugan this Christmas, and so I think it is one to keep your eye on.