Kotick: Social game biz model â??unprovenâ??

Activision-Blizzard CEO Bobby Kotick remains cautious of social game business models, though insists that his company is carefully monitoring the blossoming market.

“Social games, social network integration, mobile and portable games, a few you’re hearing a lot about today, they’re interesting and present brand development and marketing opportunities,” said Kotick, speaking at last night’s Activision financial call.

“[But] they remain characterized by unproven business models, a lot of clutter, and relatively low barriers to entry,” he added.

Social games are known for their disruptive freemium monetization models, where restricted editions of the games are free to play though the full experience will require consumers to pay.

The business has ignited the game industry, with emerging companies such as Playfish and Zynga soaring to high valuations.

Last year, EA bought Playfish in a $300 million deal.

Kotick said the current wave of emerging game markets were ‘speculative’. And when asked if he thought social games were the exception to the rule, he replied:

“Social games is like digital revenues to me where games are social, and to be talking about like casual games like Farmville that are in Facebook, the monetization opportunities are still very speculative.”

Kotick made it clear that Activision was fully exploring opportunities in the broad range of digital segments, but the company is being selective with what it’s backing.

“I think we’re hopeful; we’re spending a lot of time looking at [social games],” he said.

“I think as we always have in the past, when there is an opportunity for a new platform or a new revenue opportunity, we always pursue it thoughtfully, we’ve had great success in doing that, and I don’t think that any of these new potential platforms is any exception.

“We plan to continue selectively expanding our brands into other digital segments like the iPhone as we did with Call of Duty, and will do with other brands like Guitar Hero.

“However, today these opportunities are better utilized as a means to connect our community and extend the brand, and less about financial scale or huge financial return.

“If there is an opportunity to capitalize on some of these new trends in social gaming or in mobile gaming, there’s no better company that’s better positioned to capitalize it on it than we are. And I think we’ve shown that over a 20-year history.