19 Interviews

Interview: Activision Publishing CEO Eric Hirshberg on the innovator's dilemma

By Rob Crossley on Thursday 5th Sep 2013 at 9:49 AM UTC

If you're not familiar with The Innovator's Dilemma, a seminal thesis published by Harvard professor Clayton Christensen, here's the short of it: Even the most successful businesses will fail if they focus too much on their customers' existing needs, because they should really be thinking about what people will want in the future.

The warning is simple: keep returning to the same idea and you'll never make it big.

An abundance of examples can be found in games. Back when everyone was building sandbox titles and GTA clones, Infinity Ward was establishing a new model for the first-person shooter and outsold them all. When everyone switched to cloning that, Markus Persson transformed the indie landscape with Minecraft and sold 33 million copies (that's more than most Call of Duty games, by the way).

So where does Activision fit in this picture? It has become the biggest games publisher in the west due to its ceaseless push on Call of Duty, but it has also put tremendous faith in new IP and risky ideas.

Now, with the industry on the cusp of a new console cycle, CVG spoke with Activision Publishing chief executive Eric Hirshberg to discuss whether the publisher is innovating enough and if the Call of Duty empire has begun its decline.

Eric Hirshberg was appointed chief executive at Activision Publishing in September 2010

CVG: Over the past five years Activision has narrowed its release line-up. It's now making fewer, bigger bets. Is this a strategy you're going to proceed with?

HIRSHBERG: Yeah I don't see that strategy changing, it's been one we've had for a while and I think our slate has always been relatively small and narrower than most of our competitors. We're getting good results with this strategy too, and I think that kind of focus is good for us creatively. It allows us to focus on the choices we make very carefully, and to ensure you're working with the best development talent, and you're making the right investments from a marketing standpoint in order to succeed.

I look at the continued momentum of Call of Duty, the explosive success of Skylanders, the potential of Destiny and I see this as the right strategy for us.

Isn't there a long-term risk that you're not being diverse enough? You're relying heavily on first-person shooters, for example.

First-person shooters have been stable for a number of generations now, and I don't think that just because Destiny and Call of Duty are in the same genre that they are not diverse. I think they couldn't be more different from one another. One is a deep, mythological sci-fi epic opera in space, the other is a gritty action movie that's come to life. The games are very different from a pacing and design standpoint too, so I think there is diversity there, you just might not see it at face value.

If you look at a genre like music rhythm games, and how a major franchise like Guitar Hero saturated the market so quickly, I just wonder if it's not safer to diversify?

But we have, you're sitting next to a poster of Skylanders, which is a franchise that didn't exist eighteen months ago. It's a new IP, a new genre, a new play-pattern, untested in an area of the business that was shrinking. I feel like people breeze past that when they ask me about diversity. I don't know anyone that's taken a bigger bet on a less proven franchise based on their gut-instinct than we did with Skylanders.

"I think there is a false narrative that all Activision wants to do is put out a Call of Duty every year"

We're doing it again with Destiny - on one hand it's a first-person shooter, on another it's a new genre, it's a shared-world shooter, bringing elements of the MMO into shooters, which is incredibly exciting. We've shown a consistent willingness to take risks, and a consistent ability to take the right bets.

Guitar Hero gets brought up a lot in these conversations, for understandable reasons, but that was another game based on an unproven model that had an incredible commercial run. Just because the entire genre run out of gas at the same time, I don't think is reflective of the fact it was an ill-conceived choice, or something we wouldn't do again given the same opportunity.

Slideshow: Activision's next major project - Destiny

I wouldn't want to it look like I'm portraying Activision as risk-averse, because I don't think that's the case. But when you point to Skylanders and says it proves your point, I think it actually proves mine. It shows that if you go into other genres, if you diversify beyond the FPS, you can succeed.

I know, but you're suggesting that we don't do that already when we're working on two new genres and new IPs at the same time. I think there is a false narrative that all Activision wants to do is put out a Call of Duty every year, when in fact we've shown some real innovation and appetite for risk.

I think that publishers which have wider and 'more diverse' slates are far less risky than us, are far less creative. Just because you have a game in every genre does not mean you're creative.

So, what we do is certainly a strategy that's not for everyone, and it's not the only way to make good business, but it works for us. It's something that pre-dates me, it's something Activision has done for many years.

"I love that we have a passionate audience... but some people took things way too far, and threats of physical violence is absurd"

Moving onto the subject of Call of Duty, I think the fastest-selling game in the series is Black-Ops 1.
I don't think it was the fastest, I think MW3 was the fastest. Modern Warfare 3 got to a billion dollars faster.

I thought that was fastest revenue, which accounts for several things, and not fastest-selling in terms of unit sales?
No, but I think even if it was, the fastest-to-a-billion-dollars figure doesn't include subscription revenue, it's just for the game.

[CVG has since verified that Black Ops 1 is the fastest-selling game in the series in the UK in terms of unit sales]

Following the release of Black Ops 2, some analysts debated whether Call of Duty is past its peak

Do you believe that the franchise can grow any further?
I certainly hope so. The fact that it's a console transition year adds complexity, and if you look historically at what happens during console transitions is there are short-term challenges followed by long-term opportunities. We've discussed that pretty openly, but that said I think the franchise has never been stronger. More people are playing Call of Duty now than ever before, and in terms of performance we're producing the best season of digital content we've ever had.

These things point to key interest and momentum, but there are challenges and confusion in the marketplace with regards to whether people are going for current gen or next gen.

I think the creative challenge we have with Call of Duty is to make a game the fans love and at the same time build a new game that's innovative.

Of course, this year it's also going up against Grand Theft Auto, which is a new challenge for Activision. Though it's not a direct rival, could it still have an effect?
Well we've gone up against Grand Theft Auto before.

Sure, but Call of Duty has become something else entirely since GTA IV.
Obviously, it's a hugely successful franchise, and I get asked about our big competitors every year. We're always up against iconic titles, and I know people like to tell a clash-of-the-titans story, but I feel there's lots of evidence that there's room for more than one successful game, and indeed more than one successful blockbuster. And if people only have money for a few games, I like our chances that Call of Duty will be one of them.

And I suppose it's good for the industry as a whole that there's more desirable content out there.
Yeah, exactly, I've said it before that I want all of the great games in this industry to succeed because more people will be playing games and that's better for all of us. It's not necessarily a zero-sum game where, in order for us to do well, others have to fail.

Slideshow: The next addition to the call of Duty series - Ghosts

I think that philosophy translates to your support of the Wii U. You're saying we all have to do well in this business.
That's exactly right, Nintendo has been a great partner for us. It's a very successful company but obviously having a rough go with the Wii U launch thus far. I'm sure Nintendo and the rest of the industry wanted a different result for the Wii U, but if we can add to the appeal of the platform then we absolutely will. Nintendo is a company that's had hardware hits and misses in the past, but it has always found ways to remain completely relevant. It has some of the best game-makers in the world, and I wouldn't count them out.

Finally, I wanted to discuss David Vonderhaar, the Activision developer who was recently subjected to personal attacks for tweaking a gun in Call of Duty. There was a very important article on Polygon which I believe is the first to suggest that this kind of behaviour is driving away good talent. Do you feel the industry needs to make a stand?
It's a difficult question. Call of Duty is a game that 40 million people will play this month. First off, anything that 40 million people will do is going to result in maybe a few behaving in way that you wish they wouldn't.

I love that we have a passionate audience, people who are engaged and opinionated, that's a gift for people being creative. But some people took things way too far, and threats of physical violence is absurd and I obviously do not accept it.

I think David handled himself with wonderful grace, and I think anyone in the industry who has been through something similar - myself included - can sympathise and relate.

We are, in the end, in this business with our fans. I just feel some people need to get things into perspective a little better.

Skylanders revenues have passed the billion mark already, but Disney has launched a major new competitor with Disney Infinity

But I don't know how the industry could, as you say, 'make a stand'. I don't know what that looks like, or how it could even be done, when you have this mass of ways to connect and huge communities attached to digital ecosystems.

Being a creative person is an exhausting way to make a living. You earn every dollar when you are making something for a living, because you put all of yourself into it. And then you put your creation out there to be judged.

The amount of time and passion that goes into these games is dramatic. These guys kill themselves for their work, and it's not like we don't want to hear from people if they have negative things to say about our games, because we always want to make things better.

So on one hand I think developers have to be ready to receive the praise and critiques, but at the same time I feel some fans need perspective.