Activision Blizzard shares jump because there’s a controversial CEO

Activision Blizzard Inc. chief executive Bobby Kotick’s participation on the board of Coca-Cola Co. is causing one of the soft drink company’s largest shareholders to call for a change. The fizzy-drink maker is set…

Activision Blizzard shares jump because there’s a controversial CEO

Activision Blizzard Inc. chief executive Bobby Kotick’s participation on the board of Coca-Cola Co. is causing one of the soft drink company’s largest shareholders to call for a change.

The fizzy-drink maker is set to report a 75 percent drop in profits and a drop in net income to $2.03 billion from $6.4 billion a year earlier, which the Wall Street Journal reports will involve a $3.5 billion writedown for a failed marketing campaign.

Activision Blizzard, maker of Candy Crush and Call of Duty, reported its own second-quarter earnings, which showed an earnings per share of 41 cents on revenue of $1.6 billion, slightly better than expected.

Activision Blizzard’s board recently granted Mr. Kotick a new contract. The agreement reportedly allows Mr. Kotick to receive a $35 million signing bonus, and for his base salary to rise to $12 million from $11 million.

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Coca-Cola is Coca-Cola, a company with a singular, pristine global brand. It wasn’t built by the difficult journey required to break into Asia, sell the “pouring nonsense” of quenching thirst to a taste-deficient world. There are no upfront costs involved in designing a beverage, and revenues from a single franchise are unlikely to be affected by a bad product launch.

Do you see a pattern here?

Activision Blizzard, meanwhile, is working to build its brand franchise from its base of Activision titles to a broader portfolio of licensed content, and to new online gaming platforms such as connected devices. A comic book might be the basis for a content designed to attract a global, Internet-connected audience.

Net income has declined more than 50 percent in the first half of the year, and the company has said its second-quarter results, which came in May, will include a drop of at least 40 percent.

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These are headwinds facing gaming companies like Activision Blizzard. The names of gaming titles have become as recognizably familiar to consumers as those of blockbuster film franchises. And for months, reports from across the industry have been suggesting that this has allowed developers to build something that stands a better chance of succeeding in a competitive market.

While there are those who see gaming as a “bleeding edge,” defined by shifts in technology that some believe will ultimately extend entertainment beyond movies and books, other observers caution that a shift in technology will not be enough to advance the cause of a decade’s old idea — video games.

While there are those who see gaming as a “bleeding edge,” defined by shifts in technology that some believe will ultimately extend entertainment beyond movies and books, other observers caution that a shift in technology will not be enough to advance the cause of a decade’s old idea — video games.

The investment message around video games is clear. A 100th annual Hollywood Screen Actors Guild Awards ceremony held earlier this month highlighted the fact that more movies were made this year than any other year in history, according to awards consultants.

But how video games are perceived is less clear.

In 2016, gaming news site IGN pointed out that research from market research company SuperData found that last year, 52 percent of gamers did not consider themselves entertainment nerds.

Among this group, they continue to buy action games, likely because games offer “short, satisfying time activities” that are “far better served by their target audience,” the report said.

Having a CEO on the board of an iconic global company like Coca-Cola is one of the perks in Chief Executive Officer roles that other executives, such as Warren Buffett, may envy. But these perks are not the same as “being part of a transformative industry,” As reported by the Journal.

Activision Blizzard’s board recently granted Mr. Kotick a new contract. The agreement reportedly allows Mr. Kotick to receive a $35 million signing bonus, and for his base salary to rise to $12 million from $11 million.

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