Video-game maker Activision was founded in 1979 by an ex-music industry executive and four disgruntled programmers from Atari, a pioneer in arcade games and home video-game consoles. In part, the company was established as a haven for game developers unhappy with prevailing industry policy at the end of the 1970s. at the time, systems providers like Atari hired developers to create games only for their own systems; in-house developers were paid straight salaries and denied credit for individual contributions, and there was no channel at all for would-be independents. Positioning itself as the industry’s first third-party developer, Activision began promoting creators as well as ames. It went public in 1983 and successfully rode the crest of a booming market until the mid-1980s.
Its struggles began in 1986, when it entered an ill advised merger with Infocom, a software firm founded to develop interactive-fiction games. The relationship was rocky from the first, and Activision closed down Infocom operations in 1989, after three years of mismanagement and escalating losses. Meanwhile, Activision had also begun to branch out from video games into other types of software and, in order to underscore its new commitment to a broader product line,changed its name to Mediagenic. By this time, however, competition in the video-game market had increased substantially, and the decision to expand into areas beyond its distinctive competence turned out to be a major strategic blunder. By 1991, Mediagenic was bankrupt.
This is the point at which Robert Kotick happened upon Activision/Mediagenic – “a company,” as Forbes magazine put it, “with a sorry balance sheet but a storied history. “Kotick, a serial entrepreneur with no particular passion for video games, bought one-third of $440,000 and looked immediately to industry leader Electronic Arts (EA) for a survey of best practices in the industry. What he discovered, however, was a competitor whose culture was beset by internal conflict – namely, between managers motivated by productivity and profit and developers driven by independence and imagination. But EA also sold a lot of video games, and to Kotick, the basic tension in EA culture was not entirely surprising : clearly the business of making and marketing video games succeeded when the creative side of the enterprise was supported by financing and distribution muscle, but it was equally true that a steady stream of successful games came from a company’s creative people. The key to getting Activision/Mediagenic back in the game, Kotick decided, was managing this complex of essential resources better than his competition – notably EA—did.
Video-game maker Activision was founded in 1979 by an ex-music industry executive and four disgruntled programmers from Atari, a pioneer in arcade games and home video-game consoles. In part, the company was established as a haven for game developers unhappy with prevailing industry policy at the end of the 1970s. at the time, systems providers like Atari hired developers to create games only for their own systems; in-house developers were paid straight salaries and denied credit for individual contributions, and there was no channel at all for would-be independents. Positioning itself as the industry’s first third-party developer, Activision began promoting creators as well as ames. It went public in 1983 and successfully rode the crest of a booming market until the mid-1980s.Its struggles began in 1986, when it entered an ill advised merger with Infocom, a software firm founded to develop interactive-fiction games. The relationship was rocky from the first, and Activision closed down Infocom operations in 1989, after three years of mismanagement and escalating losses. Meanwhile, Activision had also begun to branch out from video games into other types of software and, in order to underscore its new commitment to a broader product line,changed its name to Mediagenic. By this time, however, competition in the video-game market had increased substantially, and the decision to expand into areas beyond its distinctive competence turned out to be a major strategic blunder. By 1991, Mediagenic was bankrupt.This is the point at which Robert Kotick happened upon Activision/Mediagenic – “a company,” as Forbes magazine put it, “with a sorry balance sheet but a storied history. “Kotick, a serial entrepreneur with no particular passion for video games, bought one-third of $440,000 and looked immediately to industry leader Electronic Arts (EA) for a survey of best practices in the industry. What he discovered, however, was a competitor whose culture was beset by internal conflict – namely, between managers motivated by productivity and profit and developers driven by independence and imagination. But EA also sold a lot of video games, and to Kotick, the basic tension in EA culture was not entirely surprising : clearly the business of making and marketing video games succeeded when the creative side of the enterprise was supported by financing and distribution muscle, but it was equally true that a steady stream of successful games came from a company’s creative people. The key to getting Activision/Mediagenic back in the game, Kotick decided, was managing this complex of essential resources better than his competition – notably EA—did.
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