Tales of the Tape #1: GRIT Podcast - The Bobby Kotick Story
A series of articles where I summarize thought provoking podcasts/documentaries.
Welcome to "Tales of the Tape," a new series where I break down the podcasts and documentaries that cross my virtual desk. If you know me, you know I spend hours daily diving into gaming, tech, finance, philosophy, and more. Expect a heavy focus on gaming and tech, but I'll venture into other territories when something's too good to pass up.
I recently listened to Bobby Kotick on Kleiner Perkins' "GRIT" podcast, and honestly, it was one of the most insightful gaming industry conversations I've heard in years. Kotick rarely gives interviews this candid, and hearing him reflect on his three decades running Activision Blizzard offered a fascinating window into how he transformed a struggling company into a $68.7 billion acquisition.
What makes this conversation particularly compelling is the stark contrast in how Kotick is perceived across different communities. To investors and business leaders, he's a visionary executive who delivered extraordinary returns and built one of gaming's most valuable companies. To many gamers, however, he's a controversial figure often criticised for prioritising profits over player experience and creative innovation. This dichotomy creates an interesting lens through which to evaluate his insights.
Note: I'm a huge Blizzard fan and have been since the early days. Warcraft 3: The Frozen Throne remains my favourite game of all time- I still watch competitions whenever I can. I’d argue that Warcraft 3 is one of the big reasons why I am where I am today. I'm also active in both Hearthstone and World of Warcraft, so I bring some bias to this analysis.
The Strategic Acquisition: How Kotick Bought Activision
The way Kotick tells it, his Activision journey started with an opportunity that came through an unexpected channel. In the late '80s, when Nintendo was resurrecting gaming from the ashes of the 1983 crash, he picked up a 25% stake in a struggling company called Mediagenic (the rebranded Activision) for just $440,000. They'd lost a lawsuit over pixel movement patents, and their value had crashed from $20 million to about $2 million.
Here's the part that surprised me: Howard Lincoln, the Nintendo of America chairman, basically suggested Kotick buy the struggling company because it was Nintendo's number one licensee. Insane tip, no? Kotick ended up securing the largest shareholder position and becoming the second-largest creditor for around $1 million total.
Fast forward through decades of smart (and sometimes lucky) decisions, and that investment eventually became worth $68.7 billion when Microsoft came knocking. Kotick calculated it as a 65% compound growth rate over 23 years. That's an impressive return by any standard.
The "Anti-EA" Acquisition Strategy
Listening to Kotick talk about his acquisition philosophy was like hearing someone describe the anti-EA playbook. He likened his approach to Warren Buffett's Berkshire Hathaway method (pretty lofty comparison, I know, but he makes a compelling case at a much smaller scale).
When Activision looked at studios to acquire, Kotick focused on four things:
Are they consistently profitable?
Do they have proprietary tech or IP?
Is the management team solid?
Is there a strong creative vision?
The key difference between Activision and EA? Kotick didn't bulldoze the studios they bought. While EA was notorious for acquiring companies like Distinctive Sports and rebranding them as "EA Vancouver," Activision let acquired studios maintain their identities and creative autonomy.
This wasn't just being nice – it was smart business. Creative teams thrive when they maintain their culture and identity. I've seen countless acquisitions fail when the parent company starts meddling too much with what made the studio special in the first place.
The rivalry between Activision and EA runs through the whole conversation like an unspoken subplot. Kotick doesn't hide his criticism of EA's approach; honestly, history has proven him right. While EA churned through creative teams and executives, Activision maintained stability. Kotick points out that EA's tendency to rotate development teams led to inconsistent quality in their franchises. Meanwhile, franchises like Call of Duty thrived under stable leadership and rotated with the same studios for decades.
Speaking of Call of Duty, its origin story perfectly encapsulates this rivalry. The Medal of Honor team felt underappreciated at EA, so they jumped ship to Activision and created Call of Duty. That franchise went on to dominate the FPS market that EA had pioneered. Talk about shooting (haha) yourself in the foot.
What's clear from Kotick's subtle (and not-so-subtle) digs at EA is that this rivalry drove much of Activision's strategy. When he says Activision consistently outperformed EA over the years, you can hear the satisfaction in his voice. It wasn't just about making money but proving his approach to running a gaming company was superior.
Money Talks: How Kotick Monetised Better Than Anyone
I know this is quite a contentious topic, but… here's where my business brain got really interested. Kotick's approach to monetisation was years ahead of the industry's, and frankly, many companies still haven't caught up.
Take World of Warcraft - when everyone else was chasing the next box release, Blizzard built a subscription powerhouse that kept money flowing month after month. Kotick casually mentioned that 150 million people have paid for WoW subscriptions over time. Just let that sink in for a minute.
Or look at Candy Crush. They initially only monetised 2% of users, focusing on first building a massive player base. Later, they added advertising, bringing in an additional $400 million in operating income. That kind of two-step approach looks obvious in hindsight, but was revolutionary at the time.
What struck me was Kotick's concern about Game Pass during the Microsoft acquisition talks. He essentially argued that different games need different monetization approaches - forcing every game into the same subscription model is like trying to fit square pegs into round holes. Some games work best as premium purchases, others as free-to-play with microtransactions, others with subscriptions or advertising.
It's a lesson some publishers are still struggling to learn: there's no one-size-fits-all approach to game monetisation.
The Blizzard Factor: Lightning in a Bottle
The Blizzard acquisition story deserves its own Netflix series. When Activision merged with Vivendi Games in 2008, Kotick revealed that despite all of Vivendi's studios and projects, only Blizzard, specifically World of Warcraft, was making serious money. That's why he structured the deal as "Activision bought Vivendi Games" rather than the other way around.
What fascinated me most was Kotick's recognition that Blizzard's magic came from its people. He talks about Allen Adham (one of Blizzard's founders), Mike Morhaime, and Chris Metzen (whom he calls "the heart and soul of Blizzard's creativity") with genuine respect. When these key figures left, Kotick brought some back because he understood their irreplaceable value.
Note: I highly recommend watching the BlizzCon videos when Metzen is on stage-you’ll see what he talks about. His official return to Blizzard a couple of years ago had such a positive impact on it, in addition to developers changing their philosophy and returning to their roots.
This approach paid dividends in the competitive gaming space. While Kotick doesn't explicitly frame it this way, Blizzard created modern esports with StarCraft in South Korea, and later globally with games like Hearthstone and Overwatch. The Overwatch League was one of the most ambitious esports ventures ever attempted, and it grew from a failed project called "Titan" that Kotick allowed the team to salvage rather than cancel outright.
Note: I disagree here, as Overwatch esports is far from thriving and never really did. The franchising failed, as they moved away from it. We could argue that COVID played a massive role. I might have to dive into this for an article.
It's a reminder that sometimes the best thing executives can do is get out of the way and let creative talent work. Committees or focus groups can't replicate the "secret sauce" of studios like Blizzard.
The Microsoft Deal: End of an Era
If you've ever wondered why Kotick finally sold to Microsoft after 30 years of fierce independence, the podcast offers some revealing insights. In perhaps the most candid part of the conversation, he admits the competitive landscape has fundamentally changed.
Three threats particularly concerned him:
First, Chinese companies like Tencent operated in protected markets that Western companies couldn't access without partnerships, creating an uneven playing field.
Second, tech giants like Amazon, Apple, and Meta were entering gaming with seemingly unlimited resources and without the pressure for immediate profits that publishers face.
Third, and this resonated with me from my time in the industry: gaming companies are increasingly losing the talent war for AI and machine learning experts to pure tech firms, despite creating some of the most technically complex entertainment products.
The regulatory battle he describes to approve the deal shows how important gaming has become to the tech landscape. Without a proper government affairs team (unlike Microsoft), Activision faced significant hurdles, especially in the UK. Gaming is no longer just entertainment - it's a strategic industry worth fighting over.
I found his concerns about Game Pass interesting. Kotick clearly worried that subscription models might undermine the varied monetisation strategies that worked so well for Activision's diverse portfolio.
When he talks about Phil Spencer and Satya Nadella, you can sense both respect and a hint of concern about Microsoft's ability to maintain what made Activision's franchises successful.
What Made Kotick Different
At the end of the podcast, Kotick reflects on what he values most in employees: Grit. He shares a story about Clarence Avant, former CEO of Motown Records, who warned him about a potential hire having "too much Harvard, not enough Harlem", - saying credentials don't equal determination and street smarts. Kotick ignored the advice and regretted it.
This focus on grit over pedigree says a lot about how Kotick ran Activision for 30 years- the longest leadership run of any major tech company. Unlike many executives who micromanage creative decisions (Hello, Hollywood studio heads), Kotick seemed to understand that his job wasn't to design games but to create an environment where creative people could do their best work.
Three things stand out to me about his leadership approach:
He respected creative autonomy. When he signed off on projects like Overwatch, he trusted the team's vision rather than imposing his own ideas.
He valued long-term partnerships. His 40-year relationship with his business partner Brian is almost unheard of in gaming, where leadership teams change with every console generation.
He understood the value of original talent. Begging talent such as Chris Metzen to return showed he recognised that creative leadership isn't something you can easily replace with a new hire from another company.
Lessons Worth Remembering
Looking back on Kotick's journey from dorm-room entrepreneur to architect of a $68.7 billion acquisition, there are lessons for anyone in gaming leadership.
The transformation didn't happen by chasing quarterly results or following industry trends – it came from patient investment in franchises with staying power and business models tailored to each game's unique audience.
Kotick's approach to monetisation is particularly valuable for those of us on the marketing side. Different games need different revenue strategies- some work as premium purchases, others as free-to-play with microtransactions, others with subscriptions or advertising. Forcing every game into the same model (as he feared might happen with Game Pass) risks killing what makes each franchise special.
Gaming continues to evolve at breakneck speed, but the principles that drove Activision's rise are timeless: respect your creative talent, build games with global appeal, and adapt your business approach to what works for each title, not what's trendy in investment presentations.
Revealing Insights: The Previously Untold Stories
Several revelations that haven't been widely reported in gaming media make this podcast particularly valuable. Here are some of the most interesting nuggets Kotick shared:
Steve Wynn's Surprise Investment: Kotick reveals that casino magnate Steve Wynn was his first major investor, backing him at just 19 years old. In a bizarre twist, Wynn later discovered he unwittingly held shares in Activision worth $35 million due to a loan conversion - shares that Kotick had kept on his behalf without Wynn even knowing about them.
The Nintendo Connection: Howard Lincoln, Nintendo of America's chairman, suggested Kotick purchase Activision because it was Nintendo's top licensee. Even more surprisingly, Lincoln's law school roommate was the bankruptcy judge overseeing Activision's insolvency situation- a connection that likely proved valuable during the acquisition.
The Jurassic Park Miss: Activision nearly secured the Jurassic Park game rights but was outbid by Konami despite what Kotick describes as a passionate proposal involving actual dinosaur eggs. This represents one of his biggest "what if" moments that could have dramatically altered the company's franchise portfolio.
The Failed GoldenEye Sequel: Kotick shares that Barbara Broccoli, who controls the Bond franchise, opposed violence and guns in a potential GoldenEye sequel, effectively killing what could have been another massive hit. This explains why such a successful game never received a proper follow-up despite its cultural impact.
The TikTok Possibility: In a completely unexpected revelation, Kotick discusses conversations with ByteDance founder Yu Ming about potentially acquiring TikTok when the Trump administration pushed for its sale. He even called Microsoft CEO Satya Nadella to propose a partnership instead of competing as bidders.
World of Warcraft Movie Disruption: Kotick bluntly admits that the WoW movie project significantly disrupted Blizzard's game development, causing delays and mismanagement of their primary products. This confirms long-standing player suspicions about why specific WoW expansions felt rushed during that period (Looking at you, Warlords of Draenor).
Hope you liked this as much as I did. What leadership lessons from gaming have served you best in your career? Let me know in the comments.