Console transition pains not a bad problem to have - Hirshberg

At last week's Electronic Entertainment Expo, Activision took the AAA publishing mantra of "fewer, bigger, better" to a new level, devoting its entire booth to just three games: Destiny, Call of Duty: Advanced Warfare, and Skylanders: Trap Team. With The Amazing Spider-Man 2 just launched and Transformers: Rise of the Dark Spark arriving next week, some of the publisher's narrowed showing could be chalked up to timing. Speaking with GamesIndustry International at the show, Activision Publishing president and CEO Eric Hirshberg acknowledged the company had "a non-casually held strategy" to do a few things and do them exceptionally well. At the same time, he saw the publisher's lineup as broadening over previous years in some key ways.

"It's funny that you're perceiving it as compressed because I feel like a few years ago we got the one-legged stool question on Call of Duty," Hirshberg said. "Then Skylanders came, and now we've got Destiny. I feel like we've been expanding the footprint, at least of tentpole franchises...We don't strive to compete in every category or genre. We strive to do things we think we can do better than anyone else and bring something really special to the market. In all three cases--Destiny, Call of Duty, Skylanders--I feel we have a pretty solid reason to believe we can do that."

"We don't strive to compete in every category or genre. We strive to do things we think we can do better than anyone else and bring something really special to the market."

Of course, all three of those games have their own challenges and opportunities. Destiny marks a $500 million investment in a new IP in the crowded first-person shooter market. Call of Duty: Advanced Warfare is the first installment in the series with Sledgehammer Games as a lead developer, and Skylanders is attempting to retain control of the toys-to-life genre it created, even as the competition ramps up with Disney Infinity adding Marvel Comics characters and Nintendo rolling out Amiibo figures that interact with a variety of first-party titles.

With the abundance of competition in the genre and plastic peripherals in users' homes, Hirshberg understands concerns about the genre undergoing the same sort of saturation that plagued the rhythm genre several years ago and put Activision's own Guitar Hero series on the shelf. He understands them, even if he doesn't really share them.

"Of course that's a concern we talk about a lot, but at the same time I think there are a couple key differences," Hirshberg said. "Skylanders brought two very stable markets together. Kids have collected toys since the beginning of time, and I don't think anyone thinks that kids' interest in video games is going anywhere anytime soon. So we brought two very stable markets together in a fresh way.

"I think what the rhythm music genre did was it brought a lot of new people into gaming that might not have been core gamers or people committed to that hobby or art form, but were there just to visit, to play that particular type of game. So I think perhaps they were a less stable long-term audience than what we have on Skylanders. But of course, new competition is pouring in and we need to make sure we've got the best games and the best innovations so we can continue to get our unfair share of the market."

As existing franchises, one thing Skylanders and Call of Duty have had to contend with is the transition of console generations. Demand for games on legacy platforms has dropped faster than new offerings on next-gen systems has taken off, and that's left Activision's biggest series selling down year-over-year.

"Whenever there's a console transition, there's been a disruption to demand for software because what generally happens is that people buy the new hardware, and in this case they bought it faster than anyone anticipated," Hirshberg said. "But when that happens, demand for software on the last generation, where the majority of the installed base still resides, declines. So we didn't anticipate that they would outperform their predecessors because they were selling into the biggest, most stable installed base at the end of the console cycle on both platforms."

"If we were sitting here and you were asking a question about everyone buying a lot of Xbox 360 and PS3 games but nobody's buying the new machines, I think that would be a worse equation for the industry."

Hirshberg is pleased with how Activision's franchises have handled the transition relative to the rest of the industry--he noted that Call of Duty: Ghosts is the number one game on both the Xbox One and PS4, and Skylanders is leading in its category on a global basis--but he stressed that the console transition hasn't yet finished. Although given the trends, it might not take as long as in previous generational switch-overs.

"In the last console transition, some of the legacy hardware remained incredibly potent for years into the cycle," Hirshberg said. "PS2 in particular, people kept buying games for that a few years into the console transition. We see the uptake in adoption of new hardware happening faster, and demand for last-gen software declining faster. That creates short-term problems, but if you have to have a set of problems, I'd pick that one because it's the one that sets us up best for the future...If we were sitting here and you were asking a question about everyone buying a lot of Xbox 360 and PS3 games but nobody's buying the new machines, I think that would be a worse equation for the industry."

As for Activision's first new IP native to the now-current console generation, Hirshberg likened the investment in some ways to its last big new IP, Skylanders, calling those bets "very carefully considered."

"We made a sizable gamble on Skylanders too, and I remember back a couple years before it launched, a lot of people were sitting in interviews like this scratching their heads," Hirshberg said. "'Why are you getting into the kids genre when other publishers are leaving it or struggling with it, and the Wii's declining?' It was hard to find the graph or the chart that made that look like a no-brainer. What made it look like a no-brainer to us was the response it got from kids, watching playtest after playtest of kids putting toys on a portal, bringing them to life in the game, and watching their eyes pop out of their heads.

"With Destiny, what emboldened us was the fact that it's a vision coming from Bungie, who's a pretty accomplished and capable team. They have probably one of the best track records in critical and commercial success in the history of the industry. The specifics of what we saw in the vision of this game were very compelling for us. Just as Skylanders brought together two different forms of play, I feel that Destiny brings together pieces from different genres in a really fresh way that we hope is going to be really sticky and compelling."

Just as Activision's approach has led it to showcase a handful of mammoth franchises at its E3 booth, it has also limited the company's ability to take advantage of the full breadth of industry trends. For example, the company's mobile endeavors have been limited, with Hirshberg namechecking only the Call of Duty: Ghosts second-screen companion app, and a handful of Skylanders titles which, while highly rated, Hirshberg said, "haven't necessarily broken through commercially like the console games."

"[T]here are a lot of areas where we've said no in order to be more impactful where we've said yes."

"We've stayed focused on our core business, which is making highly immersive, high production value games. And we've been opportunistic with mobile, when we think that can enhance or expand the experience," Hirshberg said. "Like everything we do, we've been very choiceful about what we put our focus and our weight behind. I think people have misinterpreted this as something to do with mobile. You could ask me the same thing about open-world sandbox games or driving games.

"We are very selective about the things we choose to get behind, and when we get behind something, we push with all our might and bring a tremendous amount of focus and energy. The thing that makes us do that is when we feel like we have an idea, a developer, a competitive advantage of some sort that makes us think we can go huge and make something great. So there are a lot of areas where we've said no in order to be more impactful where we've said yes."