Activision's Billion Dollar Man

The toys certainly have a tail to them but it's early times to analyse. The attach rate of the number of toys people buy per starter pack has exceeded our aggressive expectations. I think what that shows is there's a real stickiness to the game and a real desire amongst players to go deeper into it. The toys aren't just characters, they unlock new worlds and content in the game. And if you look at the pattern of Call of Duty Elite where players are spending more and more time with the games that they love, and more and more engagement with those games, nowhere is that more true than with kids. Kids get obsessed with the characters they connect with. The best thing we did with Skylanders was taking that extra time to get the investment in story and characters right because that's what kids connect with, they connect through the characters' plight. Toys For Bob and the writers of the original Toy Story came up with the idea that the kid would be an integral part of the story, the characters can't go and fight battles without you. I don't know if we can calculate how big a part of the franchise that is.

There are a couple of different growth vectors within Skylanders and one is expanding the universe of the games with Skylanders Giants. But also licensing. I think people always think of video games as the licensee of IP that comes from other media but that really underestimates the power of games to launch new worlds. Before Skylanders launched we got asked a lot that if we've got this idea of toys coming to life, why not just apply that to a well-established line of toys, isn't that the lowest hanging fruit? But I think that underestimates the power of games as a storytelling medium in their own right. Look elsewhere at the gaming category outside of kids, the characters that are indigenous to games are the ones that are performing the best. Those are the characters that people want to play with themselves, not the characters from movies. A couple of years ago it was the opposite. Games have shown an ability to introduce worlds, characters, mythologies that are really meaningful.

When you have access to the sizeable brains at one of the best developers in the world we pick them liberally, we'd be foolish not to. As we did when we were developing Call of Duty Elite and Blizzard's BattleNet experience. That said, they're different games and they demand different executions, you can't just apply the lessons and the best practices from one type of game to another. There are things we're able to learn and get a head start on based on Blizzard's experience and there are others we've had to invent from the ground up that make the game right for Call of Duty. The best thing about it is the mechanic that makes Call of Duty multiplayer so sticky really lends itself to micro transactions.

Some of the biggest lessons we got from Blizzard's experience were on the business side, how to execute, what to look for in a partner, and you also have to strike a balance between staying true to the brand and making something that's relevant to a different audience in China. The good news is the game I'm seeing in development will be breakthrough and revelatory for the audience.

I can't, we haven't released any formal projections, and I hate that answer as much as you do. China is obviously a massive market and a huge game market, there's a very engaged user base there. The good news is Call of Duty is already viewed as the premier first-person shooter over there before we've already entered the market. That's a rare moment where piracy plays in our favour.

Anything's possible. We try to cross-pollinate across all the various prongs of the Call of Duty brand, with the zombie games on iOS and we have different developers taking different approaches with the annual releases. Wherever there's a piece of learning that becomes well-received its worth looking at and see if there are other applications for it.

When I say it's certainly possible, I don't want that to be misconstrued that it's certainly possible that we're going to change Call of Duty in the West to micro transactions. Just that there might be things that we learn, something that might apply to Elite, or a social game or something that we haven't developed yet. I don't want to give the misconception that that was something we're considering.

I certainly hope so but the answer will come from how many truly breakthrough ideas we can create or come across. We've got Skylanders, we've got Call of Duty Elite, with got the Bungie game in development, we're launching Prototype this year, we've got the annual Call of Duty release, we've got mobile games, the micro transactions game in China and the Transformers and Spider-Man titles. So I don't think our slate is quite as narrow as lore would have you believe.

But I understand your question, as we've narrowed our focus to the worlds that we think we can make the deepest and biggest. Our strategy is clearly not to compete in every category just because a category exists, and try to deliver only incremental differentiators or improvements within that category. Our strategy is to go compete big in the places where we feel like we have a real competitive advantage or difference. With Skylanders we showed that can be a very good strategy because we had something so unique to create a successful new IP launch. And we showed that strategy works with Call of Duty because instead of taking those same resources and making three games in three different categories, we've made big innovations in one category and delivered a big digital service and delivered more content than anyone on DLC.

I always have to point out that we're following gamer behaviour. There's this impression that somehow this is being imposed upon gamers by publishers when in fact gamers are voluntarily spending more and more time going into the games that they love. We would never have created Call of Duty Elite if we didn't see players playing all year round and buying up every single piece of DLC. There's clearly a desire and demand so what can we do to satisfy that? I wish for ten of those truly differentiated ideas, as many as we can find or create, but we're going to continue with the strategy of focusing our energies where we have something special, and not just spreading our chips around the table.