December 1, 2010 / 12:22 AM / in 7 years

Activision cool to mobile, social games

NEW YORK (Reuters) - Activision Blizzard Inc sees little financial opportunity in the young but growing markets for mobile and social games, and expects growth to come from expanding the reach of its existing video game portfolio.

Activision Chief Executive Bobby Kotick said that as the customer base of the $50 billion video game industry continues to grow, the company's blockbuster franchises like "Call of Duty" and "World of Warcraft" still have the ability to reach new gamers.

"The place where you have the opportunities for growth is within the communities of franchises we control," Kotick told the Reuters Global Media Summit on Tuesday.

Kotick saw less potential in games played on smartphones like Apple Inc's iPhone and those played on social networks like Facebook, where start-up Zynga has been dominant.

"We don't view the App Store as a really big opportunity for dedicated games," Kotick said. He said tablets like the iPad may be attractive to Activision as a gaming platform in the future, but not yet.

Social games -- which are free to play -- attract a huge number of users, Kotick acknowledged, but it's more difficult to translate that into revenue.

"It's a different question assessing it as a business opportunity. Right now we don't see an opportunity for us to participate in that market," he said.

Kotick's view contradicted those expressed by rival game publishers and major media executives from the New York Times Co and Walt Disney Co.

Electronic Arts CEO John Riccitiello told the summit on Monday that his company is investing heavily in mobile and Internet-based games.

Activision is the largest stand-alone game publisher in the world. The company was formed in 2008 through the merger of Activision with Blizzard, the former games unit of France's Vivendi SA, which still owns more than half the combined company.

BIG HOLIDAY QUARTER

Expectations are high for Activision's fourth quarter. The publisher launched its latest "Call of Duty" title in November, and it became the fastest-selling game of all time.

The company's profits are underpinned by its high-margin Blizzard division, and more specifically by the multiplayer online game "World of Warcraft."

The company is set to launch the game's latest supplement, on December 7. It already has 12 million subscribers, providing Activision with a stable foundation of monthly revenue.

Kotick said he was not concerned that next year's launch of Electronic Arts' closely-watched online game, "Star Wars: The Old Republic," would eat into the user base of "World of Warcraft."

"I can't say that we're hugely concerned about that... the audience for 'World of Warcraft' is a pretty committed group of players," he said.

Kotick conceded that the music genre, once a robust growth driver led by titles like "Guitar Hero," is hurting.

"It's a challenging business right now... I think that we have some work to do in figuring out new pathways to innovation," he said.

With nearly $3 billion in cash, Kotick gave little hint that Activision was interested in deploying its capital on acquisitions, saying he preferred to invest in the company's current franchises.

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