By Devin Coldewey
With skyrocketing valuation numbers for upstart tech companies, it’s not just naysayer pundits crying “bubble.” Activision (ATVI) (Activision-Blizzard, to be precise) is skeptical of the numbers being put forth for competitors like Zynga and Rovio, whose billion or multiple billion dollar valuations put them out of reach for easy acquisition. Perhaps they’re hoping to pick them up for a song after the supposed bubble pops. Is Activision playing a long game, or is it just wishful thinking?
Speaking at Gamescom in Cologne, Activision Publishing CEO Eric Hirshberg poured cold water on the idea of the company making a major investment in social gaming via a high-profile acquisition:
Valuations of some of the companies in that space are out of whack, so that’s an issue when it comes to acquisitions…But don’t mistake careful, methodical planning for inaction. Any new place where people are playing games, at scale, is something that we’re interested in.
Unfortunately, in the fast-moving social gaming space, too much planning occasionally does amount to inaction. While Activision has plenty of successful titles, none approach, or even attempt to replicate, the super-wide, super-shallow distribution of titles like Angry Birds and Farmville. Meanwhile, million-sellers are made overnight in waves of virality which Activision seems incapable of producing.
At the same time, the rapidity of the sector’s growth speaks to the volatility of the market. While Rovio is unlikely to suddenly reveal that it’s folding due to an underdiversified game library, it is possible that the next year will bring more sobering results, or a flattening of the field as more examples of quick growth suggest a pattern not unique to these companies — in which case the high valuations might be looked on as optimistic. At this point Activision would have successfully waited it out.
Either way, Hirshberg’s comments don’t suggest any great level of illumination on Activision’s part. This kind of bemused skepticism doesn’t inspire confidence in shareholders, either, who are (like Nintendo’s) probably impatient with the failure of the world’s biggest game-maker to grasp this new gaming paradigm. They may be starting to see the light, though: they are planning on social-izing Call of Duty, one of the most popular franchises in gaming, with the Elite in-game social network. They’re still late to the party; I guess they hope that’ll turn out to be a good thing.