Activision CEO Earns 64.9 Mil
http://www.gamespot.com/news/bobby-kotick-earns-649m-in-2012-6407651
In an Era when we see countless dev's and studios being closed how can anyone justify paying anyone that amount of money
In an Era when we see countless dev's and studios being closed how can anyone justify paying anyone that amount of money
Replies
And I don't think it's complete irrelevant to the closing of studios. Part of that pay had to do with stock options. The stock can actually go up, when they close studios.
Plus, nick didn't saying that if he was paid less, that the studios wouldn't have been closed. He was one of the highest paid CEOs, yet he can't manage to keep studios profitable? I think there's a lack of justification for his pay
his job isnt to keep the studios profitable, his job is to keep the company profitable.
and while Im sure he would love to have all of his studios pull in profits, thats not in the cards and he made the cuts necessary. take an objective view on cost/return of the recently closed studios. would you pay out of your own pocket just to keep people employed? if you answered yes, I really hope you donate to charity, because I dont.
yup, I donate to charity when I can, mostly in the form of blood donation but I'm going to look into volunteering for Habitat for Humanity. Unfortunately I have too much empathy to be a blood thirsty CEO.
At the moment, I would like to say yes, I would feel wrong taking such a large sum of money, while laying of a studio, because I have this horrible thing call morals. I could never say for sure, since I have not been in a position like his. Especially if I thought I was about to become unemployed, but all I can think of, is how many salaries a few million dollars would cover. At minimum, I would work to relocate, and close the studio, to minimize operating expenses, yet keep talented people.
Are you sure you aren't thinking about Electronic Arts CEO John Riccitiello? He recently resigned.
As said his pay way outstrips the profit other larger companies/banks get. Its him and the board scratching each others back. The only people who can do anything about this are part of the problem, the stock owners. If they get a large percentage complaining or even starting a lawsuit of how that excess wasn't put towards higher profits last year.
Well, if he had passed on getting such a huge bonus, Activision could have afforded to keep some of the studios it closed open. That much money could have sustained a mid-size studio for two years straight.
At the end of the day, Robert Kotick is a business man, not a game developer. He doesn't actually care about making games, just making money off of those who do. So in that sense, I can't blame him for the decisions he's made. They have been squarely targeted at benefiting the business side of things, and providing a maximum return on investment to the shareholders.
At the same time, accepting such gargantuan bonuses in the current market is disgusting, and sets a very negative precedent. That's the kind of golden parachute that you accept just before retiring, not as an annual bonus on your usual salary.
This industry is badly in need of restructuring.
All you have to do is convince those at the top to start hating money.
What he does with his money tells you a lot about where he comes from and why he is in the industry.
you are saying that activision doesnt have another 55 million to spare? yeah, they have a 4 billion in revenue, pretty sure 55 million is meh. Im okay with the general consensus of him being a douche but his salary, while massive, is a drop in the bucket from ATVI's revenue, and therefore the closing of the studios is irrelevant to the amount of money he was paid. he closed them because it was good business, NOT because ATVI couldnt afford to keep them open after paying him his salary.
exactly, that is his job.
the publishers are still pulling in 30% ROI, which is pretty freaking massive. it doesnt make sense to call for an industry wide reform when the companies that failed, did so because of there own internal problems including, bad management, failed funding, poor sales etc...
man I dont think ive ever written this much on polycount.
No, that is a short-sighted and defeatist approach. A more aggressive, ambitious solution would be to do the current powers-that-be one better. The kind of excess and waste that permeates the current industry is inefficient, and makes for less effective development. A new publisher who took a much more efficient approach to the solution would be able to out-compete the current industry.
What we need isn't for the current administration to do an about-face. We need the current administration to be replaced by an improved system that is leaner and more competitive.
Not everyone can be as lucky as Gabe Newell making millions in MS and translating that to independent success.
And who is going to replace them? If all of these wonderful CEO's exsist, why don't they step up? It's like the argument that we all need new better politicians to move in and replace the current ones. Well, by the time you get to that high level you have lost any and all morals. The ones who are cutthroat enough to rise to the top of politics or large companies are just that, cutthroat.
So I would bet my favorite organ that if you rose to the ranks of the Activision CEO you would take your huge paycheck and run.
It's not defeatist if it's reality. I don't know about you, but I'd call a 1.13 billion profit pretty fucking effective of a system they have in place. That's not revenue, that's what's left after all the bills are paid. Which, they raked in 4.86 billion over the course of 2012. So they have a pretty high operating cost as it is.
You're right. But look at what Gabe has managed to do with Valve. Valve is a prime example of the future of game development. They built that company up slowly and steadily, instead of trying to chase the most recent trends and buzzwords. Thanks to that approach, Valve is now incredibly stable, and can call their own shots. They are taking an approach to game development that gives them creative freedom as well as nice, stable profits.
And while it would be more challenging to find investors who were willing to put money toward a slow-burn project, it wouldn't be impossible. While some money men only want a quick buck, there are plenty who understand the value of a safer investment. If you put together a business plan for a leaner, more secure game development house, you would be able to get the funding necessary.
For every hot new company, there are plenty of older, more stable companies. People still invest in Campbell Soup.
what ATVI makes can be considered irrelevant too if you think in a different context.
lets say, average game devoloper makes 70K a year. CEO made 64 million that year.
he made roughly 900 times that of an average employee.
makes sense ?
at the end of the day a CEO like seems to have only one goal, hoarding cash and making the pile bigger every year and not really investing any considerable amount of it back.
not all CEOs are like that fortunately but the ones that are, shame on them.
While I agree with the fundamentals of your suggestion, where are these companies in the videogame space? Surely there are *some* rich investors who are more sane. Yet, where? Valve could've easily failed with Half-Life after burning through Gabe's money. There's still risk that's not predictably avoided. Valve takes a cut of essentially the entire PC market, which means they can gloss over any and all inefficencies with money. Blizzard has WoW. Most companies are desperately trying to put out F2P titles for that reason, to have a somewhat stable cash cow. Everyone else is dependent on the lifeblood of publisher money.
And in a non capitalist society, this wouldnt happen? History has shown that no matter what society type you have, even those based around karl marx, those in power or those who achieve power always take far more than everyone else.
The problem is publishers, middle men made up of lawyers and investors looking to control and profit from the actual talent that exists which makes the games. The developer to publisher relationship is not much different than a whore to her pimp. Pimp takes all the money for himself, gives her just a fraction of what he has.
Techically, Game Newell IS one of those rich investors. The difference is that he opted to build and manage his company himself instead of investing in someone else. He saw an opportunity in an industry that interested him, and he chose to go for it. Now he effectively owns and drives the PC gaming industry.
Valve had the foresight to develop Steam when digital distribution was still in its infancy. They took a long-view approach to PC game development, and it ended up paying off handsomely for them. They had to invest a decent amount of money in it, but they didn't break the bank doing it all at once. Again, they took a slow-burn approach, and built up the Steam service over several years.
The same was true for Blizzard. While World-of-Warcraft made a decent profit right off, Blizzard didn't rest on their laurels. They were committed to the long-haul, and kept the game viable with regular updates to the content and game interface. That slower, more stable approach allowed them to lock out every other competitor to the MMO-RPG market.
The current mega-publisher model is blindly following short-sighted trends that could lead the console industry into disaster. They have actively opened the door for someone else to compete in areas that they've abandoned. And some companies are already waking up to this fact. Nintendo's recent announcement of a Wario game for the Wii U to be released at $40 is a sure sign of this. The market is changing. Clinging to the past structure is going to be considered folly within the next three years.
http://www.escapistmagazine.com/news/view/123577-Updated-Activision-CEO-Earned-64-9-Million-in-2012
"Upon further clarification of the compensation report, Activision has explained to us that approximately $55.9 million of Kotick's reported earnings - which, as we note below, comes in the form of stock - is actually a 5-year performance-based figure, rather than a single year guaranteed sum. The number was reported on the filing because 2012 is the year in which the agreement was made. Kotick made roughly $8.33 million in actual pay last year, which falls in line with his prior year earnings."
Uhhhhh...wow.
It's one thing to close studios that aren't doing well, it's another thing entirely to fire an entire development team the day after reaching feature complete on a project. It's almost as if it was designed to fail. Who is making these sort of plans?
Publishers need to stop thinking that rushing a game to completion, kicking it out the door, and then letting the entire team go is a good way to make money.
I really hope activision lost money on that project... because I don't want it to happen again.
I imagine the game really falls short of what it could have been too.
Oh and another thing that is bothering me as of late...
Our development costs keep going up and up these days It's quite unrealistic to think that your 3rd or 4th title in the series is going to pull double or triple the number of copies sold. I don't understand why companies are budgeting based on those sort of numbers. It simply isn't sustainable.
I really hope that PBL rendering pipelines will help cut down on the hours spent working on iteration. But in addition to that we really need to restructure our approach to making games.
Yes, you are correct. I wasn't sure if this was the same guy (I don't bother remembering their names usually).
People here (and those complaining elsewhere) need to reread this. That's a substantial difference from what was initially reported. $8.33M is considerably lower than $64M. Next year, he will fall back down in the ranks of CEO pay.
CEO's and other people in superbly high positions give up their 20's, 30's, and at least some of their 40's to get to where they are unless it's a case like Zuckerberg and Facebook. Their compensation? Gross amounts of money. Just another way to think about it.
If they can't produce profitable games and they can't be turned around then it turns from a business into charity and that isn't the business they are in. Otherwise they would be tossing out, "no strings attached" grants. Even the Bill and Melinda Gates foundation demands a return on investment at some point. People might be able to talk them once into dropping some money on their venture, but it's not going to happen again and again without some kind of a path to profitability... So even in charity it doesn't happen.
I also think that the company should be looking to foster new ventures and push those funds into studios that do work. They have to be very careful of franchise fatigue and they have said in the past, quite a few times, that they are happy to mine the existing IP's and keep their innovation contained within that IP. I have to wonder just how married is he to that idea? He said that in 2009, he seems to be happy with that path, his wallet is feeling pretty sure about the last 5 years, so I'm not sure he will be motivated to change course that much. He seems more interested in maintaining the current course, which could be headed for dangerous waters.
I think franchise management requires a different skillset than starting up new IP's. They might need to throw a lot of IP's on the wall (cheaply) and see what sticks and if they aren't built to do that cheaply than could be in for some rough sailing.
I also think that franchises don't last forever, they all jump the shark at some point. By the time they realize they need new IP it might be too late to actually get the right kind of talent together and get something out the door. A staggering behemoth needs an equally large crutch to prop it up. If they invest heavily in only one or two new IP's and they are certain they will work out, what happens if they don't perform as expected? maybe they have the potential to perform that well but need time and titles to ramp up the fan base?
Kotick might be fully willing to stick with what he sees as working and he might be so devoted to it that he wouldn't mind pulling the ripcord on his golden parachute if it ever fails to turn a profit. That CEO mentality has left a lot of unhealthy companies behind.
Bottom line, if it was my company I would be investing in fostering new IP's, a lot more than what they seem to be doing. Maybe they are and it's just deeply under the radar... fingers crossed.
is it really though? that kind of salary/bonus could keep a studio running for 5+ years.
Bizarre Creations and 7 Studios (2011)
Budcat, Underground, Luxoflux and RedOctane (2010)
Shaba and Sierra (2009 / 2008 )
Yeah, squeaky clean track record there
reminds me of this: first place is 64 million dollars, 2nd place is a set of steak knives.........3rd place is: you're fired.
[ame="
if that were the case then ALL jobs in the company have to be measured by the same criteria in order to find the proper distribution of wages from the lowest to the highest. as we all know that is not the criteria that is used for any artist or supervisor, or even management.
huge bonusus tied to company performance are done for a reason. the reason is to focus the ceo and upper management on short term profit margins. and yes 5 years is 'short' term in the view of major corporations shareholders. this short term performance driven payout allows the upper management to abstract themselves form the long term viability of the whole company and distance themselves from the other divisions of the company that make product. they only have to focus on profit for the sort term and there reward is a huge payout at the end if they can do that.
i don't think i need to tell you that short term reckless management is what drives studios to close. whether cutting highly skilled jobs for short term profit which leads to huge inefficiencies and losses later because the company can not replace those people. or driving product exclusively by market driven research which they think will give the biggest return, but ends up flopping because it's un-creative boring garbage. there are probably hundres of other ass backwards businesses strategies that this style of management repeats over and over only to destroy profitable companies and studios in a relatively short amount of time.
the reason why these are paid out as stock and other investment is so they do not have to pay income tax like you do on the money you make. they can do all sorts of accounting tricks on investment funds to pay essentially no tax on what is in principle there income. that is why people like warren buffet pay less tax then his secretary does.
And we don't??????? Sounds like you have fallen hook line and sinker for the corporate excuse. All the while pay disparity rises.
But I do think the compensation at that level, is potentially biting into their future success by diverting funds that could go to future development, specifically the creation of new IP. The basically just made a bunch of money and flushed it down the toilet, hacked off their own legs and flushed those too all just to make one guy who was already insanely wealthy, more wealthy.
Do they think he will be happy next year (or in 5 years) with less? They have a very hungry animal now that expects a certain level and I really think they need to look at what it will take to maintain that relationship...
The problem with this idea is the board and the shareholders won't allow this to happen. You know the the whole LucasArts closing? Big George kept that studio open because he was making the decisions (and he printed money elsewhere in his empire) so he could float all of the LucasArts employees for the long term.
Disney comes in and now they have stockholders to answer to and LucasArts was unprofitable in the short term. So rather than barely keeping the afloat, they opted to gut the studio and save cash now.
This is the core problem with the mega publishers. Board of Directors and stock holders don't always know what's best for games. They just want the bottom line on their options and are ruthless in the pursuit.
edit: games will eventually move to the movie development model completely. studios will have a "core" salary team that makes of a fraction of the overall dev volume. the rest will be contract. This is going to happen. Then, in about ohhhhh i dunno, maybe 5,6 year???....the model will shift again and all those contractors will be out of work because people (executives) will realize it's cheaper to outsource EVERYTHING over sea's to some 3rd world shit holes where making a game cost 10 cents and hour. It's already happening with movies.
1. only a handful of companies will stay true to traditional models in the future. For example: Epic Games will likely be Biz as usual for a good long while (unless china buys them all up)
2. Publishers will NEVER change. The Dark side of the force (greed) is too powerful.
I think if you realize those facts and adjust your future accordingly, you'll be finnnnneee
ish.
i think you have a good grasp on some of the business logic. but you might be surprised that even the most hard nosed business person does not like to see the destruction of peoples lives and careers or the closure of studios. closing a studio is always a loss and a risk. not just in money and time but also in human assets (ie the artists). you may not believe it because management will never admit to it in most cases but that IS there most valuable asset. just because they do ruthless things most of them know its not good business in the long run and not good for the industry. the others are just psychopaths and are mentally unstable. that sort usually destroys the whole thing if given free reign, those types usually get canned because there dangerous and destructive.
it would be silly for the management to take the position of the artist and advocate that position to there detriment. its just as silly for the artist to take the position of management and advocate that position to there own detriment.
you need to think about what is good for me? what is good for us (the artists)? we are all smart enough to see the logic and reasoning of management. but are we all smart enough to realize that 'they' are not 'us' and 'we' need to advocate for 'our' welfare and agenda. i doubt you will ever find an executive arguing to his colleagues they should just do what the artist want and that is that. it seems a bit silly for artists to do the same with there colleagues.
in real terms people can 'expect' to make a living wage, some benefits, health care, some level of guarantee for relocation or retraining if jobs are made redundant. and some form of pension for retirement. those are the requirements in order to have a modern first world economy. where people can be productive enough to compete in the global economy in high level industries. countries that have failed at that end up like india or pakistan. where you have a massive unproductive labour force. the economy can never produce above its own consumption. and innovation and global competitiveness is very low. those places are trying as hard as the can to copy the west and give there people all those things i mentioned above. no one wins with an ever decreasing wage, destruction of jobs and skills. social instability and substandard education.
some of the corporate practice in the west are killing the goose that lays the golden egg. it will eventually hurt them even if they can avoid it at first. we should not be so naive as to buy the propaganda that promotes destructive policies so a few billionaires can make a quick buck at yours an my expense in the long run.
Both of these are opposite side of specturm. Extremites, And we shouldn't not encourage extremities in any shape or form.
People should be paid adequatly for their work (who is to decide what is adequate is though question).
And it's no capitalism. It's neocapitalism.
True capitalism happen on Kickstarter.
How? Learn Mandarian, accept Authoritarian control, then move to China???
The problem with this argument is that it assumes that developers are entirely at their own whim as to the product they develop and produce. This is of course a fallacy; often a publisher will only fund specific franchises or genres, may not offer sufficient funding or time as far as the developer is concerned, and generally meddle in the design via external designers / producers.
It ain't so black and white.
Wrong. Sociopaths though not quite the same always as psychopaths make great CEOs and sometimes surgery doctors (not distracted by empathy versus just attempting to repair an organism).
http://www.forbes.com/sites/jeffbercovici/2011/06/14/why-some-psychopaths-make-great-ceos/