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Bobby Kotick interview: Why Activision Blizzard did the deal with Microsoft

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Microsoft and Activision Blizzard announced the biggest deal in gaming history today with Microsoft’s $68.7 billion cash offer to buy the decades-old independent game publisher.

The deal will combine Microsoft’s Xbox and PC gaming business with franchises like Halo, Fallout, and Forza with Activision Blizzard’s franchises like Call of Duty, World of Warcraft, and Overwatch. And it should be a big boost for Microsoft’s Xbox Game Pass subscription service, which has 25 million subscribers.

Bobby Kotick has been CEO of Activision Blizzard since its inception in the merger of Activision and Blizzard in 2008, and he was also CEO of Activision for decades before that. He engineered the $5.9 billion acquisition of King, maker of Candy Crush Saga, in 2015.

But Activision Blizzard was in a weak position with internal turmoil, thanks to a sexual harassment lawsuit by the California Department of Fair Employment and Housing, which alleged the company had a culture of sexual bias and tolerance of sexual harassment. The company denied the charges, but, combined with weaker performance for Call of Duty and Overwatch, Activision Blizzard’s stock price fell and made it a ripe takeover target. That prompted the deal of the century for gaming.

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I spoke with Kotick about the acquisition and why it made sense to do it.

Here’s an edited transcript of our interview.

Activision Blizzard CEO Bobby Kotick was hands-on with healthcare in the pandemic.

Above: Activision Blizzard CEO Bobby Kotick

Image Credit: Activision Blizzard

GamesBeat: Why do the deal? Why is this a good time to sell? And why is it a good price as well?

Bobby Kotick: The most important is — it’s funny, you and I were talking about AI last time — as you look at the increased competition between Tencent, and NetEase, and Sony, and now you have Google and Amazon, and Apple, and Facebook, and Microsoft and Netflix. We were looking at over the course of the next couple of years, and starting to realize that we need thousands of people to be able to execute against our production plans. We need them in disciplines like AI and machine learning, or in data analytics, or in purpose-built cloud and cybersecurity — and that we just don’t have. And that competition for that talent is expensive, and really hard to come by.

And so, as we’re starting to think about all these skills that we need, that we don’t have and that were really necessary, we realized that we should be thinking about ways to get that talent. This was an acknowledgement and recognition. And then Satya [Nadella, CEO of Microsoft] and Phil [Spencer, head of gaming at Microsoft] and I have had conversations over many, many years of bigger things that we could do together.

And so when Phil called, it happened to be at a time where we were getting ready to start our long range planning process, and realizing that these were going to be issues and challenges. We had the discussion. Phil and I know each other well, and we have a great relationship, and the company has a great relationship. And when you start to think about all the skills we need, all the resources we need, and what they have, it made a lot of sense.

When they originally called, we said we would we think about it, and then they made this offer that was incredibly attractive at 45% premium over the stock price. And I think it just made a lot of sense. And so, the more we spent the time talking about how it would work, and what would happen, what resources were available, they clearly were the best partner.

Laura Bailey is the voice actor for Polina Petrova in Call of Duty: Vanguard.

Above: Laura Bailey is the voice actor for Polina Petrova in Call of Duty: Vanguard.

Image Credit: Activision/Sledgehammer

GamesBeat: And was the sexual harassment investigation factor in this,  as it certainly seemed to affect the stock price?

Kotick: I think what affected the stock price more than that is pushing out Overwatch and Diablo. And then I think people started to see that this year’s Call of Duty wasn’t performing as well. So I think certainly the [California Department of Fair Employment and Housing] filing and the Wall Street Journal article contributed to that, but stocks go up and down for a variety of reasons. I think our view was that at $95 a share with all cash, that’s a really great deal for our shareholders. And so that was an easy and independent judgment. It’s a great deal.

GamesBeat: I assume there are going to be antitrust questions here. How do you address that? And how is this good for consumers? And does your content stay on all the platforms?

Kotick: I think that was an important part of the discussions. With Microsoft, most of the content they create has nothing to do with gaming. They’re on every device with a microprocessor and a display. And I think that they have no mobile business. So for them King was a very complimentary thing. But we all realize that gaming over the next five years is going to be more on phones than on any other devices. And I think that they they have given us repeated assurances that our content will be available on as many devices as possible.

And I think that was really important for us. They’ll drive the bus, obviously, on the antitrust issues. I think the thing that is obvious to me is that when you look at the competition, whether it’s Tencent and NetEase, and Alibaba or Sony, or Amazon, Apple, Google, Facebook, Netflix, then you start looking at like, the second part of competition and content, and you realize whether it’s Roblox or Minecraft, or the variety of other sort of platforms that are becoming available for content creators, I think there’s more competition than we’ve ever seen for games.

It’s a reality that started to factor into our thinking. There is more competition from bigger companies with more resources. Facebook is spending [billions] a year on the metaverse. I’ve never seen as much competition, and we’re seeing it even in the wage inflation. Whether its Riot, Tencent, Epic, Sony, or Microsoft, EA, there are just so many different places that people are recruiting talent.

And then you look at the specialized skills, like AI and machine learning or computer graphics. You’ve got Nvidia and all of those big companies recruiting the best AI and computer graphics talent. And so we realized the pipeline for talent — we just didn’t have it. And we needed to have access to somebody’s pipeline of talent. And that was a big consideration.

GamesBeat: There’s a little irony in, I guess, interpreting what you’re saying. It almost feels like Activision Blizzard was too small.

Kotick: It’s true. I think like, you’d think, oh, we’re this big company and have just these great resources. But when you’re comparing us to, you know, $2 trillion companies and $3 trillion companies and trillion dollar companies and $500 billion companies, you realize,  we may have been a big company in video gaming, but in now, when you look at the landscape of who the competitors are, it’s a different world today than ever before. I think Strauss did a good deal with things, because I think he realized he needed mobile. But I think that even if we were to have consolidated within EA, that wouldn’t have given us what we’re going to need going forward. And so you needed to have a big partner in order to be able to make it work.

Xbox is buying Activision Blizzard.

Above: Xbox is buying Activision Blizzard.

Image Credit: Xbox

GamesBeat: I wonder what the combined company will be capable of doing. Is there a metaverse play here? Or are there other things for people to consider? 

Kotick: Phil and I have always been aligned about this. What really is the metaverse? It’s not like Neil Stephenson’s Snow Crash vision. It’s the evolutionary vision of a collection of players. And I think players are going to be the defining characteristic of the metaverse. It’s a community of players anchored in a franchise. And then those communities anchored in some bigger virtual experience that allows you to have either access to your friends or access to other content. I think you’re going to see a big part of it is going to be content creation tools. That is going to allow for user generated content that can be either free or commercially exploited, and that’s going to be an important part of what a metaverse will be.

You look at all the opportunities that we get with a company like Microsoft. I’ll give you one great example. Phil and I started riffing on things for the future. I’ll give you three that are really compelling. I wanted to make a new Guitar Hero for a while, but I don’t want to add teams to do manufacturing and supply chain and QA for manufacturing. And the chip shortages are enormous.

We didn’t really have the ability to do that. I had a really cool vision for what the next Guitar Hero would be, and realized we don’t have the resources to do that. And Skylanders too. One of the great disappointments of my career is that other people came in and they came out with crappy alternatives. And they dumped all of these crappy alternatives in the market, and basically destroyed the market for what was a really cool future opportunity. If you look at Skylanders, with its hardware and manufacturing and supply chain, there are the same kinds of things that we can’t do but Microsoft can.

And in these conversations I was sharing my frustration about not having enough social capability in Candy Crush. I really want to be able to have a Candy Crush experience where players can play games against each other. And they can socialize. And they can have voice over IP and video over IP.

That’s a more social game, but it’s rooted in being able to play the game against another person or other people. There is nothing but opportunity for the kinds of things that we can’t do on our own, and the resources that they have for us to just make a difference.

GamesBeat: What what do you think of reporting to Phil? What might you think about doing next once the deal is done? And is retirement one of your thoughts.

Kotick: Right now my focus is just staying CEO and running the business. And I think you probably could tell this from the stock price, there is still a long way between now and getting a deal approved, and all the regulatory issues. So I’m still going to be first focused on running the business. What I told Microsoft is that I care so much about this company, that whatever role they want me to have, in making sure that we integrate the business and we get a proper and smooth transition, I’m willing to do. However much time that takes, if it’s a month after the close, if it’s a year after that, I just care that the transition goes well.

Reporting into Phil is an easy thing to do. He’s a great guy, and we have a great relationship. And if I have to do that, I’m happy to do that. All I care about is making sure that the transition and the integration go well.

GamesBeat: It does sound like you still have enthusiasm for the job. 

Kotick: I mean, like, I come to work every day, as excited as I was, I mean, we have a lot going on right now. I have a new set of responsibilities in my focus on the workplace. And that is my principal focus is making sure that when you think about and part of why I’m so committed to this welcoming, inclusive workplace is when you think about companies that have defining characteristics that are going to help attract talent. Having a really welcoming, inclusive workplace will be a defining characteristic of the culture of a company in an increasingly competitive talent environment that will ensure that we’ll have access to great talent, and so independent or not thought, that is an important part of what I think will allow us to attract talent, we have to do that. And that’s something I’m spending a lot of my time.

GamesBeat: You got had a few months of tough coverage. A lot of tough words from the Wall Street Journal. What was some of the learning from this experience that you’ve had?

Kotick: From my perspective, if you have one single incident of harassment at your company, that’s one too many. And you don’t want to ever have an environment where people don’t feel safe and comfortable and respected. And so when the EEOC started their investigation, where it was like three years ago now, that was the catalyst for us to start thinking about, how do you change and transform the culture to making sure that you do have the most safe welcoming, inclusive culture. It’s a priority for me to make sure we have the very best workplaces.

GamesBeat: I wonder is there anything that you think will benefit Call of Duty from this? I’m sure it’s the number one thing Call of Duty fans and people like me, who are Warzone players, are worried about.

Kotick: I would say probably the biggest thing is the AI and machine learning, and ultimate access to that talent. And that that’s one of our big needs.  For the long term, we could have a real streaming Call of Duty experience that’s going to be critically important.

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These are the 12 big bets of future disruptive technologies

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The 12 big bets on future technologies as per Nasscom report

The National Association of Software and Services Companies (NASSCOM) and Boston Consultancy Group (BCG) have identified 12 big bet technologies that can potentially disrupt markets in the next 3-5 years.

A report titled “Sandboxing into the Future: Decoding Technology’s Biggest Bets”, has identified these technologies of the future: autonomous analytics, Artificial Reality and Virtual Reality, autonomous driving, computer vision, deep learning, distributed ledger, edge computing, sensortech, smart robots, spacetech, sustainability tech, and 5G/6G.

AR VR concept image

The report noted that these 12 technologies will unravel in diverse ways, giving way to regional and vertical-specific big bets. While buyers in North America and Europe are betting on technologies such as autonomous analytics, APAC is likely to focus more on 5G/6G technologies, sensortech and smart robotics. Overall, technology buyers anticipate that investments in emerging technologies will account for 70%- 80% of tech spending by 2030.

“Going forward, it will be interesting to see how businesses will put their bets on emerging technologies and how they would be taking ahead the tech revolution for the larger good of the society,” said NASSCOM President Debjani Ghosh.

Cognizant acquires Utegration

Leading technology services company Cognizant has said it bought Houston-based Utegration LLC, a full-service consulting and solutions provider specializing in SAP  technology and SAP-certified products for the energy and utilities sectors.

Cognizant will gain approximately 350 employees in North America and India upon the close of this acquisition.

“We believe Utegration’s rich industry expertise and differentiated portfolio of energy and utilities-focused products and accelerators is a perfect complement to our SAP practice,” said Rob Vatter, Executive Vice President of Cognizant’s Enterprise Platform Services.

Utegration serves over 50 North America-based clients in the energy and utilities sector with solutions across four domains aligned to market needs: customer experience, billing and advanced metering infrastructure, managed services, data science and analytics, and finance and asset performance management.

HCLTech partners with Intel and Mavenir for 5G solutions

HCLTech, a leading Indian technology services company revealed a new collaboration with Intel Corporation and Mavenir to develop and provide scalable private 5G network solutions for communication service providers (CSP) and broader cross-vertical enterprises.

Through this new collaboration, the companies will work closely on a range of projects and activities across enablement, go-to-market and sales acceleration, with the goal of delivering more 5G solutions to CSPs, Internet of Things (IoT) and enterprise verticals, a statement said.

HCL

The three companies will work cross-functionally to add new offerings and help generate greater value for enterprises. The companies will develop a cloud-native enterprise-to-enterprise (E2E) architecture of an Intel Xeon processor-based 5G solution leveraging Mavenir RAN, Intel SmartEdge and HCLTech’s management, orchestration and automation services.

“There is currently a great need for scalable, reliable 5G solutions across nearly every enterprise and industry,” said Kalyan Kumar, Chief Technology Officer, HCLTech. “This need represents a major opportunity to innovate and deliver solutions that will have a major impact on business operations and outcomes.”

Collins Aerospace to expand operations in India

Collins Aerospace, which is part of Raytheon Technologies has announced that it will be expanding its operations in India. The company inaugurated its Global Engineering & Tech Centre and a new India Operations Centre to mark its 25th year in Bengaluru.

Collins Aerospace has also pledged significant capital and manpower investments over the next five years given that the Indian aerospace & defence (A&D) market is projected to reach $70 billion by 2030.

The team at Collins India is actively collaborating with Indian R&D organisations like NAL, CMTI, DRDO for study into materials, additive manufacturing, pre-qualification tests and other important projects.

Wipro bags top honour for workplace inclusion

Wipro Limited, a leading Indian technology services and consulting company, has been recognised as a ‘Gold’ employer by the India Workplace Equality Index (IWEI) 2022.

Awarded to the top employers by IWEI, the gold employer is the highest of 3 levels, where an organisation is credited with ‘embedding inclusion in the workplace.’ Highlights of Wipro’s efforts in this journey include recognition of Wipro’s leadership in India to advance LGBTQ+ inclusion in the workplace, from organisational policies to external communications.

wipro

It also demonstrates a long-term and in-depth commitment towards LGBTQ+ inclusion, where Wipro has implemented several initiatives enabling its employees to become active allies for the community.

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Corraling Kafka: New ecosystem simplifies, democratizes event-streaming data for enterprises

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Aiven, a cloud-data platform based in Helsinki, has fleshed out an open-source ecosystem for Apache Kafka, a popular event-streaming platform. The new offerings promise to help enterprises consolidate their Kafka infrastructure using open-source components. 

“Event streaming is transitioning toward the main stack of the IT infrastructure,” Filip Yonov, director of data streaming product management at Aiven, told VentureBeat. “At Aiven, we have witnessed the fastest growth in the event-streaming domain compared to all other products.”

Apache Kafka provides the infrastructure for wiring streams of data together from databases, apps, IoT devices, and third-party sources. Kafka helps organize raw data into event streams that reduce data size and are easier to integrate into event-driven apps and analytics. Enterprises use it to improve customer experiences, build the industrial metaverse and monitor patients. 

However, building out a Kafka infrastructure involves a lot of moving parts. Aiven has consolidated all the necessary tooling into one place to simplify this process. Key new enhancements include support for Apache Flink and data governance. These complement existing tools for connecting services, replicating data and managing schemas for Kafka deployments.

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The need for simplicity

LinkedIn originally developed Kafka to integrate data across its large microservices infrastructure and open-sourced it in 2011. Over the intervening years, large enterprises have customized the tooling for their own needs, and several vendors have rolled out proprietary enhancements to fill in gaps around governance and integration. Many organizations use Kafka for various data pipeline scenarios, such as transferring data between applications in real-time or moving data from a database to a data warehouse.

Yonov told VentureBeat that as Kafka clusters become larger and more complex, they require additional tooling and governance to ensure proper operation and management. “Unlike existing Kafka solutions, Aiven’s offering does not require organizations to choose between proprietary tools and vendor lock-in or open-source technologies without support,” he said.

Improving the developer experience with event streaming

One essential aspect has been to democratize the experience for working with event-streaming data. The open-source tool, Klaw, provides a self-service interface for managing Kafka clusters. Kafkawize, which develops Klaw, recently joined Aiven’s open-source development office in September to help integrate their tools together. Now they are working together to improve self-service, simplify user management and enforce data governance. 

Another significant development was to connect streaming data to SQL queries familiar to data engineers. The new Aiven for Apache Flink tools allows teams to process larger volumes of events and run real-time analytics using SQL. Aiven provides this as a fully managed service that reduces the complexity of deploying a Flink cluster. It also simplifies the integration with Aiven for Apache Kafka to filter, enrich and aggregate events on the fly. 

Aiven hopes to replicate the success of other open-source frameworks like PostgreSQL, Kubernetes and Linux, built by a healthy mix of contributions from various communities. 

“We truly believe that fostering an open-source, community-driven and inclusive ecosystem of technologies around Apache Kafka can drive further innovations and new developments in the data-streaming domain, ensuring the long sustainment of the technology in the future,” Yonov said.

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How do tech layoffs impact PERM and the green card process? • TechCrunch

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Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.


Dear Sophie,

I handle HR and immigration at our tech company. We filed a PERM for one of our team members about five months ago for her EB-2 green card, and we’re awaiting certification from the Labor Department. We’ve been gearing up to start PERM for another employee.

Will the layoffs in the tech industry affect the PERM process for EB-2 and EB-3 green cards? What will happen to my team members’ green cards if our company has to do layoffs?

— Pondering in People Ops

Dear Pondering,

It’s wonderful that you’re steadfastly supporting your team with green card sponsorship. This can provide unfathomable peace of mind for people still on non-immigrant status in the U.S. through the green card process. We’re here to help ease the holiday season with education on the options for both companies and individuals.

Let’s dive into the winter wonderland of PERM and employment-sponsored green cards.

Will tech layoffs impact the PERM process?

For the permanent labor certification application — or PERM — your company is currently working on, the short answer is yes, the layoffs may have several different effects depending on where your company is in the process.

The PERM green card process is a multistep and time-intensive one involving a labor market recruitment test requiring employers to demonstrate to the U.S. Department of Labor (DOL) that there are no qualified U.S. workers (U.S. citizens and green card holders) who are qualified, willing and able to fill the EB-2 or EB-3 PERM position. PERM also aims to ensure that the opportunities, wages and working conditions of U.S. citizens and green card holders are protected.

A composite image of immigration law attorney Sophie Alcorn in front of a background with a TechCrunch logo.

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

If you are in or will soon start the PERM recruiting phase, you may receive a larger number of job applicants for your job posting due to the recent layoffs in the tech sector. With an uptick in potentially qualified applicants, it could prove more difficult to demonstrate that there is no qualified U.S. worker to fill the PERM role. If a qualified U.S. worker is ready, willing and able to fill the PERM role, the labor market test fails and the DOL will not grant the company’s PERM labor certification.

Keep in mind that unemployment is a big concern for the DOL. During the last recession, when millions of jobs were lost, DOL increased its scrutiny of the adjudication of PERMs, particularly within the financial sector, to ensure displaced U.S. workers were considered for positions before international talent.

At the moment, the U.S. unemployment rate is under 4%, so we have a ways to go before we match the 10.6% unemployment rate in 2010. Although there have been many layoffs in tech, I remain optimistic, as there are other indicators that the economy is still strong and there are many job requirements in and beyond the tech sector.



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