Bobby Kotick, the Call of Duty billionaire forced to sell up by a sexual harassment bombshell

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Bobby Kotick hammered out a $69bn takeover deal with Microsoft over Christmas - David Paul Morris/Bloomberg
Bobby Kotick hammered out a $69bn takeover deal with Microsoft over Christmas - David Paul Morris/Bloomberg

Bobby Kotick was bursting with optimism on Tuesday as he told staff about his video game company’s $69bn (£51bn) sale to Microsoft.

The 58-year-old Activision Blizzard boss painted the deal as a “partnership to define the future” of the industry that creates “endless possibilities for us”.

The takeover is the biggest in the gaming industry’s short history, designed both to tilt the balance in Microsoft’s war against Sony and allow it to leapfrog Facebook in conquering the “metaverse” of virtual worlds.

But for Kotick and Activision, the sale may be more like an escape hatch.

The Los Angeles-based giant behind Call of Duty, World of Warcraft and the smartphone gaming phenomenon Candy Crush Saga, has suffered a brutal decline in its share price in the past year amid a string of sexual harassment allegations that has singled it out, even in a business notorious for less-than-spotless workplace cultures.

The deal may also be the final chapter for Kotick, a character who has been as divisive within the industry as Activision’s money-spinning Call of Duty franchise has been among fretful parents.

Kotick admits he does not play many games himself, and has been depicted as “the most hated man in video games” for his focus on shareholder returns rather than pleasing the outspoken online gaming community.

In one case, a group of former Activision employees added a playable character with an uncanny likeness to Kotick to their free online shooting game, who went by the name “Money Sacks”.

Yet Kotick has also been described by industry colleagues as “very smart” and is widely regarded as formidably well-connected.

The son of a Manhattan lawyer, Kotick grew up in Long Island, New York, and took an interest in business from a young age. At high school, Kotick sported his own business cards, selling sandwiches and wallets to fellow pupils and later renting nightclubs at unpopular times to throw parties for teenagers.

As a confident 19-year-old, he gained one of his first mentors by walking into a charity fundraising event in Dallas and pitching his idea to billionaire Steve Wynn, the Las Vegas tycoon.

But Kotick's first big move came in 1990, when he led a $500,000 buyout of Activision. The Silicon Valley start-up had collapsed into bankruptcy after an ill-fated attempt to diversify away from video games into other kinds of software.

After taking over, Kotick shifted the focus back to video games and rode the home console boom. Under his stewardship, the company soon became a darling of Wall Street and released some of the most popular series, including the Call of Duty shooter games, Tony Hawk's Pro Skater and Guitar Hero.

Activision Blizzard scored big hits with the Guitar Hero franchise
Activision Blizzard scored big hits with the Guitar Hero franchise

A merger with Blizzard, the studio behind World of Warcraft and once part of French conglomerate Vivendi, came in 2008, catapulting the company into the big leagues, alongside the likes of Electronic Arts.

Since then Kotick has controlled about 2pc of the shares – worth $375m under the Microsoft deal.

'Sexist' culture claims

Yet his standing in the games industry has been damaged by his perceived handling of a series of scandals that have outraged colleagues.

His “exclusively male and white” leadership team at Activision Blizzard presided over a sexist, “frat boy” culture in which women were regularly harassed and discriminated against, according to a lawsuit brought by the government of California.

Male staff regularly drank in the office, came to work hungover, bantered about sexual encounters, talked openly about women’s bodies and even joked about rape, the lawsuit alleges.

Meanwhile, female staff were constantly forced to fend off unwanted advances and groping by male colleagues – including “high-ranking executives”, according to the lawsuit.

One woman killed herself on a business trip with a supervisor who had brought sex toys with him after explicit photos of her were circulated among her male colleagues.

Activision’s culture triggered a string of complaints. However, women who spoke up were later overlooked for promotion, made redundant, unwillingly transferred to another part of the business or deprived of work on projects, according to the lawsuit.

More generally, women were also paid less, given fewer stock options and hired based on their looks. “Faced with such adverse terms and conditions of employment, many women have been forced to leave the company,” the lawsuit adds.

Activision has insisted there is “no place in our company for sexual misconduct or harassment of any kind” and that it took action “in all cases related to misconduct”.

“The [lawsuit] includes distorted, and in many cases false, descriptions of Blizzard’s past,” the firm said last year.

Kotick himself is said to have known for years about sexual harassment at Activision and in one instance even intervened to prevent the firing of an implicated staff member, the Wall Street Journal has reported.

Separately, a female employee at Sledgehammer Games, another subsidiary, said she was raped by her male supervisor twice, in 2016 and 2017, in a complaint to the human resources department.

After being unsatisfied with the response, she hired a lawyer and Activision settled with her out of court. Kotick did not tell the company’s board about the incident, according to the Journal.

It was also claimed that Kotick once threatened to have his assistant killed in a menacing voicemail message. He “quickly apologised” for the “obviously hyperbolic” tirade in 2006, the company said, and also settled out of court with her.

Activision claimed the Wall Street Journal report was “misleading” and said the company had made improvements to internal policies, “at Mr Kotick’s direction”, for handling inappropriate conduct.

Kotick has previously hired PR consultants including Steve Rubenstein, publicist to America's financial elite, to help manage his image.

Kotick has also shown ruthless zeal when defending himself in court. In a court battle that was splashed across newspapers in New York, he was accused of trying to outspend his step-mother “into oblivion” through protracted legal warfare.

Natalia Shvachko, a model previously named Miss Ukraine in 1996, claimed Kotick had sought to deny her control of a $2m apartment she shared with his father, whom she married before his death in 2005.

Legal papers filed by Shvachko’s lawyers in 2017 claimed Kotick had become “obsessed with defeating his step-mother’s right to any assets from her husband’s estate”, while he claimed her lawsuit was an attempt to “rehash personal grudges”.

A big exit

Bobby Kotick counts Facebook chief Mark Zuckerberg among his acquaintances - Kevin Dietsch/Getty Images
Bobby Kotick counts Facebook chief Mark Zuckerberg among his acquaintances - Kevin Dietsch/Getty Images

Despite the controversies, Activision’s board has stood by Kotick. Many employees took a different view and staged a walkout last year, calling for him to be replaced as chief executive.

Even during a pandemic that has sent the value of games companies to stratospheric heights, Activision and Kotick needed a way out. Microsoft presented the best possible route.

The Windows maker’s profits and share price have hit record highs in recent months. Its chief executive, Satya Nadella, has been aggressively pursuing acquisitions, a strategy helped by Microsoft avoiding the public backlash that has piled scrutiny on the likes of Facebook, Google and Amazon.

Nadella has spent a combined $50bn on takeovers of LinkedIn, voice recognition firm Nuance and coding database GitHub, and a further $10bn on Mojang and ZeniMax, the game companies behind Minecraft and Skyrim. That does not include the aborted takeovers of TikTok and gamer-friendly chat app Discord.

Kotick has denied Activision’s sale was down to its myriad controversies, but Microsoft was not the only potential bidder.

According to Bloomberg, the company attempted to get Facebook interested in a deal (Sheryl Sandberg, the social media giant’s chief operating officer, had a three-year relationship with Kotick that ended in 2019), and solicited a third potential acquirer without success.

Few companies have $70bn to spend, though, leaving Microsoft as the sole candidate. Kotick and Microsoft gaming boss Phil Spencer thrashed out the deal over the Christmas break, and Spencer was noticeably tight-lipped when asked about Activision’s scandals in an interview last week.

“This isn't about us virtue shaming other companies,” he said. “In terms of individuals who are in leadership at other companies, it's not our position to judge who the CEOs are.”

Even without the pending takeover announcement, Spencer may have deemed Microsoft’s house too fragile to be worth throwing stones.

Only last week, the company announced a review of its own sexual harassment and discrimination policies after shareholders had raised concerns about the company’s handling of allegations against founder Bill Gates.

It is unclear, however, that Kotick will see the result of that review. While Microsoft said that he will stay in charge for now, it said that after the deal the “Activision Blizzard business” would report to Spencer, without naming Kotick directly.

In his note to employees, Kotick wrote: “Importantly, Microsoft wants you – your talent, your creativity, and your dedication to each other.” Whether it wants him may be another matter.

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