Bobby Ko'Tax' and the Big Exploitation Era

To everyone’s chagrin it was recently announced that Microsoft is going to be increasing the annual cost to participate on Xbox Live by $10.00.  If you reacted anything like I did then I suspect that you may have spewed out a 5 minute string of expletives cursing the audacity of the proposition.  Now, you could argue that ‘what is $10 really (only 0.83 cents a month for a year)?  Isn’t it warranted for increased managing costs for ‘X’ increase in subscribers since 2005?  And since they announced* that Xbox 360 will be in production for another 5 years doesn’t it make sense to anticipate inflation costs?  Other companies/entities/institutions do it with their products why can’t Microsoft?

But then I remembered this article from Kotaku.com

http://www.kotaku.com.au/2010/07/xbox-live-is-microsofts-new-billion-dollar-business-and-activision-wants-a-piece/

You don’t even need to read the article to find out what it’s all about.  Just read the link.

I also recall reading an article earlier this year stating that according to statistics 60%+ of Live subscribers spend most of their time playing a COD/MW game.  Its figures like this (and the Kotaku link) that allows people like Bobby Kotick (Activision CEO) to leverage his case for subscription based games.  And he has, in the past, openly suggested that this business model for the COD franchise to be implemented.  Not only that, but he has openly said that he wants to increase prices of games as well, and he has already done so if you didn’t notice.

If you recall, 4 exclusive Co-Op levels in Black Ops will only be available in Hardened & Prestige Edition.  And don’t tell me he’s not thinking of only allowing Multiplayer in those same editions in the future. 

So knowing the aggressive nature of Bobby and his wild ambitions could it be implied that the $10.00 increase is a financial counter to M$ giving in to Activision’s foreseeable demands.  Is Microsoft in a sense hitting us with a Bobby Kotick Tax? 

So before we break out the pitchforks & starting burning Kotick effigies in our front lawns I did want to play devil’s advocate for a sec.

As much as we despise Ol’ Bobby he did, as a CEO, take Activision, who’s stock was trading at a paltry $0.35 in 1994 to as high as $18.00 in 2008 (It’s now $10.90, which isn’t too bad exiting a recession).  And the main catalyst for that huge leap was the acquisition of Infinity Ward (2003) and the Blizzard merger (2008) which Mr. Kotick did have his hand in.  This is important to note because if you didn’t get the aforementioned Bobby is a CEO of a publicly traded company.  He has obligations to shareholders to explore viable business models and to increase profit margins at any means necessary.  If you have spent any time in business you should not be foreign to this concept and in fact Kotick’s business behavior would actually seem normal to you and maybe inspiring.

And it’s probably safe to assume that his end goal is a Vertical Integration Business Model (it’s where you control all aspects of a product – developing, publishing, and selling product yourself).  Some people have said that Valve does this already, and they do sort of by selling their games through Steam, but EA still publishes their retail games (L4D & L4D2, and we’re not quite playing those games on Valve Consoles (yet?).

Alright, before we get off course, back to the $10.00 increase.  So what is it for?  Is it a strapped for cash Microsoft (BAHAHAHA!!)?  On their Wikipedia page it says that Live gains a new subscriber every 5 seconds.  Did someone at M$ say, “some one give a calculator quick! If we increase by $10 and include the growth variable by 5 years…carry the 3…OMG get Billy on the phone!”  OR is it just the ESPN & HULU Tax? Is it the Ko’Tax’?  Who knows, they sure has heck aren’t saying.  Major Nelson only mentioned that since 2005 Xbox Live has provided blah blah blah over the years and want to continue to offer blah blah blah.

What ever it’s for at the end of the day we all wanted this whether we like it or not.  We (gamers and our industry) started off looking for small blurps in our local papers announcing new video games to ‘teasers’ being shown during NBA Conference Finals.  We came from waiting in line in the morning to hopefully get a game that this retail store cared enough to order to Midnight release parties.  We wanted out games to get to get the attention they deserved.  We wanted big business to get involved and to back our favorite developers.  We wanted HD games, 60fps, multiplayer, huge worlds, etc… but not pay for it?  Well, now we live in a time where ‘Big Business’ knows we are a billion dollar business and unfortunately we’re are either headed towards or already in the Big Exploitation Era.  One way or another we are going to have to pay something if want to keep this hobby.  Hopefully we’ll never have to dip into our dignity.

* http://www.businessweek.com/news/2010-08-23/microsoft-will-offer-xbox-360-for-five-more-years.html

Don’t know who Robert ‘Bobby’ Kotick is?  Click link to read his most famous quotes. http://oneofswords.com/2010/08/bobby-kotick-those-infamous-comments/

Activision’s Stock Trading Price since Oct 1993.

http://finance.yahoo.com/echarts?s=ATVI+Interactive#chart2:symbol=atvi;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Xbox Live Wikipedia page:

http://en.wikipedia.org/wiki/Xbox_Live