Activision Aims for Sweet Spot

We spent so much time with consumers asking them what features and functions or things they would like to see done differently. There's probably three years of data that we have, and there's a three-year brand plan for that product that has a very deep penetration in terms of features and functions. So, I think we've spent a lot of time building a process that helps us, through our consumer research, identify the expectations of the consumer.

Q: Beyond Electronic Arts, who do you see as your competition?

People often omit [the console makers], but they have huge percentage share on their own platforms, so they are certainly direct competitors.

You have THQ (THQI Quote). They've done an incredible job. [CEO] Brian [Farrell] came from bankruptcy to building a $750 million business. They have good franchises. They've gone from no development resources to having pretty significant development resources. They've done a very good job. They're certainly a direct competitor. Take-Two (TTWO Quote): It's hard to argue with the biggest franchise in the history of the interactive entertainment industry.

I think Ubisoft has done a really great job over the last year. Those are the principle competitors.

Q: What about the smaller publishers?

It is very difficult to compete in this market in my mind at less than $1 billion in revenue.

We have $800-and-some-odd million in cash on the balance sheet. If we're going to go make a commitment to an intellectual property, that IP owner is going to know -- You know what? That guarantee we make for the next seven years -- we're good for it. They're going to know that we have a history of consistently putting out high-quality product and a process to ensure that. Then they're going to get the benefit of real worldwide distribution.

So, just from sort of a pure apples-to-apples comparison on IP, on development, on worldwide exploitation, on the ability to successfully sell and market, on the ability to enhance the value of an intellectual property, we're going to be able to do those things better than most small companies.