Activision axes Infinity Ward Execs: G4 calls it “Fall of Duty”

Not everyone is interested in or plays video games.  However, the video game industry is a massive business that includes console gaming such as Wii and Playstation 3, computer gaming, and portable gaming such as smart phone apps and  DSi.  One key to video game industry success is to have one of “the games” that gamers have to have.  An example of one of “the games” is “Call of Duty.”  The sequel, “Call of Duty:  Modern Warfare 2,” broke industry records.  The game sales were $550 million in its first five days of release.  The game was released in the Fall of 2009 and had sales of over $1 billion by January 1, 2010.  The profit margin for “Call of Duty is estimated at 60%.  You can do the math on the profits it creates

By any measure “Call of Duty” is a successful franchise.  A game becomes a franchise when multiple versions/iterations appear.  Essentially a franchise is a line or even a brand unto itself.  Activision Blizzard Inc. is the company that owns the “Call of Duty” franchise.  Other key franchises in their stable include “Guitar Hero” and “World of Warcraft.”  “Call of Duty” is actually created by Infinity Ward, a company that Activision bought complete control over in 2003.  Activision actually owns a number of studios that are the creative element for their games.

But in early March of 2010, Activision attracted a great deal of attention without a major gaming announcement.  It begins on March 1st when Activision releases an Securities and Excahgne Commission (SEC) filing, a legal form, that noted:  : “The company is concluding an internal human resources inquiry into breaches of contract and insubordination by two senior employees at Infinity Ward. This matter is expected to involve the departure of key personnel and litigation. At present, the company does not expect this matter to have a material impact on the company.”

The SEC filing and related news releases are examples of the investor relations (IR) function of public relations.  See how the last line noted “material impact on the company.”  Material impact is basically whether or not the actions will have an effect on stock prices.  Companies have to disclose information that can affect stock prices and that information is monitored by the SEC.  Improper communication can result in fines from the SEC.  The news release by Activision focused on how it was creating a new business unit that would be responsible for the “Call of Duty” franchise.  Here is the first part of the release:

“ Activision Publishing, Inc. (Nasdaq: ATVI) today announced new strategic plans for the Call of Duty(R) franchise, one of the best-selling video game franchises of all time.

The plans include the formation of a dedicated business unit that will bring together its various new brand initiatives with focused, dedicated resources around the world. The company intends to expand the Call of Duty brand with the same focus seen in its Blizzard(R) Entertainment business unit. This will include a focus on high-margin digital online content and further the brand as the leading action entertainment franchise in new geographies, new genres and with new digital business models. “

The release was necessary because news reports were announcing that the unnamed people in the SEC release were Jason West, president, and Vince Zampella, chief executive, of Encino-based Infinity Ward and the main people behind “Call of Duty.”  Investors get nervous when top talent is lost.  Hence, the news release was a way to reassure investors that the franchise was still in good hands.  As one stock analyst observed, “’Having the top developers leave is a new risk. A greater risk would be whether or not the two heads end up taking more talent away from Activision.’”

Of special interest is how the names of the two executives became public.  On March 1, G4 broke a story about security guards appearing at Activision.  Employees reported they were on edge and called the security people “bouncers.”  It is common practice to have security escort fired personnel from a facility.  That is a commonly used and recommended safety precaution.  The problem was that employees did not know why security was there.  Employees used words such as “freaked out” and “confused” to describe the situation.  G4 is not your common source for breaking news but the network does have regular show that focuses on video games so they are a logical source for this story.

The sources used are also of interest.  When the names of West and Zampella became public, online investigators turned to the executiveds Facebook and Linkedin profiles for information/comments.  Here are examples of what was found:

West’s Facebook page at Kotaku with the status update “Jason West is drinking. Also, unemployed.” I can confirm from a source that’s friends with West that update did actually come from West’s account.

West also updated his Linkedin profile to appears to reflect a change in employment. 

“President/Game Director/CCO/CTO Infinity Ward
January 2001 – March 2010 (9 years 3 months)”

Online reporters also contacted Activision manage through social media, including Twitter, to get comments on the situation.  The news was spreading from non-traditional sources but was spreading rapidly.  People interested in video gaming are computer savvy and were tracking the story online and even on tv through G4 updates.  It is too early to tell if the situation is a crisis but it is a situation that did require strategic communicative action.

Questions to Consider

  1. During crises, management often worry about what employees will say to reporters appearing on the scene and prefer employees not to talk with the media.  What does the case suggest about the new reality employee communication during a “crisis?”
  2. What seems to be the core problem(s) in the situation?
  3. How does the case show changes in how communication channels are used by organizations trying to manage a crisis?
  4. Why is this situation a public relations problem—what can public relations do to help?
  5. How could Activision have handled the situation more effectively?
  6. How have ethics and legal concerns helped to guide the actions in this situation?

One Response to Activision axes Infinity Ward Execs: G4 calls it “Fall of Duty”

  1. Rosetta Lu says:

    Wow I’m really the only comment to this great article?!

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