Activision Blizzard Capabilities

Activision Blizzard Capabilities

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Identity, Security and Privacy in the Gaming Sector

Identity

In the past decade, video game characters have become moldable and specific to the user.  During the early years of simple computer games and the original Mario & Luigi, gamers had the option to select from a variety of pre-developed characters.  Gamers could identify with certain characters or simply pick a favorite, and adopt them as their own for use at every new game.  Choices were finite.

As video game structures have changed from short epics to longer, complex levels, video game makers have given gamers the opportunity to design themselves in their virtual worlds.  With the advent of Wii, gamers were encouraged to model themselves as a cartoon, choosing, for example, hair color and style. As technology advances and graphics improve, gamers will get the opportunity to create avatars that are the spitting images of the real thing.  There is tremendous potential to use such technology to educate individuals and influence behavior. For example, if someone creates a character with the same body proportions, goes on a binge eating rampage in the game and sees the results, an obese man who has difficulty completing tasks within the game, the individual might rethink how he conducts his real life. Seeing yourself and the effects of your choices on screen can send a powerful message.

Also, with interactive gaming gaining popularity, gamers will are able to modify their identities to project a persona that they wish to have rather than what the reality of the physical world dictates.  Their virtual lives can serve as an escape from reality, where they can experiment, test, and revert to their ideal state with the click of a button.

Security

Security in gaming came to the forefront and turned into a mainstream issue with news of a security breach of Sony’s PlayStation Network by a group of hackers that shut down the service for nearly a month and ultimately cost Sony millions of dollars in revenue and damage to the PlayStation brand. This security breach is now the largest breach in history with over 77 million accounts compromised, which surpassed the TJX security incident back in 2007 (http://en.wikipedia.org/wiki/PlayStation_Network_outage). Incidents similar to Sony’s will continue to occur in the sector for the foreseeable future, although at a much smaller scale, now that gaming has entered the digital era and online accessed content and platforms become ubiquitous. The spotlight is now brighter than ever on security in the gaming sector as Sony is still recovering from this incident, but security has always been an issue for all companies that are associated with gaming.

Security is a blanket statement in gaming because there are so many different contexts where security is applicable. Some examples include manipulating code in games, accessing online game servers, cheating to obtain an advantage, assuming another gamer’s identity, and so on. These are just a few examples, but the reality is that compromises in security can have a profound adverse effect in this sector compared to the other sectors where security may not be as vital. Game developers and publishers can lose millions with pirated software while gamers can become frustrated and lose interest when other gamers cheat to gain a competitive advantage in online video games. For the most part, security has been adequate in the gaming sector up to this point but the PlayStation incident brought the sector to its knees. While that incident was devastating to Sony and the PlayStation brand, it will serve as a reminder to the rest of the industry that security is going to play a major issue in the future and that companies must do everything they can to mitigate that risk. The digital era will usher in additional challenges and unforeseen risks that all companies must grasp or face a similar outcome that Sony experienced earlier this year.

Privacy
Privacy in video games is a challenge for game developers, console manufacturers, and consumers. Consumers could have their gaming experience in complete isolation and experience privacy, but the value added from having a connected gaming experience drives most gamers to open communication channels. The challenge then for the game developers and console manufacturers is to ensure privacy controls within the connected gaming experience.
For example, Microsoft Xbox Live shows a when a user is logged in, their achievements, the game they are playing or the movie they are watching at that time. Users are prompted upon first setting up their Xbox Live account to enable or disable this feature, and the choice can be changed at any time. The result is a value added connected gaming experience while enabling consumers to have a finer degree of control over their information.
The changes in the cloud computing era will also impact privacy in video games. Microsoft recently enabled cloud storage for game saves (http://www.youtube.com/watch?v=g77UF5tGfm8). This requires consumers to sacrifice a bit of their privacy for added value in a balance that Microsoft must consistently deliver.

Gaming Sector: Activision Blizzard, Inc.

Introduction

Within an extremely fragmented sector, Activision Blizzard, Inc. has been able to stand out from the crowd as the largest worldwide publisher of videogame content across all console platforms and is a sponsor for several online enabled games. Fiscal year 2010 proved to be the finest year yet as the company raked in revenues of $4.4 billion (GAAP) and net income of $418 million (Activision Blizzard 2010 Annual Report). While Activision Blizzard’s current performance bodes well for the immediate future, the company’s long-term strategy to remain competitive in an evolving sector remains unclear.

For those of you unfamiliar with Activision Blizzard, here are videos showing their most profitable franchises: Call of Duty and World of Warcraft.

Position in the Gaming Sector

Activision Blizzard remains one of the largest players in the content creation and publishing layer within the gaming sector. These two layers are undergoing a radical transformation as the separation line is becoming more and more blurry with each passing year. This is due to the recent trend of publishers, particularly EA and Activision Blizzard, acquiring third party content developers rather than investing capital to produce fresh and exciting intellectual property in-house. While this strategy may yield gains in the short-term, it is not sustainable as a long-term strategy. This business model is analogous to the pharmaceutical industry as the big players like Pfizer and Eli Lilly are struggling to find the next blockbuster drug that will support their on-going research and development efforts before their current blockbuster drugs lose their patent exclusivity benefits. Eventually this cycle will break when popular franchises get stale, all of the current mainstream content becomes oversaturated, and all that remains is niche content that cannot generate enough revenue to offset publishing and operating costs for a larger companies like EA and Activision Blizzard.

Future of Activision Blizzard

Activision Blizzard is currently at a crossroads that may define their future in the gaming sector. Currently, it controls two of the most popular content IP in the sector: Call of Duty and World of Warcraft. However, how long can Activision Blizzard rely on generating enormous profits off two key franchises before gamers’ tastes will change. Activision Blizzard learned a hard lesson with its Guitar Hero franchise that no longer exists. With an over-saturated market of first person shooters, how long can the Call of Duty franchise keep hardcore gamers entertained? The same can also be said about World of Warcraft now that it is about to enter its eighth year in operation this November. Activision Blizzard continues to operate under an old archaic and antiquated business model in the constant evolving gaming sector. Will Activision Blizzard pursue other avenues like the social platform before its too late? The next five years are sure to be interesting…

For the full report and analysis of Activision Blizzard's network, click here