WHEN: Today, Wednesday, July 12, 2023
WHERE: CNBC’s “Closing Bell”
Following is the unofficial transcript of a CNBC interview with Activision Blizzard CEO Bobby Kotick on CNBC’s “Closing Bell” (M-F, 3PM-4PM ET) today, Wednesday, July 12. Following is video of the interview on CNBC.com: https://www.cnbc.com/video/2023/07/12/activision-ceo-bobby-kotick-would-be-surprised-if-the-ftc-wastes-taxpayer-money-on-appeal.html.
All references must be sourced to CNBC.
JULIA BOORSTIN: Thanks so much, Mike. That’s right. We’re so grateful to have Bobby Kotick here. Not only do we have the deadline for that Microsoft deal coming up next week, but we just got this ruling from the judge yesterday. A big move to clear the way for this deal to close What’s your response to the judge’s ruling yesterday?
BOBBY KOTICK: I think Judge Corley was very sensible. She is very deliberate, clearly understood the details of the case, the law, and made a judgment based on facts and law, and wasn’t swayed by ideology.
BOORSTIN: So this deal is still far from done, though. That was a big hurdle clear, but this deal is far from done. The FTC could still appeal before the deadline of Friday night at midnight, this appeal could come through any time before then, they could request to stay on the deal. What happens if the FTC does that?
KOTICK: Well, I’d be surprised if they would waste taxpayer resources on something like that. Opinion was a very well written opinion like I said, she’s a very deliberate judge. I can’t imagine the ninth circuit would grant a stay. You never know but I would think that would be highly unlikely and it just wouldn’t be productive.
BOORSTIN: But we’re hearing they are leaning towards an appeal, though it’s certainly not a done deal. Do you have any thoughts on how that might impact this process?
KOTICK: Like I said, I can’t imagine ninth circuit would grant the stay.
BOORSTIN: So that’s not your only hurdle, though. You’re still working with the regulators in the UK. There was some discussion back and forth between Microsoft and the CMA, the UK regulators, saying they’re considering finding some sort of compromise. What do you think would be a practical compromise to assuage those UK regulators concerns? Are there certain divestitures or certain compromises or actions that Microsoft could take that could get this deal through in the UK?
KOTICK: Look, there’s enormous competition. You know, Xbox is the third place competitor in the console gaming business. Nintendo and Sony have had dominance in the business for almost as long as I’ve been in the business. In the cloud, there’s nothing but competition whether it’s Tencent or Alibaba, or Google or Amazon or Apple or Netflix or Oracle. There’s so many different competitors, so they don’t really need to be – there’s nothing that we really need to be doing that’s going to encourage more competition. You know, this transaction gives an opportunity for us and Microsoft together to actually be able to compete against these entrenched competitors.
BOORSTIN: Microsoft’s Satya Nadella is here as well. What do you – what is your sense of what Microsoft’s going to have to do in order to get this through in the UK? Do you think they’re going to have to divest some of their businesses or agree to operate things differently in the UK?
KOTICK: I think these conversations are ongoing but you know, we came to a great agreement with the EU that was sensible and responsible and I think was well thought through, And so we’ve already come up with remedies that make a lot of sense and work well in the EU. We have unconditional approval from China, unconditional approval from Japan, both places where you have the most successful competitors in video gaming.
BOORSTIN: While we await to hear what Microsoft ends up proposing with the CMA, I want to make sure to get your sense of what’s going on with the business. I know a lot of your attention has been spent on getting this deal done. But there’s this also this question of economic uncertainty and how that could be impacting the video game business – either casual gaming or console gaming. What are you seeing from consumers right now?
KOTICK: You know, there’s always this belief that in a recession are difficult economic times, video games as an industry does better. I think there’s not necessarily supportable data to that effect. I think you, what you’ve seen our console releases happen to have come at the same time as recessions. New games have come out but business is good. And we just launched Diablo IV which is the most successful launch we’ve had of a Blizzard title ever. Candy Crush is at record numbers. Call of Duty continues to be a great franchise. It’s evolving into not just what it historically has been, but now it offers free to play and mobile gaming has been transformative in our industry. We’re seeing more people in more places than ever before having access to video games. So when I look out over the next 10 years, I think that there’s gonna be nothing but opportunity in video games.
BOORSTIN: Mike Santoli, want to jump in here and ask Mr. Kotick some questions.
MICHAEL SANTOLI: Sure. Bobby, it’s good to see you. Of course, Microsoft attempting to get this deal through and close it has of course offered assurances there’ll be nothing like exclusivity for Activision Blizzard games on their platform or anything of the sort. In that case, what are the advantages to an Activision being part of Microsoft? Where is it going to be a better competitor and what kinds of things will you be able to do as part of that company?
KOTICK: Look, I think one of the great things about the business combination is, you know, Microsoft as a console manufacturer doesn’t have the same advantages that Sony and Nintendo have with deep rich libraries of intellectual property. They don’t have a movie studio, they don’t have a TV studio. They don’t have a music company. They don’t have 40 years of franchise success with Mario and so with a company like ours, they get three franchises like Candy Crush, Call of Duty, Warcraft. We get access to better technology, more talent and in a world that’s increasingly competitive where you have so many people entering the video game industry, it gives us an opportunity to have access to more resources and I think on a combined basis, it gives us a chance to more effectively compete.
SANTOLI: So that suggests that part of that competition would be going into those areas like studio like using the intellectual property library and your games as vehicles for media content.
KOTICK: Well, that’s a pretty difficult thing to do. But I think, you know, we want to be able to make sure that our games are on more platforms. Mobile’s been a big push for us across the games that we make. We have games that we have aspirations to be franchises that having access to more technical talent will give us the opportunity to do. I think as AI becomes more important in gaming, having access to AI and machine learning talent is going to be increasingly important, data analytics, user experience and user interface talent. And, you know, Microsoft is principally an enterprise company so our hope is that we’ll be able to attract people from the enterprise side of the business to want to work in gaming, which is a really fun industry.
BOORSTIN: I want to ask another question about a different type of legal hurdle you’ve been dealing with. Activision counter sued California Civil Rights Department for its suit over sexual misconduct and pay discrimination. There was the suit, there was the counter suit. What’s the state of those negotiations now?
KOTICK: Well, you know, we already settled a long time ago with the EEOC. We released a transparency report that was very clear and showed that we had a model workplace, that we’ve made great strides in building a welcoming, inclusive workplace and we don’t have any pay equity issues. We have publicly disclosed our pay equity. It’s been something that we have always taken very seriously and so when it comes to promotions and pay equity, that information is publicly available, and it shows that we’ve always done a good job of paying people fairly.
BOORSTIN: Just a quick final question. We are out of time, but I have to ask you about China. What is the state of your relationship with your former partners in China, future partners in China, what’s the state of, what’s going to be the future of Activision Blizzard’s business in China?
KOTICK: So, we view China as a great opportunity, but, and we’ve had a great partnership with Tencent for a long time now. They’ve been a great both an investor and partner. They’ve been a great commercial partner and we’re in the process now of finding a new partner for the Blizzard content. and I think we’re making good progress towards finding a partner in China and making sure that all of our players have access to all the Blizzard games.
BOORSTIN: Well, we’ll be looking out for that headline as well as more headlines around this Microsoft deal. We appreciate you joining us in the midst of all of this news. Activision Blizzard CEO Bobby Kotick, thanks for joining us here from Sun Valley. Mike, I’m going to send it back over to you.