Guitar Hero

Guitar Hero

Peter C. Beller, 01.29.09, 05:00 PM EST
Forbes Magazine dated February 16, 2009

How did Bobby Kotick, a man with no interest in playing videogames, build the world's most successful videogame publisher?

Robert Kotick's mother dates his compulsive capitalism to toddlerhood, when young Bobby sold her ashtray to a friend who had come over for a playdate. He netted $3. After that the moneymaking ideas never stopped pouring out. By junior high Kotick had his own business cards and ran an array of ventures: delivering sandwiches, restringing tennis rackets, selling wallets. He first made the pages of forbes at the age of 20, after he started a software company to take on Apple Computer (nasdaq: AAPL - news - people ).

When Kotick stumbled across his umpteenth new business idea--buying a bankrupt videogame maker--it seemed a perfect mismatch. Gaming fanatics like Atari's Nolan Bushnell and Electronic Arts (nasdaq: ERTS - news - people )' William (Trip) Hawkins had made fortunes in the young industry, but businessmen lacking any passion for games had a way of winding up broke. The 26-year-old Kotick seemed destined to land in the latter group. To him, playing videogames was a waste of time.

Yet Bobby Kotick would go on to turn a bankrupt company into the biggest and most valuable videogame publisher in the world. Over the course of his 18-year tenure shares in Activision (nasdaq: ATVI - news - people ) have risen fortyfold. The Santa Monica, California company, with $3 billion in revenue, is worth $12.3 billion, double the market value of the industry's perennial leader, Electronic Arts.

Somehow, a chief executive blind to the beauty of videogames developed an unmatched eye for spotting hits. Activision Blizzard, as the company is now called, owns a peerless collection of widely beloved and extremely profitable games. They include the bestselling family entertainment videogame (Guitar Hero), the bestselling massively multiplayer game (World of Warcraft), the bestselling war simulation (Call of Duty) and many others.

Just as in Hollywood, successful executives in the videogame industry are ultimately judged for their ability to back the right creative talent. Movie mogul Jeffrey Katzenberg, an old pal of Kotick's, marvels at his friend's knack for green-lighting winners. To understand today's videogame industry, Katzenberg suggests, you first need to unravel the mystery of its most unlikely success--a man he fondly calls "a crazy, ambitious, funny lunatic."

Kotick, now 45, traces his ascent to the lessons he learned as a teenage hustler trying to escape the tedium of suburban Long Island, New York. He happily recalls his most profitable high school business venture, renting out Manhattan nightspots like Studio 54 on off nights and throwing parties for underage kids. The hardworking Kotick found the hedonism of his customers--his fellow teenagers--befuddling. "I could never understand how you could spend hundreds of dollars buying cocaine or pot. I worked too hard for my money. I saved it. I still have it," he says.

Instead he spent his spare time hanging outside with the bouncers taking head counts and dreaming up wholesome cross-selling opportunities, such as bringing in ice cream carts to the clubs. He left for college confident in his ability to understand his customers, whether or not he shared any of their passion for his products.