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CURRENTS
Issue #102
March 11, 2009
Strapped
Front Page

...And a cheery, midweek greeting to you, too. Many individuals judge the rest of the day's (or even week's) activities by how well the beginning of it goes. For instance, a person on his commute to work gets a late start, doesn't have time to eat breakfast and gets caught in horrific traffic, only to arrive to work to face a dilemma that will take him hours to fix before he can even get to his job. To such an individual, the general mentality is that the rest of the day from that point is going to be pure, unadulterated and absolute crap.

I, as an often-time pessimist, am usually one of these individuals. Monday was pointless, as I didn't get anything truly accomplished, but instead saw the majority of the day pass by with no true reason. Normally, I would consider this the harbinger for a bad week ahead. Here I am working on typing this out on Tuesday, and I got a start much later than I had planned. However, contrary to what I usually would feel at this point, things feel pretty good right now. I can see my neighbor (who is also feeling the brunt sting of unemployment with the U.S. economy right now) has a boat in his front yard that I know for a fact is not his—which means that his friend who owns said boat has come over and the two of them are about to hit the river to fish. The weather is nice and cool, overcast but not terribly humid, and I've got a list of projects I've been itching to jump into lately. Perhaps this week won't be as bad as I was anticipating.

Anyways, enough of that. Let's see what happened in the world of gaming this week...

CEOs of Video Game Companies Pass 'GO'
Collect well more than $200 for their efforts

My first apprehension for doing this story at all comes from the fact that the information is based off of a blog's page. (Albeit, a professional sounding blog entitled The Game Trade Journal.) Second, I'm usually not a big fan of doing stories that pry into the financial lives of individuals. Personally, I don't give two shakes of a rat's tail about how much people make so long as they're not embezzling the money or selling children on the black market or anything like that. So, why am I running a story about it?

Well, first of all—it is news, and video game news at that. A newswriter writes what the people want and/or need to hear, not necessarily all the things he cares about. Secondly, a couple of interesting facts concerning some popular companies showed up in the lineup. (Thirdly, but unofficially, this was a hard week to find stories that actually fit here in the Currents section.) At any rate, here's what the heads of companies got for their personal salary in 2008:

Activision CEO Bobby Kotick

Salary for 2008: $899,560

Total income for 2008: $14.9M

Anyone who has been watching the news for the last few years understands that company CEOs do not make their fortunes based off of their 'official' salaries. (Which is why it really didn't matter to most people when the mayor of New York City, U.S. made a big deal about only accepting $1 salary per year for his job.) Case in point—Bobby Kotick. According to the GTJ, the other $14M came from bonuses, incentives, and stocks. The article brings out another interesting point of financial influence. In 2007, Mr. Kotick brought home less than $3M at the end of the year. Why the increase of 'pay' in just one year's time? Well, most of you probably know, but in 2008, Activision purchased Blizzard Inc., who hasn't been hurting for money for quite some time. So in addition to thickening out the ol' Activision bank account in that acquisition, it would seem a few executives, Mr. Kotick included, were able to put a few extra pounds of food on the figurative table. (Of course, said merger put the company in the red by over $100M dollars, but I'm sure Bobby Kotick will find a way to avoid that pitfall with public speeches. He can afford some good speechwriters with that kind of salary.)

Electronic Arts CEO John Riccitiello

Salary for 2008: $750,000

Total income for 2008: $5M

Mr. Riccitiello (boy, that's getting hard to type out each time) has attempted very hard to become the 'De-eviling' agent to Electronic Arts, after a not-quite-so-pristine legal and ethical history. (Of course, owners of the EA game 'Spore' know that this is an ongoing issue. He's got some ways to go yet.) His philosophy of 'keep the studios autonomous' (or, in other words, anti-Borg) has yet to have a long enough impact to see any positive benefits, but the acquisition of BioWare in 2008 probably didn't hurt finances too much for the long run. As with Bobby Kotick, the remainder of his income came from incentives and stock options. (Interestingly, no bonuses.) Oh, and like Mr. Kotick, the company was still in the red at the end of 2008.

THQ CEO Brian Farrell

Salary for 2008: $651,000

Total income for 2008: $2.7M

Now, this was the one I was interested in seeing. You may recall that last week I started an article on speculation that THQ was undergoing heavy financial difficulties. (Part two of that article is listed below.) So, then, how did the Big Cheese of the company fare in 2008? As you can see right above, he's still not doing too terribly bad for himself. Granted (as Mr. Farrell would no doubt bring out himself), his salary was far less from 2007, where his total earnings for the year were well over $3M. However, he still got those stock options that kept him where he is now... and yes, how astute of you—the company was well in the red at the end of 2008.

GameStop CEO Dan DeMatteo

Salary for 2008: (Unknown to this writer at this time)

Total income for 2008: $4.9M

Wow. I thought EA was good at hiding things. I honestly only spent about 5 minutes surfing around for an accurate salary amount for Mr. DeMatteo, but this is a heftily guarded secret. Even on gamestop.com, I couldn't access any sort of pertinent information. The bottom of any corporate page usually has a link bar that includes 'Corporate' information, but the links for that and other options are just typed on the page—they aren't even links. (You have to check this out; it blew my mind!) I'm getting off topic, anyhow. The GTJ sites the fact that a good business model for 2008 brought in a good amount of profits, leading to a $2.4M bonus for high executives. So, one assumes somewhere in the remainder 2.5M, his salary lies.

Anyways, the article continues with CEOs from Midway, Majesco and Take Two studios. Interesting that Ben Feder of Take Two decided to do another one of those 'All I got was $1 in salary all last year-What a good boy I am' routines. I understand that it is supposed to save the company money, but why they need to make a big deal in the media about it, I don't know. Lots of back-patting going on, I says.

Sony Considers Defamatory Lawsuit Over Obesity Ad
Decides making fat jokes in court 'not a good idea'...

This week marks the first official week of Litigation Street, a quasi-sarcastic joke I made last Currents article about how often lawsuits (and talks thereof) appear in the news. I have been following an ongoing news article for the last week regarding an advertisement put out by British advertisement firm The Gate and its client company Change4Life:

As has been widely reported, the ad, which visually links playing video games with an early death, has generated official complaints to the U.K.'s Advertising Standards Authority by British game development group Tiga and game business website MCV.

Now, reports MCV, Sony Europe is considering the filing of a lawsuit over the ad's unauthorized use of what appears to be a PlayStation controller:

Ah yes, because everyone seeing the ad will immediately think, "Well, that boy is holding a PlayStation controller—all other systems will be perfectly fine." (On second thought, given Nintendo's latest push with Wii Fit, there may be a slight validity to that argument.) For those who have not seen the advertisement, (first of all, check out the reference link to this article) a young boy who looks to be more in need of a haircut than a diet is slumped on the ground with a video game controller in his hand. The image is slightly blurred due to an artistic touch, but the controller does seem to have two symmetrical analog sticks where Sony often places them on the PlayStation controllers.

Everybody together now...

"COME ON!" Obviously, the company putting out the message is not spearheading a smear campaign against Sony, otherwise it would be much more overt than a kid holding a controller that sort of resembles a PlayStation controller. The financial backers of the ad include the British Heart Foundation, a cancer research institution, and Diabetes UK. It could just possibly be that these particular groups are making a general observation concerning young children spending obsessive amounts of hours in front of a television screen.

Now it's true that other groups have spoken out about the forwardness of the advertisement, stating that video games in themselves are not bad (a fact I hope we all acknowledge around here), but rather the obsessive addiction to them with no physical exercise whatsoever. The groups have dictated that the advertisement needs to clarify this statement. This can be a valid argument, easily. However, suing the company because of defamation is just plain stupid. It would be the same as McDonald's suing a council speaking out against obesity if they had someone eating a hamburger that kinda looked like one of their plain hamburgers. (Maybe if it were a Big Mac, I could see it, but even then...)

The point I am making is this: The situation has officially gotten nit-picky. If their message was not to play video games until your eyes dry out from lack of moisture, what exactly is the kid supposed to be doing in the ad? Playing on a Tiger electric wristgame? I don't want to get into a side-taking argument in the actual debates against the advertisement, but I certainly don't think Sony would be acting with a concept of moral integrity if they decide to attack the ad in the way suggested.

THQ Rallies Support from Investors
Staying Afloat or Staying Alive – You Decide.

It isn't a big article. It isn't a detailed article. It is, however, an interesting piece of reading given the rumors from last week's discussion on a possible financial crisis for THQ. Given the analysis some financial experts have concerning THQ, I thought it interesting that the very next week, this report was put out:

THQ Inc. today announced that THQ’s President and Chief Executive Officer Brian Farrell will make a presentation to investors at the 7th Annual Wedbush Morgan MAC: Management Access Conference on Wednesday, March 11, 2009, at 9:30 a.m. (EDT). Additionally, Farrell will be presenting at the Bank of America and Merrill Lynch Consumer Conference on Thursday, March 12, 2009, at 10:40 a.m. (EDT).

The presentations will be open to all interested investors through a live audio Web broadcast via the Internet on the Investor Relations Event Calendar page of THQ's website located at http://investor.thq.com. An archived replay will also be available on the company’s website approximately 24 hours following the live broadcasts.

Interestingly, the article does not state anything outside of the advertisement for potential investors. The question this raises, then, is: "Is this an attempt to raise capital for future projects or a gasp for air for a company who could be heading in a tailspin?" According to the numbers, THQ suffered three consecutive quarters of heavy losses and a change in CFO (Chief Financial Officer) during 2008. An announcement of layoffs has also been made for almost a quarter of its active staff (some 600 people), all in addition to the five studios that were announced to be closed in November. Obviously, the need for financial stability is there. However, whether this call for investors is a chance to stay afloat or to avoid a deathstroke is not public. Of course, this being the second straight article on it, I'll certainly be commenting on any further news on the situation.

Again, one could ask the pertinence of commenting and focusing on one company as opposed to highlighting a number of different companies. There are a few reasons why I've chosen to do this.

First of all, it gives us a good flavor as to what's involved in guiding a company through hard financial times. In other words, I'm using THQ as more of a guide than picking on them specifically. Secondly, as mentioned in the last article, it's often a good comparison for benchmarking other companies when looking at one particular video game company. Other companies can gauge their success or need for improvement based off of 'the next man'. Finally, and most importantly to me, it can be quite exhaustive trying to follow multiple companies in all of their endeavors. (That's why there are financial analysts who get paid big bucks to do it.) Since every company faces different challenges and has different goals, it just wouldn't be possible for me to follow a heavy number of companies.

Still, if someone goes belly-up, that would be noteworthy for future articles...

QUICKIES: Like A Snack For The Brain
  • Israeli Kids Now Safe from Rocket Launchers When Playing Video Games
    Yeah, that was my reaction when I first read this, too. "Huh?" According to MSNBC:

    "Brightly painted walls surround a mini-soccer field, video games, a climbing wall and play areas. The converted warehouse also has a new thick concrete roof, a half dozen shelters and an alert system to give a 15-second warning of incoming rockets.

    The children of Sderot finally have a safe place to play.

    The fortified indoor playground got a warm welcome Tuesday when it opened in this southern Israeli town that has been battered by missiles fired from the adjacent Gaza Strip by Palestinian militants."

    I mean, it's good to know... it just strikes me as an odd priority...
  • Next Generation Musicians – Guitar Hero Experts?
    They've been saying this since the game came out, but here's another affirmation that this is a secondary goal, according to the Boston Herald:

    "The Headliner digital guitar is not meant to be just another tricked-out controller. By holding and feeling out a real guitar, players may actually want to learn how to play the instrument and write music, said Zivix president and founder Dan Sullivan.

    "There is a certain group that aspires to go beyond the game," said Sullivan, who started Zivix in 2006. "They had a taste of what it’s like to be a real guitar player because that’s the illusion. Why not take the next step and being able to play?"

    I've always wanted a medium to say this, and this seems as good as time as any. Kids who have Guitar Hero, take it from someone who's been playing guitar for awhile. Playing Guitar Hero is not going to teach you guitar. It's the difference between playing piano and writing music on Mario Paint.
Sources: MSNBC | Boston Herald |

As the title of this issue of Currents would lead you to believe, I was a little strapped for time in coming up with the articles this week. No real excuse exists that I could offer, but I certainly want to apologize for not having the 2009 archive up before now. It was brought to my attention that it should be ready by now.

As always, let us know your thoughts on the forum board, linked below. (This is the right link this time.) Also, not to be having other people doing my job for me or anything, but if you come across any interesting lawsuit stories or information on THQ that I could use for future articles, please send them my way — I'll be sure to consider them closely for references in my Currents... or any other articles for that matter...

Daniel Burnham
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