Activision’s CEO Can Earn As Much As Nintendo’s Profit
Nintendo’s last financial year wasn’t great, but it wasn’t bad either. Although the Japanese company managed to make ¥7 billion in profit ($71.2 million) for the year, it still missed its profit forecasts by 50 per cent (¥14 billion). Too bad Activision gives that kind of money away.
Despite forecasts not being met, Nintendo managed to better last year’s deficit of ¥43.2 billion ($433 million).
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The reason for poor sales figures was due to the Wii U (3.45 million units sold) and 3DS (13.95 million units sold) not performing as well as expected. Neither console met sales projections.
For 2014, however, Nintendo is aiming to sell 9 million Wii U consoles and 18 million 3DS units. Profits are forecast at ¥55 billion for 2014.
With Nintendo making some profit, it shows that the company has started to make a turnaround from last year’s massive loss. There’s still a lot of work to be done, and with the release of next-generation consoles from Sony and Microsoft, consumers might be more accepting of the Wii U–as next-generation will have officially arrived.
I am not saying that the Wii U is a suitable replacement to the other consoles, instead, consumers will now be more invested in upgrading their technology as all three industry participants have released new hardware. This could possibly change the mind of the consumer to want to keep in tune with what is happening in the industry.
On an unrelated note, Activision seems to have more than enough money. Activision’s boss, Bobby Kotick, has managed to make his yearly salary of $8.33 million, with the chance for a further $16 million if the company meets performance targets.
Then, if that isn’t enough, he’s also getting another $55.9 million from stock awards. However, these awards vest over the next five years, where Activision needs to report them now.
To compare all of this, the Activision CEO’s bonus is roughly similar to that of Nintendo’s entire profit–if you add the salary and other potential performance bonus to the amount. Sure, it’s not entirely the same as the amount vest for five years, but it’s an individual against a corporation. Comparable for fun.
Kotick has few fans between gamers, and seemingly many fans between investors. However, the news of the amount of money the CEO is going to get has started to raise a few questions. Analysts and consultants have queried just how Kotick has earned the money. They feel that the compensation packages offered by the company are concerning, at the least.
“We don’t like any element of this pay package,” said Nell Minow, of GMI Ratings. “In the past we have expressed concern about this company and its compensation practices.”
“The lack of information provided by the compensation committee is a red flag,” she told Bloomberg. “It’s very difficult to discern how they determined this compensation package from the information that’s been provided.”
From what we know, certain studios that were cut (High Moon and Radical Entertainment) have literally paid the price. The amount in bonuses is easily enough to fund a new game, for the gamer.
We will have to wait and see if Activision’s new strategy is to release a game and cut the studio thereafter, to retain all possible income.
How all this for perspective, the more ruthless you are in the gaming world, the more money you make. Nintendo can probably learn a thing or two from Activision.