Profiles
Activision's James Levy
A software success story
by James Capparell, Publisher
Activision is a hot name in electronic gaming. Activision, Inc. has produced several titles that have sold more than a million copies for game machines. Now these and other new exclusive Activision titles are showing up on cartridges for the Atari computers.
"All part of the master plan," notes James Levy, President and chairman of the board of the young company. He started Activision in 1979, along with four former Atari programmers: David Crane, Alan Miller, Bob Whitehead, and Larry Kaplan.
Their notion was unique at the time - Activision was to be a software-only company that supplied entertainment products for other people's equipment. At the time, the horse to ride was Atari's 2600 VCS, more commonly called "the game machine." Soon, however, there was an explosion of systems - ColecoVision, Intellivision, Odyssey, and Astracade among them - and Activision gave them all a spin. But for a time there just weren't enough "real" home computers out there to demand the company's active interest.
But by 1983, game-machine software bad hit a trough. Too many companies were making too much product for too many machines. Mindboggled and glutted, the public laid back for a while to rest its wrists. In the meantime, Activision bad to change its plans, since it bad expected a steady demand for video games to lift it into the new and "inevitable" era of general-purpose computers..
Activision has bad to move a little more quickly than expected, but Levy is not dismayed by the timing of the transition. At 39, he brings a strong business and marketing background to the company. He has earned degrees in industrial administration from Carnegie-Mellon University, worked for several divisions of Time, Inc., and served as a brand manager for Hershey Foods. Just before founding Activision, be was vice president of GRT Corp., a music and software company in Sunnyvale, California.
Levy says he met his Activision partners over his lawyer's desk, and that they immediately decided to start the new company. The rest is software history.
Antic's publisher, James Capparell, talked with James Levy about Activision at the company's Mountain View, California, headquarters last January.
Antic:
What do you think Activision has accomplished so far?
Levy:
Our greatest success is that we created an industry. The company was formed in 1979, and our first product was delivered in 1980. There really wasn't a software industry for home computers then. Four years ago, the total home-computer base was in the hundreds of thousands.
Being in the home-computer software business wasn't important to anyone, except those who were making the computers. The same was true on the games side of the market ... if you wanted a game for your VCS, you had to get it from Atari. If you wanted one for Intellivision, you had to get it from Mattel.
Activision came along and said, "Look, the software business is unique and distinct from the hardware business." It has a whole different product-development cycle, it has wholely different distribution needs, it has a whole different manufacturing rhythm and marketing approach. For software to be as advanced and meaningful as hardware, it needs its own single-minded attention.
I think that we can take credit for proving that a software-only approach worked. Certainly, our success lured a lot of other people into it.
Antic:
What's your best selling product?
Levy:
Pitfall. Over three and a half million units worldwide, at this point. This makes it one of the five or six best selling games in history.
Antic:
What are the other best sellers?
Levy:
It depends on what you count. Certainly Pac-Man, Space Invaders, Donkey Kong, maybe Defender. Parker Brothers may be approaching some pretty large numbers on Frogger.
We have five games that have sold over a million units each: PitfaH, Laser Blast, Kaboom, Freeway and River Raid. I suspect that Atari probably has some multiple of that. Demon Attack is over a million for Imagic.
Consider that Activision is the only company of any size that creates all of its own work from scratch, without licensing concepts from the arcades. Our hit ratio is a testimony, not only to the quality of the work, but also to our ability to distribute broadly in the market.
Antic:
To what do you attribute this success?
Levy:
Great talent.
Antic:
Do you pay your programmers well?
Levy:
Talent is talent, no matter what you pay them. Don't take that wrong, our creative people are extremely well paid. But paying them well doesn't make them talented. Ultimately, the rewards come from the talent; the talent doesn't come from the rewards. Dave, Alan, Larry and Bob, when they first started at Activision, probably earned less than they did at Atari. But the incentives, the freedom to create, the challenges, are all a lot greater at Activision than they had been before.
We have a unique approach to the creative process, very different from that the other mainstream ri, Parker and Coleco. Ours is an inside-out approach, rather than outside-in. "Go buy an idea and have somebody adapt it" is the outside-in approach, whereas our approach is to attract great talents and give them the opportunity to create extraordinary work.
Two other things have contributed to our success. Being a software company has enabled us to design our business practices - our manufacturing flow, our distribution flow, our sales approach, our promotion programs and our marketing - uniquely for software. That made us a more successful marketer than most other companies in the business. Few organizations can take original games and turn them into million sellers without the power of the pre-sell that comes from the arcades.
The other factor was extraordinarily good timing, and, for that, I thank the Lord.
Antic:
A lot of us do, as a matter of fact.
Levy:
We were in the right place at the right time and did the right things, so it all worked together for us to be successful. But you cannot ignore that timing factor. Those who started a year or two after us, I think, have had a more difficult time establishing their position in the marketplace.
I think that arrogance kills more companies than anything else. When we became very successful, there was a real fear around here of reading our own press notices. The market has chastised us a bit in the last six months, and that makes us all a little bit stronger. You do everything right, and still have market come around and rap you on knuckles.
Antic:
You mentioned chastisement. Atari has experienced some of that, too. The whole video game market as we all know, has suffered. Do you expect the demise of video games as they are today, or ... ?
Levy:
No. I use the analogy of the LP record and the 4 5. You know, the invention of television didn't kill radio and the movies. It just changed their role in the marketplace. The video-game machine was the first home computer - it just didn't have a keyboard. A lot of people think that Activision has changed its strategy, because we call ourselves a home-computer software company. Our original business plan for Activision, written in 1979 shows that we were never a video-game company. To me, calling yourself a video-game company is like going into the music business and calling yourself a singles company - a 45-rpm company. The fact is that music is music. To us, you're either in the home-software business or you're not in the home-software business.
Antic:
If you're in the home-software business, do you intend to make non-game software?
Levy:
Any software that goes in the home and enhances the power of a computer is fair game for us. We said in 1979 that, during the next 10 years or so, the computer was going to become as irnportant in many American homes as the television, the automobile, the radio and the stereo.
Our second fundamental idea was that software was going to drive the market. The fact is that music sells record players. Programming sells television sets. And, ultimately, software sells computers. Use of the computer as a programming tool, or as some sort of communication device, will probably account for a relatively small part of the market.
Our third premise was that someone has to make that software. The hardware people really are not focusing on what makes good software - they're focused what makes good hardware. Software is a creative process and requires a different kind of approach.
Antic:
The psychological approach?
Levy:
Right. So Activision was founded as a home-computer software company. We then asked, "What home computers exist?" This was in 1979. Well, there was the Apple (really a hobbyists' cornputer), there were the Atari 400 and 800 (they'd just shipped their first thousand, so that wasn't a big market), and there was the old TRS-80, black and white at $800 (who wants to design high-quality work on that system?).
So we said, "We can't survive doing software for those things that people are calling computers' " But, the video-game machines - the Atari 2600, the Intellivision system, the Odyssey 2, the Bally Astracade - were, in fact, the early forerunners of what we felt home computers were going to look like. Now, these happened to be what some people call (I love this definition) "entertainment computers." When you use that definition, rather than "dedicated game machines" or "video-game machines," the whole perception of what they are changes.
We decided that Activision would start out making high-quality, video-game software and evolve with the market, providing both entertainment and non-entertainment software for the more sophisticated home computers, which we forecasted would emerge in numbers by 1983.
Antic:
So, you're on track so far.
Levy:
Yeah, Unfortunately, we didn't forecast that the market would get so big, so fast that the transition, from phase one to phase two, would force a trough in 1983 that would whiplash everyone in the business.
Antic:
Your early products really did set the standard for the VCS. Your designers did things with computer systems that no one else had even thought possible.
Levy:
In terms of pure technical capability, we're still the best at getting out of the VCS more than it ever was designed to give.
Antic:
I used to do programming work, and I know that to do stuff as well as you do takes a lot of persistence ...
Levy:
Most people think that it takes incredible scientific or technical genius. The fact is, it takes enough knowledge of programming to be able to program, and a certain penchant for inventiveness, and then it takes extraordinary perseverance - hour after hour after hour of painstaking work. But that's the way it is with all art forms. I was in the record business for six years and found that the difference between great artists and those who didn't quite make it usually was not talent. Usually it was persistence.
Antic:
Is that right? I've always wondered about that.
Levy:
I saw some brilliantly talented people who just never were stars. The real difference between the great bar bands and the Doobie Brothers, who were a bar band down in the Valley, was like that. People say that you need breaks to get ahead - the fact is, you make your breaks.
The reason that we get such extraordinary results with almost any system we work on is one part technical genius and four parts extraordinary devotion to quality by our creative people. They just won't turn it loose until it's right.
Antic:
You can afford that?
Levy:
To a point. In the movie business they say that no motion picture is ever finished; you just pull the last cut out and put it on the screen. We used to have a saying around here that "you can tell when a piece of work is finished just look for the bullet hole in the designer."
We have enormous patience for the creative process because we recognize that many brilliant ideas do not form themselves until late in the process. If you rush the process, or take a concept and test it with consumers, or do other things designed to speed it up, to be more productive, you will kill an awful lot of good ideas along the way. We'd rather kill a bad idea at the end of the cycle than a good idea at the beginning. Some people would call this an inefficient approach to producing software. On the other hand, we have a pretty good hit ratio.
Antic:
You're successful, so something's working. What products do you have for Atari computers now?
Levy:
For the computers right now, we have adapted Kaboom, River Raid, and MegaMania, which are three of our classics. Coming soon are Pitfall, Keystone Capers and Dreadnaught. These are also adaptations of prior work. From this point forward, almost every new Activision title will either start on, or be on, the Atari computers and the 5200 (I'm sure you have some folks in your audience). Pitfall II for the 2600 is to be released in February, and it will be on all the leading systems over the summer, including the Atari computers and the 5200.
Antic:
And the XL line, I take it?
Levy:
To us, the XL computers are the same as the 400s and 800s. One of the very smart things Atari has done is to maintain compatibility It's one of the things we've always appreciated about the hardware side of the Atari system.
Antic:
So, Atari owners have a friend in Activision.
Levy:
You always have had, you know. That's what I try to tell our friends at Atari who were a bit upset when Activision was founded. I think they've gotten over it. As you know, we're even in a joint venture with Atari now, so I think that the storm clouds have dissipated.
I have a lot of respect for many people at Atari. I respect what Atari has done; after all, they created the industry! Their concept of a mass-market computer (like the 2600) opened the door for Activision to create our software business. We are great fans of Atari's future. We want to see them succeed... we want them to sell millions of computers because we like to create for their machines.
I have a lot of respect for Jim Morgan, and I think he's going to try very hard to put things right again.
Antic:
We share the hope.