Perhaps the most fortuitous moment for Bobby Kotick happened in 1983 at a party in Dallas. Kotick was a junior at the University of Michigan, and the party was a swank charity dinner known as the Cattle Baron’s Ball. In attendance with the tycoons of West Texas was Steve Wynn, the Las Vegas casino developer, who was introduced to Kotick by the mother of one of Kotick’s friends. When Wynn mentioned he was on his way to New York, Kotick asked if he could tag along. (“He was hitchhiking,” Wynn recalls in an email.)

When they reached cruising altitude in Wynn’s private DC9, Kotick started telling the gambling titan about his plan to launch a software company that would develop programs for the Apple computer; a day later, Wynn, impressed by the young student’s verve, wrote Kotick a check for $300,000 to use as seed money for his startup.
 
Kotick, now the 44-year-old C.E.O. of videogame company Activision, has been cutting audacious deals his entire business life, and he recently made his boldest move yet: a proposed merger of Activision and Vivendi Games valued at $9.8 billion. The deal, expected to close in the first half of 2008, will create the world’s largest videogame company, with Kotick at its helm, and it will place Electronic Arts, the decade-long leader, in Kotick’s rearview mirror—though not far enough behind for him to rest too comfortably. The new company, to be called Activision Blizzard, is projected to have a combined revenue of $3.8 billion in fiscal 2007, just beating Electronic Arts’ estimated $3.5 billion to $3.7 billion.
 
A few weeks after the merger announcement, Kotick was feeling that mix of emotions—elation and concern—that comes after having won a hard-fought battle, the uneasy sense of triumph that compels a quick look over the shoulder. “There’s definitely a sentiment of immense gratification,” he says. “But there’s also the anxiety that you now have to maintain it. We’ve been in the No. 2 position for so long, I don’t think you ever want to lose that focus of trying harder.”
 
In a $40 billion industry that’s often compared to Hollywood—videogame “studios” are judged by how many hits they produce; sequels to bestselling titles are common; and scriptwriters and actors help produce games—Kotick has wielded a steady, no-nonsense hand. When he acquired Activision and installed himself as C.E.O. in 1991, he staffed the faltering company with more business-minded types—executives with consumer marketing experience or business school credentials—than his competitors, whose focus, he says, was heavily on software coders and the technology faithful, who “may not know a balance sheet from a bedsheet.”
 
“Bobby is a guy who has a really clear idea of where he wants to go,” says John Taylor, managing director of Arcadia Investments, who has tracked Activision for the past 14 years as an industry analyst. “He’s been good at building competent teams, [having] folks around him who can execute. But Bobby also brings a certain amount of charisma and aplomb in the way he communicates. He knows what to say to investors.”

They call it the “Kotick Factor.” As in, the Kotick Factor attaches a premium to the company he runs. “He’s very good at steering people away from looking at the immediate challenges and focusing people on what’s going to happen in the long run,” Taylor explains.

Kotick's first company, Arktronics Corporation, which developed software for Apple, failed, but his second, Leisure Concepts, a licensing agent for Nintendo characters such as the now-iconic Mario, fared better. For Kotick, though, licensing proved too removed from the action, and he wanted to get back to his videogamer roots. Before dropping out of college to start his first venture, Kotick would spend up to 10 hours at a time playing Mystery House on the Apple II, a multiplayer game with rudimentary graphics where players input commands such as “open door” and “pick up gun.”

In late 1990, Kotick entered the videogame industry in earnest. He sold his interest in Leisure Concepts and, together with a group of investors that included Wynn, purchased a 25 percent stake in Activision. The company had the distinction of being the first third-party game developer for the Nintendo game console, but it languished under what Kotick considered to be poor management, and he was determined to take it over and build it into a dominant videogame company, with the help of Wynn. (Wynn, however, may have been looking for something more than a solid financial investment. “I thought he would make a good son-in-law,” he deadpans. Though Kotick did not marry either of Wynn’s two daughters, it was still a good gamble: Wynn reportedly earned a cool $50 million when he cashed out in the late ’90s.)

Kotick turned Activision around with a series of clever acquisitions and aggressive licensing deals. One of Activision’s first major successful deals was its 1999 purchase of Neversoft Entertainment, which developed the Tony Hawk series of skateboarding games, a dominant franchise with more than $1 billion in sales. Another hit has been the Spider-Man series based on the movie franchise. And last year Activision bought RedOctane, publisher of Guitar Hero, for approximately $100 million, a price that some analysts considered too high at the time. Today, many in the industry regard it as a “genius” move, and Activision estimates that the Guitar Hero games (the most recent installment, Guitar Hero III, was released in the fall of 2007) will generate at least $360 million in revenue this fiscal year.

With the merger, Activision Blizzard will arrive with the hits already established. Along with Guitar Hero, the company will boast World of Warcraft, which is projected to earn $1.11 billion on 9.3 million subscribers this fiscal year. But Kotick will have his challenges: Online gaming is one area where Activision has failed to gain a foothold, while Vivendi has traditionally been weak in console games.

The next stage for the company, says Kotick, is to expand on the Guitar Hero paradigm of “social gaming” in which groups of people play games together in physical and virtual spaces. “[Videogames are] not just a solitary pursuit anymore,” he explains—something that Kotick, who has built his success with the help of others, surely knows well.