In 1990, Bobby Kotick bought 25 percent of failing videogame maker Activision for $440,000, with financing from his mentor, casino king Steve Wynn. Since then, the company has been in nonstop-growth mode, through both internal expansion and acquisitions, and late last year, Kotick engineered his biggest deal yet—a nearly $19 billion merger with Vivendi’s game division. The prize for Activision: Blizzard Entertainment, maker of the online game World of Warcraft, which has about 10 million paying subscribers. Vivendi will own a majority stake in the merged company, to be renamed Activision Blizzard, and Kotick will run it.

With megahits like Guitar Hero, Call of Duty, and Tony Hawk’s skateboarding games, Kotick, 45, has become one of the most powerful figures in the $10 billion videogame industry (a number that counts sales of games only, not consoles). Longtime game-industry leader Electronic Arts currently has about $3.7 billion in annual sales. Once Activision closes the merger with Vivendi, the combined entity will have yearly revenue of nearly $4 billion as well. But E.A. recently made a hostile offer for Take-Two Interactive, creator of the Grand Theft Auto series, a move seen by industry observers as an attempt to stay ahead of Kotick. Moreover, some analysts question whether Activision can continue growing at such a rapid rate.

Condé Nast Portfolio’s Kevin Maney met with Kotick at his Beverly Hills home, an airy, angular, modern structure with contemporary art—including a De Kooning—on every wall. (Kotick is a trustee of the Los Angeles County Museum of Art.) Wearing a sweatshirt from an Allen & Co. media conference, blue workout pants, and white socks with no shoes, he talked about his management style, Wynn, and the future of the videogame business.

In 1999, Activision bought Neversoft Entertainment for $11.9 million in stock. The purchase, which included the popular Tony Hawk series, resulted in a worldwide revenue of $100 million in 2007.

I take it that in the Vivendi merger, you were most interested in Blizzard’s World of Warcraft.

We started hearing the rumors of how profitable that was. My guys kept telling me about the business, and I didn’t believe it. But we realized that this is not just a game. It’s a social network with a lot of elements, and people rely on the game for a lot more than just entertainment. It wasn’t the kind of thing that something else would come along and displace.

How did the deal happen?

We made an offer. It was more than we’d ever offered for anything—billions, almost equal to our own market value. And Vivendi said, “We’d really like not just to sell you the business but actually to become your partner.”