Bits Blog: Drawing the Line on Altering Human Minds

Bobby Kotick of Activision, Drawing Praise and Wrath

Mr. Kotick, the C.E.O. of Activision Blizzard, the world’s largest video game publisher, inspired a stocky, auburn-haired character named Money Sack, who, in a game created by a competitor and a former employee, wields a wide grin and an automatic weapon. In another video, Mr. Kotick pops up from behind a fortified wall, and in a husky, ominous voice says he’ll set the price of his biggest game, Call of Duty, to “your soul” — a dig at its cost. Then fiery lasers shoot out of his eyes, wreaking havoc on an apocalyptic fantasy world. In several online photographs he is depicted as the Devil, with red horns against a Hades-like background.

On this particular Sunday, it’s those Photoshopped horns that really irk Mr. Kotick. He is seated at a corner table in the cavernous breakfast room of the Pierre hotel, across the street from Central Park, shaking a leg nervously and whispering in a conspiratorial hush.

“Think about what it’s like for my dating life when the first picture that comes up is me as the Devil,” says Mr. Kotick, who is recently divorced. “You see all this chatter and you realize that they game the search results. These super-sophisticated 19-year-olds are smarter than our expensive P.R. firm.” (His publicist, Steven Rubenstein, shrugs sheepishly.)

Mr. Kotick, 49, has reason to be annoyed. Not since the music industry’s heyday has there been a business with such a wide disparity between the popularity of its products and its customers’ perception of the chief executive who made those products possible. Video games are among the most successful segments in the entertainment industry, and the disdain heaped on Mr. Kotick in video game blogs is second only to the admiration for him on Wall Street.

He bought the company that is now Activision in 1990, when it was nearly bankrupt and when analysts dismissed video games as fads. But in his 22 years as C.E.O. he has built Activision into a company with a stock market value of $12.7 billion, almost three times that of its top rival, Electronic Arts.

Mr. Kotick isn’t the most technology-driven executive. (He still prefers a BlackBerry.) And he doesn’t get into the weeds of creative storytelling; he leaves that to the studios Activision has acquired. But like David Geffen, who never played a musical instrument well but signed Bob Dylan, Joni Mitchell and the Eagles, Mr. Kotick has a knack for identifying hit after blockbuster hit. He wakes up each day thinking about those hits — some would say obsessing about them — and how Activision can lavish games like Call of Duty, Diablo and World of Warcraft with ever more bells and whistles to keep customers happy and ensure that the next release is a big success, too.

The latest edition of Activision’s biggest game, the shoot’em-up megahit Call of Duty: Black Ops II, was released Nov. 13 and had sales of $500 million in its first 24 hours and more than $1 billion in the first 15 days. That fell short of some analysts’ expectations but was nevertheless more than the total domestic box-office revenue of “Avatar,” the highest-grossing movie of all time.

BUT expensive, immersive games now face a challenge as free online games from companies like Zynga and Rovio compete for users’ attention. Retail sales of video games in the United States totaled $7.5 billion from January to October, down 26 percent from the same period in 2011, according to the NPD Group.

In response, Activision is doubling down on a handful of games with high margins. The strategy is to have customers pay $60 or more to traverse for hundreds of hours through story lines with orchestral soundtracks and realistic, hologram-like heroes and heroines. With each new version “we need more resources, more time, and our development schedule has to get longer,” Mr. Kotick says. “How do you make the games better each year?”

Developers of Call of Duty took the risky step of bringing the mostly historical war series into the not-so-distant future of 2025. David S. Goyer, co-writer of the story for “The Dark Knight Rises,” was a co-writer on the story for the latest Call of Duty. Trent Reznor, the Nine Inch Nails singer who won an Oscar for the soundtrack of “The Social Network,” did the theme song. Oliver L. North served as an adviser for the game, which features a virtual David H. Petraeus, the former Central Intelligence Agency director.

The Activision strategy relies heavily on the holiday season. “This is a nail-biting time for us,” said Brian G. Kelly, Mr. Kotick’s longtime business partner, who is co-chairman of the Activision Blizzard board.

In the three months ended Sept. 30, Activision exceeded analysts’ expectations and increased its earnings by 53 percent, to $226 million, or 20 cents a share, even as video game console sales declined slightly.

Slipstream: Do-Not-Track Movement Is Drawing Advertisers’ Fire

Do Not Track mechanisms are features on browsers — like Mozilla’s Firefox — that give consumers the option of sending out digital signals asking companies to stop collecting information about their online activities for purposes of targeted advertising.

First came a stern letter from nine members of the House of Representatives to the Federal Trade Commission, questioning its involvement with an international group called the World Wide Web Consortium, or W3C, which is trying to work out global standards for the don’t-track-me features. The legislators said they were concerned that these options for consumers might restrict “the flow of data at the heart of the Internet’s success.”

Next came an incensed open letter from the board of the Association of National Advertisers to Steve Ballmer, the C.E.O. of Microsoft, and two other company officials. Microsoft had committed a grievous infraction, wrote executives from Dell, I.B.M., Intel, Visa, Verizon, Wal-Mart and other major corporations, by making Do Not Track the default option in the company’s forthcoming Internet Explorer 10 browser. If consumers chose to stay with that option, the letter warned, they could prevent companies from collecting data on up to 43 percent of browsers used by Americans.

“Microsoft’s action is wrong. The entire media ecosystem has condemned this action,” the letter said. “In the face of this opposition and the reality of the harm that your actions could create, it is time to realign with the broader business community by providing choice through a default of ‘off’ on your browser’s ‘do not track’ setting.”

So far, Microsoft has shrugged off advertisers’ complaints. In an e-mailed statement, Brendon Lynch, Microsoft’s chief privacy officer, said a recent company study of computer users in the United States and Europe concluded that 75 percent wanted Microsoft to turn on the Do Not Track mechanism.

“Consumers want and expect strong privacy protection to be built into Microsoft products and services,” Mr. Lynch wrote.

The tone of the industry offensive may seem a bit strident, given that the W3C has yet to decide how to implement the don’t-track-me mechanisms — or even what they signify. For the moment, that means the browser buttons are little more than digital bumper stickers whose sentiments companies are free to embrace or entirely ignore.

But what is really at stake here is the future of the surveillance economy.

The advent of Do Not Track threatens the barter system wherein consumers allow sites and third-party ad networks to collect information about their online activities in exchange for open access to maps, e-mail, games, music, social networks and whatnot. Marketers have been fighting to preserve this arrangement, saying that collecting consumer data powers effective advertising tailored to a user’s tastes. In turn, according to this argument, those tailored ads enable smaller sites to thrive and provide rich content.

“If we do away with this relevant advertising, we are going to make the Internet less diverse, less economically successful, and frankly, less interesting,” says Mike Zaneis, the general counsel for the Interactive Advertising Bureau, an industry group.

But privacy advocates argue that in a digital ecosystem where there may be dozens of third-party entities on an individual Web page, compiling and storing information about what a user reads, searches for, clicks on or buys, consumers should understand data mining’s potential costs to them and have the ability to opt out.

“If you are looking up the word ‘cancer’ ” on a health site, says Dan Auerbach, a staff technologist at the Electronic Frontier Foundation, a digital rights group in San Francisco, “there’s a high probability that you have cancer or are interested in that. This is the sort of data that can be collected.” He adds: “Consumers absolutely have a right to know how their information is being used and to opt out of having their information used in ways they don’t like.”

But the two sides seem to have reached an impasse. When the W3C met recently in Amsterdam to hammer out Do Not Track standards, as my colleague Kevin J. O’Brien reported in an article earlier this month, advertising industry executives and privacy advocates accused each other of trying to stymie the process.

“There is a strong concern that the W3C is not the right forum to be making this decision,” says Rachel Thomas, the vice president of government affairs at the Direct Marketing Association, a trade group based in Manhattan. “The attempt to set public policy is entirely outside their area of expertise.”

During the Amsterdam meeting, Ms. Thomas proposed that Do Not Track signals should actually permit data collection for advertising purposes, the very thing the mechanisms were designed to control. That provocative idea went over with European privacy advocates about as well as a smoker lighting up in a no-smoking zone full of asthmatics.

Indeed, some prominent consumer advocates have interpreted the industry’s proposal as an act of bad faith.

“While many advertisers do support privacy, there is clearly a rogue element of advertising networks that wants to subvert the process,” says Jon D. Leibowitz, the chairman of the Federal Trade Commission. “Or so it seems to me.”

Earlier this year at a White House event, the Digital Advertising Alliance, or D.A.A., an industry consortium, pledged to honor don’t-track-me signals so long as the systems required consumers to make an affirmative choice. But last Tuesday, the consortium published guidelines saying that it viewed Microsoft’s latest browser setting as an automatic, machine-driven choice preselected by a company — not a choice actively made by an individual consumer. During the installment process, Microsoft’s new software actually does give users a choice of whether to keep the mechanism on, or to turn it off. Nevertheless, the consortium said it would not require members to honor the forthcoming browser’s don’t-track-me signals.

Besides, the D.A.A. has already established its own program for consumers who want to opt out of receiving ads tailored to their online behavior, says Mr. Zaneis, whose own group is a member of that consortium. The consortium remains committed to incorporating browser signals into its program, he says, provided that the systems require consumers to make affirmative choices and give them information on the potential effects of eschewing tailored ads.

“We have self-regulation. It’s working very well,” he says. “Why don’t we give that a chance to succeed?”

SOME government officials vehemently disagree. In a letter to the F.T.C. earlier this month, Senator John D. Rockefeller IV, Democrat of West Virginia, called the industry program an “ineffective regime” riddled with exceptions.

“To date, self-regulation for the purposes of consumer privacy protection has failed,” Mr. Rockefeller wrote.

Now regulators are warning that opposition to Do Not Track could backfire on advertisers, by giving browsers more incentive to empower frustrated users.“We might see a technology arms race with browsers racing to see — by letting consumers block ads — who can be the most privacy-protective,” says Mr. Leibowitz of the F.T.C. “Maybe that’s not a bad thing.”

E-mail: slipstream@nytimes.com.

Google Goes Back to the Drawing Board for Nexus Q

But last week, just five weeks after the introductory pomp at the annual developers’ conference, Google indefinitely postponed shipment of the device.

Though Google was hardly betting the company on the Q, the failure reveals deeper challenges for the Internet search giant as it tries to move into two new areas: hardware and social technology. Though the hardware for the Q, which Google built in a factory in San Jose, Calif., has for the most part been well received, early users say the device simply does not do enough. And for what it does, at $299, it is too expensive.

The company’s only statement on the delay came in a letter to customers who had ordered it. The letter acknowledged the criticism of early users and said, “we have decided to postpone the consumer launch of Nexus Q while we work on making it even better.” Customers who ordered the device already will receive it at no charge.

Google’s push to build the Q is part of the epic battle between Google, Apple, Microsoft and Amazon.com for control of the living room — the TV shows and movies we watch, the music we listen to and the advertisements we see while sitting on the sofa.

“The battle for the TV is raging,” said James L. McQuivey, an analyst on media and technology at Forrester. “If you’re Google and you know the future of advertising is going to encompass all the screens — the ones you’re strong on, the PC and mobile phone, but also TV — then you’ve got to nail that piece or you run the risk of hitting a ceiling with your revenue potential.”

Advertisers are expected to spend $64.8 billion on TV this year, compared with $39.5 billion online, according to eMarketer, the advertising research firm. People are spending less time reading print publications or listening to the radio in favor of digital devices, eMarketer said, and they are spending more time watching old-fashioned TV.

The delay of the Q is not Google’s first misstep as it tries to become a consumer electronics company and make its products jump off computers and phones and into the family room. Google’s Internet-connected TV, Google TV, has struggled to sign on programming partners and rumbled with hardware makers, and has not caught on widely with TV viewers. Like the Q, it was delayed in its early days to improve the software, though Consumer Reports called LG’s latest Google TV the best version of the product yet.

The Q plugs into TVs or speakers so its owners can listen to music or play video from their Android phones or tablets. It is similar to devices like Apple TV, Boxee, Roku and Google TV.

But the Q is much more expensive than those products and does much less. It plays music, movies and TV shows only from Google Play’s limited collection and YouTube, and can be controlled only by Android devices. It is unclear how it would work with Google TV. The Nexus 7, however, a $199 tablet computer that Google introduced on the same day, has been met with rave reviews and is selling quickly, and can be used as a remote control for TVs.

Tech companies want people to buy their devices so they will also buy their media, and vice versa. Amazon.com sells Kindles so people will buy e-books from Amazon, and Apple sells music on iTunes so people will buy iPods. Companies are racing with one another, because once people store enough media with one service, it is much harder to persuade them to switch services or devices.

Though analysts say the race is far from the finish line, a problem for Google is that most people have not purchased much in the way of music and movies from Google.

“They only extended it to people who had music inside Google Music and media purchased off Google Play which, let’s admit, was a much smaller market than Apple iTunes, Amazon and any other media outlet,” said Chris Silva, a mobile analyst at the Altimeter Group. “They want to get people using Android and using Google Play for media and they know it’s an uphill battle, which is why they’re pushing it so hard.”

Google also hoped that the Q would be the centerpiece of its fledgling efforts to connect home devices to the Internet. It has said it wants to tackle not just the entertainment space but the whole home, eventually connecting coffee pots to the Internet so they can be turned off remotely, for instance, or refrigerators so they can order milk when it is running low.