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?”