I bet you didn’t see it coming…In the most surprising gaming
news of the year, Activison and Vivendi has signed an agreement to create Activison
Blizaard, a new gaming company that combines Vivendi Games, Vivendi's
interactive entertainment business, and Activision.
Vivendi Games is the owner Blizzard Entertainment, the
company that created World of Warcraft, the biggest MMORPG (multi-player online
role-playing) gaming franchise to date.
With 9.3 million subscribers worldwide, Blizzard projected
calendar 2007 revenues of $1.1 billion, operating margins of over 40% and
approximately $520 million of operating profit. Also, Blizzard owns other
famous gaming franchises such as Starcraft and Diablo.
On the other hand, Activision holds games franchises such as
Guitar Hero, Call of Duty and the Tony Hawk series, as well as Spider-Man,
X-Men, Shrek, James Bond and Transformers.
In the last fiscal quarter Activision has grossed revenue of
$317.7 million, which is up 69 percent from a year ago and has topped even Wall
Street’s expectations of $262 million.
The new company, Activision Blizzard, is expected to have
approximately $3.8 billion in pro forma combined calendar 2007 revenues and the
highest operating margins of any major third-party video game publisher. With
these revenues, Activision Blizzard will easily surpass the biggest third-party
publisher Electronic Arts, which has annual revenue of about $3 billion. The
deal is expected to be completed in the first half of 2008.
Activision Blizzard's board of directors will be comprised
of eleven members: six directors designated by Vivendi, two Activision
management directors and three independent directors who currently serve on
Activision's board of directors.
"By combining leaders in mass-market entertainment and
subscription-based online games, Activision Blizzard will be the only publisher
with leading market positions across all categories of the rapidly growing
interactive entertainment software industry and reach the broadest possible
audiences," said Activision's Chairman Robert Kotick.
Lately, due to the introduction of the new gaming consoles,
the gaming market is booming. For example only in US, according to the latest
NPD Group report, total videogame software sales for October came to $513.9
million, up 39% from the same period last year.
But also the production costs have increased. According to
IDC Games analyst Billy Pidgeon games can now cost up to $50 million dollars to
create, which means that even larger publishers cannot afford to release failures.
