I'm torn. Activard? Blizzavision? But Activision Blizzard, that's a little meh, between you, me, and the talentless if predictable name-brand fallback. Oh well, guess we'll have to live with the new six-syllabic company moniker, because according to the AP (by way of Business Week) Vivendi SA said today it plans to snap up a controlling stake in Activision and merge the publisher with Vivendi Games in a deal said to be worth $18.9 billion.
The new company is expected to have a combined 2008 turnover of $3.8 billion and the highest operating margins[1] of a "third-party" game publisher that isn't functionally affiliated with "first-party" console manufacturers like Microsoft, Nintendo, or Sony. Interestingly, Electronic Arts, which back in May forecast net losses for its fiscal year ending March 2008, is expecting slightly lower net revenues of between $3.35 and $3.65 billion. In a year that's seen record business for the industry overall, EA announced a $195 million second quarter loss and said it was cutting four percent of its staff last month (to be fair, EA claims the downturn's due to new mobile and casual initiatives that haven't yet paid off).
The Activision-Vivendi deal combines some of the top franchises in the game industry, from Activision's Guitar Hero, Tony Hawk, and Call of Duty, to Blizzard's marquee WarCraft, StarCraft and Diablo series.
Look at it another way, and you could argue that in recent years, Activision's strengths have been in console games with strong single-player experiences, while Vivendi's have been mostly in PC-based games and online (*hem* World of Warcraft *hem*). Combine the two, and add giddy-scream-inducing stuff like StarCraft 2, and you get a merger that not only makes strategic sense, but which forges a formidable brand-driven powerhouse.
Bigger than Electronic Arts? Hard to say. Certainly "on par with," financially speaking with annual revenues expected in the $3.7 billion range. But look past the clinical Wall Street number crunching and the only real questions I'm interested in are:
1. Can 'Activision Blizzard' (gawd that's weird to say out loud) duplicate EA's business model of churning out perennial franchises that generate reliable profits?
2. Should it? Would that really be a good thing for consumers?
Also, while the merger is undeniably blissful news for the new class of video game tycoons (set, in my opinion, to eventually rival or become one with media empires like News Corporation, Sony, Time Warner, or Disney), I suspect it's bad news for a lot of developers. After the Wall Street honeymoon's over, the next phase in just about any merger is consolidation, which means culling "redundancy," which typically culminates in layoffs, not to mention the old saw about corporate incompatibility with spontaneous creativity.
Anyway. I've left out all the stock-trade mazuma-speak. Get it here if you like. The companies will remain publicly traded on the Nasdaq under Activision's ticker ATVI.
UPDATE (12/2/07 5:00 p.m. CST): Gamasutra's Simon Carliss has a nice five-point overview of what he views as the merger's "five key points." Numbers one, two, and three are fairly self-evident, but the fourth isn't, and it's worth a read. The fifth I'm not sure I agree with, since Carliss's "$3.8 to $4 billion" figure for EA's fiscal year revenue is after deferred net revenue.
UPDATE (12/2/07 10:31 p.m. CST): 1UP's Jeff Green talked to Blizzard's CEO Mike Morhaine earlier today and clarifies a few of the less obvious details about the merger/acquisition/takeover/bunch-of-guys-singing-camp-songs-together/whatchamacallit here. Apparently the new name is nominal, and won't appear on a boxed product. (Remember when Babbages and Software Etc. were called Neostar? Sort of like that.) I wish Jeff could've pushed a smidgen harder and asked about what this meant for each company's staff in terms of studio changes and/or potential downsizing, but comme ci, comme ca, I guess.
[1] Give it up for World of Warcraft. Technical and support staffing costs are probably a drop in the bucket compared to the revenue generated from over nine million worldwide subscribers times $180 a year (per user).
