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How Will Activision Blizzard Change Games Sector?

It’s not entirely clear yet how Vivendi’s plan to take a controlling stake in Activision, unveiled Sunday, will shake up the games industry. But the $18.9 billion deal will not only merge the maker of World of Warcraft with the owner of Guitar Hero, but will create a video game company, Activision Blizzard, that surpasses Electronic Arts in terms of revenue.

It certainly gives EA (ERTS) something to think about, and some analysts are wondering if EA will look for a buyout from a large media company. What’s more likely is that EA will look for other acquisitions. Raph Koster, who started a company that bridges the web with virtual worlds, notes that EA seems to be moving towards global media concerns while Activision (ATVI) has been “doubling down on traditional gaming.” It will be interesting to see if EA starts eyeing music, TV, film, and other entertainment options.

Also affected is The9 (NCTY), which operates World of Warcraft for Blizzard in China. Shares of the Chinese gaming operator, in which EA holds a 15 percent stake, slumped in Monday trading as analysts worried that the deal may delay contract renewal negotiations next year.

Activision CEO Kotick said in one interview that he’s counting on Blizzard’s strength overseas to help carry other Activision brands — such as Guitar Hero — to Asia. Blizzard is also working on Starcraft II, a brand that remains very popular in South Korea.

With Vivendi (V), Activision also gets the support of its music division, Universal, to potentially bolster licensing deals for Guitar Hero. Harmonix benefited greatly from its partnership with MTV in this regard for their competing music game, Rock Band.

Kotick — who will be CEO of Activision Blizzard — is quite open about his ambition to lead the world’s largest game company. It could all be very good news for the smaller studios. It gives them some breathing room and opens up the possibility of being acquired by the new company, or by EA. And it may attract new investors, those who have cooled on the rising share prices of the soon-to-be even bigger big guns.

10 Responses to “How Will Activision Blizzard Change Games Sector?”

  1. video games has always been everyone’s darling. age has never been a barrier for it. we spend hours and hours playing games but are we aware that video games were introduced in india in late seventies and the only machine available to the gamers were the ping pong machines. not many of us including me are aware about it. it was recently that i got this cool news through this cool site about gaming

  2. I dont think its as simple as traditional gaming Acti-Bliz versus multi media future thinking EA at all. Franchise (EA) vs subscription based revenue (Act-B) is more appropriate and the expected superior margin owing to WoW makes the new company clear leaders in that.

    EA’s orientation is best demonstrated by its acquisition of Bioware and Pandemic. Its not only a nod to franchises (Bioware seems to understand the secret sauce of IP creation along with Bungie and Blizzard) but also a premium paid for the MMORPG being developed by Bioware in its Texas studio. So EA is in fact going down the route of its traditional franchise model by acquiring the franchises it cannot create. And it will also muscle in on WoW’s territory where it hasnt been able to make a dent despite acquiring Turbine. There is a reason why Take Two makers of GTA series are seeing their share price zoom up. They could be the “Empire Strikes Back” moment for EA.

    This will be very interesting. In the end its going to be a question of culture. Can the culture of Activision-Blizzard keep its best people and keep coming up with the hits? Or will EA’s Mass Effect/ Pandemic shot in the arm give it blockbuster hits that take it up front.

    I grew up on Bioware games and am very fond of them. But Blizzard with its Starcraft, Warcraft franchises not to mention Diablo the ace it can throw at any time give the new company a lot of momentum.

    Very interesting indeed.

  3. Sync’d air guitar playing Level 60 Warlocks with an inevitable crack addiction, repetitive strain injury and some great big white letters on a parched hill some place in California saying Activision Blizzard.

    So we have our major studios, now we need the resources to foster the indies and somewhat mis-titled casual gaming community.

    China’s state/private partnership to build giant virtual world server farms will change all this… watch this rapidly moving, cross platform, shoot’em up space.