Does ActiBlizsion Make Sense? Can A Merged Activision And Blizzard Really Work?

from the the-studio-model-at-work dept

Mon, Dec 3rd 2007 4:28am — Mike Masnick

The big news in the tech world this weekend, of course, is the slightly complicated merger between video game firms Blizzard and Activision to form the not-particularly-creatively-named Activision Blizzard. You can read the link above to figure out the complicated parts, including Vivendi's role, as well as the various amounts of cash going into the deal from both sides. As for the rationale behind the deal, it's one of those deals that seems to make sense on paper. It makes the combined company somewhere around the size of EA, the major player in the space. It also aligns the complementary strong points of each firm. Activision is big in console games like Guitar Hero while Blizzard is big in multi-player online games like World of Warcraft. Blizzard also has a strong presence in Asia. So, on paper, it sounds like a great deal. The tricky part will be actually making it work. Even with such clear complementary successes, it's not always so easy to merge two large players like this with different approaches to the market. What almost always happens when two large companies merge is that one side ends up taking over and the other group fights for a while and then leaves -- taking much of the reason for the merger away. Even more complicated in this case is that both companies are pretty dependent on coming up with new "big hits" on a regular basis to keep bringing in the revenue. EA's success (whether on purpose or not) has largely been driven by the ability to release "franchise" games that people will buy the next version of every year -- particularly in the sports arena. If the merger makes the company take its eye off the ball, leading to a weak set of products, it could be quite damaging. Maybe the companies will pull it off. Maybe they can figure out a way to actually build on their separate strengths without fighting themselves -- but it's a big bet to take.

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Filed Under: mergers, video games
Companies: activision, blizzard, vivendi

29 Comments

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moe, 3 Dec 2007 @ 4:43am

Fark's got it's finger on the pulse
I think this headline from Fark.com says it all: "Activision and Blizzard to merge their creative juices, come up with the name Activision Blizzard. Creativity has its limits."

It'll be interesting to see how it works out, but just because you make a company of the same size doesn't guarantee you'll unseat EA. This merger brings together two companies that excel at two different types of games: Console & PC/MMORPG.

Sure, EA competes in both markets but it does so using the same titles! They just make the latest version of Football/Baseball/Golf/etc and then port it out to every gameplaying medium.

Unfortunately, neither of these companies competes very well with EA's core business of sports games. So, the combined margins and profits might equal EA's but they're not going to hurt EA in any significant way. I don't see this merger doing anything that each of the companies couldn't have done on their own.
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Shohat, 3 Dec 2007 @ 4:57am

Oh comeon
At least link to the
ActivisionBlizzard.com
Website.
There is a very detailed paper there that explains a lot of the reasons behind the merger, and states some key achievements of both companies.
Blizzard is a completely different type of company . They release one game every 2-3 years, but 4 out of 5 all-time bestselling games belong to Blizzard.
Over 9 million WoW users generate more than 100 million a month in revenue.
On a side note, Guitar Hero is owned by Activision and EMI is owned by Vivendi, which could be an another angle for this merger...
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Anonymous Coward, 3 Dec 2007 @ 5:40am

Re: Oh comeon
Blizzard made the Sims, Mario Bros and Tetris?
Wow i underestimated them.
Although they made the worst decision in selling the Sims to EA :$?
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Danno, 3 Dec 2007 @ 5:54am

Since this isn't supposed to be a consumer facing brand (ie You won't be seeing any games with an Activision Blizzard splash screen), it seems like this is more about Activision acquiring Vivendi (which, as a publisher, has slipped in recent years [see, loss of publication of Valve games, loss of publication of Relic games, general suckitude aside from Blizzard]) and acknowledging that Blizzard is such a damn huge entity on their own that they can't rightly call them an Activision development studio.

I mean, to a stockholder, which would you rather purchase Activendi or Activision Blizzard, maker of the most popular video games in the world?
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My best guess, 3 Dec 2007 @ 6:15am

is MMPG
My best guess is the industry is realizing mutli-player gaming is becoming a big deal and it generates on-going revenue. [? I know Blizzard sucked nearly three years of monthly subscriptions from me until I kicked the habit.] Perhaps Activision is looking to Blizzard's expertise to help develop more multi-player titles?
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Mod -1 (Troll), 3 Dec 2007 @ 6:22am

Names rejected by committee
Blizzivision
Blizion
Activendi
Actard -- my personal favorite.
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Nick Overstreet (profile), 3 Dec 2007 @ 6:33am

Re: Oh comeon
4 out of 5 all-time bestselling games belong to Blizzard?
What are you talking about?
It is obvious you made NO effort to check this comment, and in reality just made it up.
Let's look at the top 5 best-selling games of all time:
1) Super Mario Bros. (NES - 40.23 million)
2) Tetris (Game Boy - 33 millions)
3) Pokémon Red, Blue, and Green (Game Boy - 20.08 million approximately, 10.23 million in Japan, 9.85 million in US)
4) Super Mario Bros. 3 (NES - 18 million)
5) The Sims (16 million shipped)
[wikipedia.com]
Well, you got one thing right, 4 of the top 5 all-time bestselling games do have something in common. They're Nintendo games. With the other top 5 game being from EA.

Please don't make up your own facts, it has only proven to discredit your entire post.
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Anonymous Coward, 3 Dec 2007 @ 7:03am

Re: Re: Oh comeon
A lot of those games you just listed came bundled with consoles which accounts for 50% or more of their sales numbers. Just figured you should know, since its kind of unfair to compare Blizzard games to them, seeing as how you cant bundle with computers.
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Killer_Tofu (profile), 3 Dec 2007 @ 7:06am

Sorry Mike
I am going to have to disagree with you saying that Blizzard is in any way dependant on coming out with new big hits at regular intervals. I suspect they only do that for even More money. Blizzard has the wonderful World of Warcraft. That right there brings in gawd awful amounts of money. They are not dependant on big hits. They just choose to keep making more and aiming for the big hit mark.
Next up in line that everyone seems to be insanely hyped about: Starcraft 2 (I'm on that boat), and Diablo 3 (which I was told was announced at the last E3 but I have yet to see verification, partially because I haven't checked).
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Shohat, 3 Dec 2007 @ 7:08am

Re: Re: Oh comeon
To Nick Overstreet

http://www.activisionblizzard.com/

Is the source of my data - the data was copied from the merger summary, written for SEC(and others) by Vivendi and Activision

I assume they were referring to PC games.
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Killer_Tofu (profile), 3 Dec 2007 @ 7:09am

Re #8 AC
Can't bundle with computers?
Putting all the extra shit that comes with any store bought computer aside (such as Windoze and other various softwares) and leaving it limited to games, games have come with computers.
Especially a lot of the online stores for either complete PCs or just graphics cards. When I bought the last graphics card that I am still using, it had an added bonus of Half Life 2.
I have seen plenty of other games here or there (most notably if you end up being from cyperpowerinc.com) that comes with computers.
So yah, they do bundle with computers.
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killertim, 3 Dec 2007 @ 7:16am

The biggest problem with the whole thing from the players perspective is that this seems to be all about money and reaching new markets. They will have to work hard to perserve the quality of the games that they have had to date.
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Anonymous Coward, 3 Dec 2007 @ 7:23am

At least get the name right. As the poster on Slashdot commented, it is BLACTIVISION. Stop trying to erase the funk, you muthafunka.
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Thomas, 3 Dec 2007 @ 7:46am

They never teach the MBA's...
That M&A math is different than regular math:
3 legged dog + 3 legged dog = bigger 3 legged dog
This company will go down horribly within 5 years.
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Dick Underroad, 3 Dec 2007 @ 8:32am

Re: Re: Oh comeon
and it only proves that people belive everything they read on wikipedia...

I think the man you trying to "disprove" is correct if he only added one small part...

4 out of 5 all time best selling PC games belong to blizzard

Please dont suck facts out of wikipedia, it has only proven to make you look like me... dick underroad....
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cyen, 3 Dec 2007 @ 9:16am

So much for good mac games...
So one of the last great game makers for the Apple computer has been bought up. Blizzard has been great in dual releases and always being there for the Mac community. Activision, not so much. Blizzard will probably go the same way as Bungie now. A sad day for us mac gamers (all 7 of us).
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Greyson, 3 Dec 2007 @ 9:18am

Merger
Hope this doesn't delay Starcraft 2! I am dying for that and a Diablo 3. You listening Blizzard???
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Nick Overstreet (profile), 3 Dec 2007 @ 9:30am

Re: Re: Re: Oh comeon
Ok, so let's remove "bundled" games since you don't want to count those.
#1 and #2 were the only bundled items, so move up everything else and you end up with this:
1) Pokémon Red, Blue, and Green (Game Boy - 20.08 million approximately, 10.23 million in Japan, 9.85 million in US)
2) Super Mario Bros. 3 (NES - 18 million)
3) The Sims (16 million shipped)
4) Nintendogs (DS - 15.77 million)
5) Grand Theft Auto: Vice City (PS2 - 15 million, may include PC and Xbox versions)
[wikipedia.com]

Huh... still no Blizzard games. 3 Nintendo and 1 EA and 1 RockStar.

The point being that Blizzard's best selling game was StarCraft with 9.5 million and doesn't even make a top-20 list. Sorry.
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Nick Overstreet (profile), 3 Dec 2007 @ 9:32am

Re: Re: Re: Oh comeon
Top 5 selling PC games, Blizzard only has 2 of the 5 spots. Not 4 of the 5 spots as Blizzard would like you to believe.
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Jason Still, 3 Dec 2007 @ 11:00am

Re: Re: Re: Re: Oh comeon
For those quoting numbers from the wikipedia article on top selling games, you might want to note that many of the numbers listed are several years old and should not be accepted as the current sales figures. Always look at the dates in the references section!
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Toddly, 3 Dec 2007 @ 11:05am

Re: Re: Re: Re: Oh comeon
To Nick Overstreet

What's your deal man? You're throwing insults at people for lack of research, yet your almighty source is Wikipedia. If you HAD done any research, you'd know that the merger is between Activision and Vivendi games. This includes Blizzard AND Sierra Entertainment. Starcraft, World of Warcraft, Half-Life, Diablo 2... all among the top-selling PC games of all time. Depending how they count sequels and other considerations, I can see how they can claim 4 of the top 5.
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Jason Still, 3 Dec 2007 @ 11:15am

Re: Re: Re: Re: Re: Oh comeon
Toddly, for what its worth, that part of the fact sheet that they released specifically lists Blizzard Entertainment as having 4 of the top 5 games (it doesn't specify PC only) right after pointing out that Vivendi is made up of 4 units (Blizzard Entertainment, Sierra Entertainment, Sierra
Online, and Vivendi Games Mobile). Its probably just a snafu on the part of whoever put that document together. I disagree with nick's reliance on the wikipedia numbers, but I'm not sure that I can agree that Blizzard itself has 4 of the top 5 selling (by units) pc games of all time.
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Lucretious, 3 Dec 2007 @ 1:41pm

Blizzards first dumb move IMO. They were a privately held company that was silly with cash. No need to answer to the all powerful shareholders or board of directors. Now they will be beholden to the bean counters. Sad.

A few greedy company principals fucked it all up for the rest of the employees. How typical.
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Anonymous Coward, 3 Dec 2007 @ 3:09pm

Re: Re: Oh comeon
They made Starcraft, Warcraft 2, Diablo, Diablo II WOW, and Warcraft 3... Almost all of their games made best-selling lists.. Except maybe the earlier ones.
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Anonymous Coward, 3 Dec 2007 @ 3:13pm

Re: Names rejected by committee
I like Blizon
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BBW, 3 Dec 2007 @ 3:15pm

Blizzard will eat them
Blizzard will consume them. It's a good trademark, because of the games currently assosiated with it. Meanwhile the real blizzard will be gutted, and regulated to releasing suckatude, like what happened with Bioware, Bullfrog, and Black Isle.
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Nick, 3 Dec 2007 @ 7:10pm

Not going to help
As has been said, neither company can compete now with EA's sports games, so I don't think EA is trembling in their boots over this one. Unless they come up with "World of Sportscraft" and you can go to different arenas to compete as a member of various sports teams instead of slaying monsters, it's not going to make any difference.
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TW, 4 Dec 2007 @ 8:32am

"like what happened with Bioware"

The company that just released what might be the best game of the year? Don't confuse them with Obsidian, the company that made KOTOR2 and NWN2. Bioware is gold.
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oh come on, 25 Feb 2008 @ 10:15am

do reaserch on vivendi they have invested with many huge companys in all other forms of media, including universal music which owns many big labels in the global music market. vivendi games is just one of the branches
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