Monday, December 3, 2007

Activision + Vivendi = OMFG

Wow. Let me repeat that. Wow (and I don't even mean World of Warcraft which is included in this deal). This deal is HUGE. These companies have 19 billion USD in assets. Previously, Activision had only generated about 5% of their revenue in Asia. Now they have merged with Blizzard which makes Starcraft, Warcraft, and World of Warcraft, all games that are hugely popular in Asia. Meanwhile Vivendi gets Activision's "Hollywood" collection of IP; titles like Tony Hawk, Spiderman, etc.

Electronic Arts is in for some trouble. Time to get creative EA ! Making the same game every year (Madden, Tiger Woods) may not cut it any longer !

It's probably safe to assume that many executives spat out their morning coffee when news of the biggest merger in game industry history broke. Sunday morning, Activision and Vivendi Games announced that they were joining forces to create Activision Blizzard, a new, publicly traded company.

If the merger is approved, the new entity is expected to leapfrog over Electronic Arts to become the biggest independent third-party publisher on the planet, with estimated joint revenues in excess of $3.8 billion. That princely sum is dwarfed by the estimated combined value of Activision Blizzard's assets--a massive $18.9 billion.

While unexpected, the union makes perfect sense. Though its Call of Duty and Guitar Hero franchises are established success stories in the first-person shooter and rhythm game markets, Activision has no massively multiplayer online role-playing games in its portfolio.

Since the Creative Assembly was bought by Sega, its profile in the real-time strategy space has been nearly nonexistent. Enter Vivendi, whose Blizzard Entertainment subdivision owns the most popular MMORPG on the planet--World of Warcraft--and whose RTS roster includes the hugely anticipated Starcraft II.

As the game industry picked up its collective jaw up off the floor, GameSpot got ahold of Mike Morhaime, Blizzard's co-founder, president, and CEO, to get some insider perspective on this landscape-altering union.

Q: Obviously this is huge. Can you speak about the origins of the deal at all?
Morhaime: Well, I guess it originated out of a phone call earlier this year. (Activision CEO) Bobby Kotick went out and had lunch with (Vivendi CEO) Bruce Hack, and they chatted about possible things the two companies could do together. I think both companies left feeling like there was a lot of merit exploring the combination of the two companies. But before I get too far, I just want to clarify something--Vivendi is not buying Activision; they're acquiring a majority stake in Activision Blizzard, which is pretty different.

So it's more of a merger in which Vivendi has a controlling interest.
Morhaime: Yeah, that's perfect. Something Bobby (Kotick) has always wanted to do is grow his company to be the No. 1 game publisher in the industry. This provided him a way to do that. Activision's got a great track record, very strong in console gaming. In fact, the last several months they've been the No. 1 third-party publisher in console gaming.

Q: Yeah. The kids, they like the Guitar Hero.
Morhaime: Call of Duty has also been doing very well...

Q: Really? I hadn't noticed.
Morhaime: (Laughs) Right. Anyway, we've been very strong in PC games and online games. We're the publisher of the No. 1 massively multiplayer online subscription game in the world--9.3 million subscribers and counting. We're the only successful Western publisher in Asia.

Q: I hear you're popular in Korea.
Morhaime: (Laughs) Yeah, a bit.

Q: The total deal is worth nearly $19 billion, but it's not the only big deal of late and comes not long after EA bought BioWare/Pandemic, in large part for their upcoming massively multiplayer online role-playing game. Now, Activision Blizzard will be taking that project on head-on. Was this deal accelerated at all by the BioWare/Pandemic buyout?
Morhaime: I don't really think there was any correlation. We've been talking about this a long time before we heard about the other deal. There was a lot of due diligence. There was a lot of understanding of Vivendi's business and Activision's business. It really took some time.

Q: Are there any plans for staff reduction in the Activision Blizzard organization? What's going to happen in terms of the management structure?
Morhaime: Bobby Kotick will be CEO of Activision Blizzard, the public entity traded on Nasdaq of which Vivendi will have a majority interest. I will remain as president and CEO of Blizzard Entertainment, reporting to Bobby. Michael Griffiths will be president and CEO of Activision publishing, also reporting to Bobby. Activision publishing will include all non-Blizzard Vivendi games assets.

Q: So what happens to Sierra Entertainment? Is that brand going to remain or be subsumed by Activision?
Morhaime: (Pauses) I think it's too early to talk about the branding strategy going forward. I think those decisions will revolve around conversations that haven't happened yet. I do know that Mike Griffiths in his role as president and CEO of Activision Publishing will be responsible for all of the Vivendi games.

Q: So will all Activision Games be branded with a new Activision Blizzard logo?
Morhaime: I'm not sure about a logo--that's something we'll have to discuss. But I think this issue is very important from a consumer-facing standpoint, so I want to emphasize it: The Activision and Blizzard brands will remain. We're not going to put Blizzard Entertainment logos on Guitar Hero boxes, and we're not going to put Activision logos on World of Warcraft boxes.

Now on
Part 1: Securing Microsoft: A long road

Living with technology: Magic '08-ball

All about coal: A necessary evil

Extra: Consumers to cell providers: Can you hear me now? Q: There is a big fear among certain gamers that with the creation of this "mega corporation," game quality will suffer. What assurances can you give the myriad Blizzard and Activision fans that this deal will in no way change the quality of your games?
Morhaime: I spent a long time speaking with Bobby Kotick about our culture, philosophy, and commitment to quality at Blizzard. And no one at Activision or Vivendi has any desire to change that. Why would they?

Activision runs an autonomous studio system. Their studios operate with a lot of creative freedom, and it's been very successful for them. That's something that may be different from the (way) other large publishers operate. But both Activision and Blizzard respect the talent that creates games, and this is going to be able to provide us with a stable, secure infrastructure with which we can take care of our people making games.

Striking Writers Should Get Gaming

The facts:

1. T.V viewership is in a delcine:

Television networks reacted with alarm
When a Nielsen Media Research TV ratings report
Showed a decline of 8 to 12 percent
In the number of 18 to 34-year-old men
Watching prime-time television
at the start of the 2003 TV season.
Some disbelieving network executives,
Fretting about fading viewer ship
Among a prized demographic group,
Questioned whether Nielsen itself
Had somehow
Botched its own measurements.
What Nielsen likely did record,
Is the first mass migration
Of young consumers
Away from traditional television
And toward a fast-growing entertainment alternative:
Video games.

2. Writers are on Strike:

It’s no surprise that scriptwriters for radio, television and movies are at a stand-still with the current Writers Guild of America (WGA) strike. After three weeks without work, those writers are starting to look for writing positions in the video game industry.

“Vidgames may be one of the prime reasons network TV doesn’t draw as many viewers as it used to, but it also represents a new market for screenwriters,” said Ben Fritz, technology and videogame reviewer for Variety magazine. “While the WGA has made no secret that it would like to eventually cover videogame writing, it hasn’t pushed the issue yet and is allowing members to work on games during the strike.”
The WGA is a union of writers who work in film, television and radio broadcasting. The reason the writers have all gone on strike in the first place is that they demand an increase on residuals for DVD sales and a healthy cut from new-media profits.
Naturally, the WGA has not hesitated to remind us that it plans to create a special category for videogame writers at the next Writers Guild Awards to be held in February 2008.
“Video games are written and many are written very well” said WGA West President Patric M. Verrone. “By recognizing the skill and craft of video game writing, the Writers Guilds intend to raise the profile of these writers so that they can get WGA contracts and benefits for this work. We aim, we shoot, we score.”
Veteran game and film writer, Flint Dille, said times have changed and games have come the new market.
“I’m certain some kind of union situation is going to evolve for this industry, including the writers,” Dille recalls. “Then as budgets went up, they realized they need designers and some actual art. Today, it’s unusual if a writer is not brought into the process at some point. Twenty years ago, games were all about the engineers. Over the next 20 years, I’m certain some kind of union situation is going to evolve for this industry, including the writers.”

3. Combine facts 1 and 2 and you get the conclusion:

Writers are going to turn to video games for work.
The writers may even GetGosu -_-