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The Impact of Activision Blizzard


June 9, 2008 Article Start Previous Page 3 of 4 Next
 

The Impact

As we've already stated, there's no argument that the merger of Activision and Vivendi has already had a vast impact across the industry, but once the company is established, what are the true, meaningful reverberations going to be? We asked game attorney and Gamasutra columnist Thomas H. Buscaglia, veteran online game journalist Michael Zenke (Massively, MMOG Nation) and financial analyst Michael Pachter from Wedbush Morgan for their unique opinions.

"If I didn't see this merger coming, nobody did -- and I didn't see it coming," said Pachter when we asked him if he, one of the industry's most respected analysts, had any idea that such a deal was in the offing. We've yet to speak to anyone who did see it -- "I haven't talked with anyone who saw it coming, including insiders I know at both companies," said Buscaglia, "but the folks involved in the deal sure knew what was going on. And they did a bang up job of keeping the lid on it."

Whether or not he saw it coming, Pachter admits that the merger makes perfect sense "insofar as Activision conducted solely a packaged goods business (and quite successfully), and Vivendi games derived all of its profits from the MMO side of the business."

"Vivendi was not performing well with its packaged goods business, so the combination gave them capable management that they hope will productively reinvest the profits from World of Warcraft. Activision gains by diversifying its revenue base and gaining access to a much higher level of profits that it hopes to reinvest for even greater profits," he continued.

The Impact on Blizzard

"Blizzard is the cash cow that drove the whole deal," said Buscaglia. "You bet they will maintain a level of autonomy, and I suspect that level will be whatever they want, so long as they keep doing what they have been doing -- bringing in the cash. Other areas are more problematic with Activision stronger in the core game areas, for example, with Blizzard and Sierra Online, Vivendi has a superior understanding and expertise. It would make sense to let the group with the most expertise have a fairly free hand to run with it in that area."

There are few (if any) dissenting opinions with this opinion from most sources, though there are further possibilities that could impact Blizzard rather than simply messing with any of their carefully organized processes.

"Expect [Activision] to offer ideas about pricing and microtransactions that will enable Blizzard to be even more profitable," offered Pachter. "For example, I think Activision will ultimately figure out a way to extract some value from farmers who create things on WoW and sell to other subscribers, bypassing the middleman. Activision is sufficiently resourceful to figure out how to insert itself into the process as an exchange (a la eBay) and collect a transaction fee for sales of user generated content."

Similarly, "Advertising for Blizzard games is going to become more aggressive (as we've already seen happen with World of Warcraft)," said Zenke, though he agreed with general opinion that "Activision's reach isn't going to go much past the front door."

"Will the new company try to use the Blizzard folks as sort of internal consultants on other MMO projects in the organization? I'm probably going to go with a no," Zenke continued. "While certainly there are areas of development, design, and certainly technical areas where Blizzard is an industry leader, most of those concepts are on the institutional level. That is to say, I'm not sure a quick consultation from Rob Pardo would be all that helpful to another group's game."

As for the question of whether or not Activision will make other MMOs? "I think that's probably a firm yes," said Zenke. "The MMO style of game has been a proven money-maker even since the days of Neverwinter Nights and Meridian 59; adding more MMOs to the Activision/Blizzard portfolio makes a great deal of sense just from a business point of view."

When it comes to a Call of Duty MMO, as floated by Bobby Kotick, Zenke feels that Kotick is "late to the party" - "All CoD 4 needed were some persistent hubs for the instanced 'spokes', and it would have been essentially as detailed as Guild Wars' PvP. A better question is, in ten years are we going to look around and see any games that don't have that sort of online component?"


Article Start Previous Page 3 of 4 Next

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