Vivactard/Blivendivision Formed, Industry Continues Morphing into Clumsy Lumbering Cyclops

By Chris Remo, Dec 02, 2007 11:53am PST

The writing has been on the wall for quite some time, but it is now as clear as it has ever been that the games industry is going the route of the rest of the successful consumer industries and consolidating the hell out of itself.

Activision has been clawing at some kind of strategy to truly compete with Electronic Arts as the industry's biggest 800-pound gorilla, and I suppose it was inevitable that the strategy was less a finely-tuned procedure and more a desperate sledgehammer swing.

Blizzard and Activision (now the catchy Activision Blizzard) hardly seem like a natural fit for one another; it is a merger borne entirely out the desire for market capitalization. One spends years on finely-tuned PC games and could have easily prospered as an independent; the other shuffles internal studios to ensure every major franchise has at least one yearly iteration. Then there's Vivendi, a.k.a. Sierra, which makes stuff too.

This just gives me all the more appreciation for the absolutely insane maneuver Bungie recently pulled off. Good show, fellows.

The new Blevendivision is projected to out-earn EA in revenue. Maybe in response EA will go completely apeshit and start buying. It already owns 20% of Ubisoft and was being awful threatening a couple years back. Plus, there have been ongoing reports of Take-Two being receptive to buyers.

We're on our way to being a real entertainment industry like Hollywood and the music biz, where a few monolithic merger-formed entities dominate. We're on our way to joining other industries with bizarre monikers like PricewaterhouseCoopers and the now-trimmed AOL Time Warner.

How is a small publisher or independent developer going to be able to compete (and stave off acquisition) if their larger competitors just keep joining forces in a financial dick-waving competition? There's already BioWare/Pandemic (now part of EA), Square Enix, Namco Bandai, Sega Sammy, Foundation 9 (with its merged or acquired studios) and so on.

IGN merged with a company that provides multiplayer tech to the games it reviews, and is owned by a company looking to get back into full video game publishing. Turner-owned paid game download service GameTap has its own fully-staffed editorial news and review division. CNET/GameSpot fires people who aren't nice enough on the games. Shacknews is 25% owned by Maarten Goldstein, a Dutchman (do those people make video games?).

Anyway, get ready for Tony Hawk's StarCraft: Ghost Extreme Vulture Racing.

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10 Threads* | 23 Comments

  • Respectfully, I think you are wrong, Chris. VUG is, and in many cases continues to be, a clusterfuck of mismanaged studios. The company has driven away some of the best known names in the industry. Many of these have fled to form their own studios who in turned ran into the arms of EA for funding. Just look at Flagship and how EA pushed that unfinished product out the door.

    Activision has one, if not the best, management teams in the country. This, combined with the attached Activision blizzard name, will no only bring talent to the fold, but also top notch studios looking for funding and/or an alternative distribution network (steam).

    I don't believe that market capitalization was a driving force in this merger. What drove this merger was the fact that Activision has been a huge candidate for a takeover for a number of years by a media conglomerate. Analysts have clamored for years that Activision was a widely undervalued firm, even with its high price earnings multiple, and that consolidation of the company was inevitable. Management decided to take the proactive step of looking for partners because they think, as I do, that a merger of equals (or near equals), or an acquisition, would provide far more value to shareholders and thus customers.

    One important thing to note from the text is that Activision's current managment team will continue in their roles. Another item to note is that Blizzard and other VUG will remain independent entities under the corporate structure of the parent company. This seperation leaves intact all studios.

    I think this is good for the industry as it will drive competition against the behemoth that is EA. I have no doubt that more industry consolidation will follow as media giants fight to take control of other game companies to jump in on the action. I see ubisoft as another big player who will jump in on the action. Take Two, THQ, and Webzen could see themselves consolidated in the next few years. I can almost guarantee that SCi will be sold before next year is out and that midway will be sure to follow. I see sega as a prime target also.

    Like I said, I see all this consolidation as a driver for competition and better games. I see good things for the industry.

  • PricewaterhouseCoopers (PwC) used to be Price Waterhouse and Coopers-Lybrand. They merged in 1998 and dropped the Lybrand name.

    Deloitte and Touche, another Big Four accounting firm like PwC, is aka Deloitte Touche Tohmatsu but they recently rebranded as just plain Deloitte.

    The Public Accounting firms today you have the Big Four: PwC, Deloitte, Ernst & Young, and KPMG (abbr for: Klynveld Peat Marwick Goerdeler, each with their own history for merged names) and they're used to be many more. Before Enron it was the Big Five which included the late Arthur Andersen which became absorbed (both employees and clientel) into the other four.

    In the 1970-1980's, it was the Big Eight. Over time it became in the interest of two firms to merge until it hit the Big 5 but Arthur Andersen fell with Enron so now we have the Big 4.

    So it is definitely similar to what's happening in the gaming industry. I can see a few more mergers and if something unfortunate happens either in the industry or to a company via scandal, one of the giants can fall the the other companies will pick up the pieces.