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Activision/Blizzard Merger Shows Video Game Industry Challenges
Activision Inc. had three of the top-10 video games in 2007 and over $1 billion in revenue. But it didn't have a big title in the fast-growing multiplayer online gaming market. It could only envy the leader, World of Warcraft, which boasts upward of 10 million subscribers spending $15 a month to play against each other in a scary gothic fantasyland populated with dwarves, gnomes, night elves and, of course, the undead.
In late 2007, Activision CEO Robert Kotick, the jolly-looking entrepreneur known as one of the smartest and toughest in the business, approached Vivendi Games, which published World of Warcraft through its subsidiary Blizzard Entertainment Inc. Kotick made an offer for Blizzard, but Vivendi countered by suggesting that the two companies merge ' with Kotick at the helm. The merger, which was completed in July 2008, created a publicly traded company, Activision Blizzard Inc., that is the most impressive video game business in the world ' running neck-and-neck in revenues with longtime leader Electronic Arts Inc. ' and surpassing it in profits. “Vivendi acquired a [60%] controlling interest in the new company,” says Wedbush Morgan analyst Michael Pachter, “for the sole purpose of getting Activision management to run the business.”
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