Vivendi Case Study

Topics: Activision, Blizzard Entertainment, Video game industry Pages: 9 (3012 words) Published: February 17, 2009
1. Background
Video games are one of the most important and popular entertainments in 21st century. As a famous company of this field, Vivendi acquired the Activision in Dec 2007. After that transaction, the two big giants of gaming industry, Activision and Vivendi games— which includes Blizzard entertainment, announced that they would form "the world's most profitable games business" in a merger deal of $18.8 billion. The business range of the new company named “Activision Blizzard”, would cover every territory of the world on every gaming platforms, such as PS3, Xbox 360, Wii and PC games. BBC news said, “The companies behind Call of Duty and World of War craft are merging in a deal which could shake up the global video games industry.”

Activision, which was found on October 1st 1979 in French, is one of the world’s leading independent publishers for the interactive entertainment. It is famous for its top selling game series--Call of duty. Especially, Call of duty 4 has sold over 10 million units and received awards from various game sites and gaming authorities. Moreover, Activision is well known for other good selling games, such as Tony Hawk series, Guitar Hero, Spider Man, Transformers and X-men. According to the research from the leading global market research company-the NPD group, Activision is now one of the largest third party video game publishers in the world and was also the top publisher for 2007 in the United States. Vivendi is an international French media company with business in music, television, film, publishing, telecommunications, internet and video games. The reputation of interactive entertainment of vivendi is well known for its division companies, including Blizzard Entertainment, Sierra Entertainment and Universal Interactive Studios. In this merger deal, Blizzard entertainment, which was originally founded by Michael Morhaime, Ayman Allen Adham and Frank Pearce as Silicon & Synapse in February 1991 in America, is the leading role. It is the developer of several classical computer games, including the Warcraft. Star craft, Diablo and World of war craft. Specifically, World of war craft, often known as Wow, is the most popular and most profitable Multiplier online role-playing game (MMORPG) which has more than 10 million monthly subscribers. According to the authoritative market investigation, World of Warcraft was estimated to hold 62% of the world’s multiplayer online game market. As part of the merger plan, Activision and vivendi invested $1 billion U.S. dollars and $2 billion U.S. dollars respectively. After given the permission from the European Commission for the merger, Activision announced that the merger took place on July 8 2008, and the deal closed on July 9 2008 with the total transaction of $18.9 billion U.S. dollars. Vivendi is the majority shareholder with 52% stake in the new company, and the rest of the shares are held by private or international investors. As a result of merger, all the key productions of Activision and Vivendi will combined together including a lot of world famous games. That means further visions of Call of Duty series and World of warcraft will be developed and managed with the same company. René Penisson, a member of the Management Board of Vivendi and current Chairman of Vivendi Games, said: “We are very confident that by combining forces, Activision Blizzard will set the highest standards in quality, reputation and profitability, and will bring together the best creative teams in the industry. The combination of this unique product portfolio with highly professional employees gives us great confidence in the growth prospects for Activision Blizzard.” Some observers said, the two companies are holding their different strengths, and the power of business combination will make the new organization to challenge Electronic Arts, which is the biggest interactive developer and publisher of the world.

2. The reasons for this acquisition
As a world leader...
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