Now if my calculation are correct the new conglomerate should be valued around $19 billion.
The plans for the merger are a bit complex: At the moment of the merger Vivendi will buy $1.8 billion worth of shares of the new group, hence giving the company the previously mentioned valuation. Once the deal is closed the new group, named Activision-Blizzard should launch a $4.8 billion buyback of its shares – assuming everything goes according to plan Vivendi will find itself with a 68% controlling stake of the new business.
The new firm will still be dwarfed by EA, the industry leader. However, as I discussed in some of my older posts, it has a formidable weapon on its side: Creativity. Something that as far as I’m concerned has been increasingly fading away in the games market.
I hope that sooner rather than later Electronic Arts will realize that film licenses and 2000 sequels of the same game is simply not a viable strategy. All evidence to the contrary of course, EA did rather well for itself and will continue to do so.
However one sub-sector of the gaming market it has failed to commandeer is the online massive… whatever.., an area that in my view will grow even faster than the rest of the industry’s predicted 9% per year. All Blizzard and Activision have to do is to keep building on what they already have.
Some 9.3m players subscribe to the biggest web-based game around the world. It accounted for a big chunk of Vivendi’s €804m ($1.1 billion) of games revenues last year. Nearly half that sum was profit. All in all it is an impressive number.
Blizzard and Sierra (which are at the core of Vivendi games) certainly need no introduction, Starcraft? World of Warcraft? Yes, you know what I’m talking about. Vivendi also has an incredible portfolio of titles especially for console systems: Call of Duty, Guitar Hero. The companies involved in the merger work on different platforms and there’s no internal competition risk, so I say that the merger is probably a very smart move.
Now all Blizzard and Activision have to do is try to keep innovating and not comfortably rest their bums on a pile of money.
Tags: Activision, Blizzard, Games, Online, Thoughts, Vivendi
