There’s a new giant game company in town

http://blogs.mercurynews.com/aei/2007/12/theres_a_new_giant_game_company_in_town_activision_and_vivendi_to_merge_game_businesses_into_activision_blizzard.html

There’s a new giant game company in town: Activision and Vivendi to merge game businesses into Activision Blizzard
By Dean Takahashi
Sunday, December 2nd, 2007

Activision and Vivendi announced this morning they will merge, creating a huge challenger to Electronic Arts in the battle to be the world’s biggest video game company. Activision and Vivendi are merging into Activision Blizzard

The combined companies are expected to have $3.8 billion in 2007 revenues and “the highest operating margins of any third party video game publisher.” As you can tell from the Blizzard name, the big attraction of this for Activision is to get Blizzard and its high-value game properties such as “World of Warcraft” and the upcoming “Starcraft 2.”

Electronic Arts is forecasting that its fiscal year ended March 31, 2008, will close with revenues of $3.35 billion to $3.65 billion, possibly making it smaller than the pro forma results estimated here by Activision Blizzard. Activision Blizzard can also say it has the highest operating margins because of the cash cow from World of Warcraft.

This is part of the long-awaited consolidation that many have predicted in the industry for a long time. It’s good that EA will have more serious competition, but I expect that the consolidation will make things harder for the little guys of the industry, developers and publishers alike.

Here’s the details so far:

Activision and Vivendi have announced that they have signed a definitive agreement to merge, creating a worldwide leader in the interactive entertainment industry. The new company, called Activision Blizzard, is expected to have approximately $3.8 billion in pro forma combined calendar 2007 revenues and the highest operating margins of any third party videogame publisher. On closing of the transaction, Activision Blizzard will operate as a publicly traded company on NASDAQ (ATVI).