Activision Blizzard is born

Activision Blizzard (merging of Activision and Viviendi games) became largest publisher of video games in the word with a value of $18.9 billion. EA now trails with $14.1 billion. Stockholders have approved the merger of Activision and Vivendi Games to form the goliath Activision Blizzard. Activision Blizzard is expected to have the highest profit margins in the industry.

Despite early expectations from some investors, the deal has not led to a deal wave in the industry. But analysts say the new 800-pound gorilla's reach across the world and various gaming platforms will have a major effect on the way every gaming company thinks about their business.

"What it does is create a (first) truly global gaming company with reach in the U.S., Europe and Asia," including in the fast-emerging Chinese market, said Edward Williams, an analyst with BMO Capital Markets. "It also creates a company that drives revenue from multiple streams, including the massively (multiplayer) online game category that is seeing the biggest growth."

This will force other companies to also approach MMO more aggressively and try to move into other emerging streams and global distribution, he said.

"I don't see a 'deal wave' coming" right now," said Michael Pachter, analyst at Wedbush Morgan Securities. But he and others also expect a focus of game companies on increased global reach and profitability amid ever-rising development costs that drag down profit margins.

Activision, one of the world’s leading independent publishers of interactive entertainment, is best known for its top- selling franchises, including Guitar Hero®, Call of Duty® and the Tony Hawk series, as well as Spider Man™, X-Men™, Shrek®, James Bond™ and TRANSFORMERS™. Blizzard Entertainment, a division of Vivendi Games, has projected calendar 2007 revenues of $1.1 billion, operating margins of over 40% and approximately $520 million of operating profit. Blizzard owns the #1 multi-player online role-playing game franchise, World of Warcraft, which currently has over 9.3 million subscribers worldwide. Blizzard’s World of Warcraft, Warcraft®, StarCraft® and Diablo® games account for four of the top-five best-selling PC game titles of all time. Vivendi Games also owns popular franchises, including Crash Bandicoot™ and Spyro™. Pro forma for calendar 2007, Activision Blizzard expects to generate approximately 70% of its revenues from owned franchises. As a result of the business combination, Activision Blizzard expects to have the most diversified and broadest portfolio of interactive entertainment assets in its industry, positioning the combined company to capitalize on the continued worldwide growth in interactive entertainment.