City-based Activision rides ‘Hero’ to whopper of a deal
SUNSET PARK The blockbuster deal merging two Southern California-based video game publishing companies could be a sign of a geographic shift of power in the gaming industry.
Santa Monica-based Activision, which has hit the jackpot with its best-selling “Call of Duty,”“Tony Hawk” and “Guitar Hero”franchises, has announced that it is joining forces with Vivendi Games, which includes Blizzard Entertainment and its wildly successful online role-playing game “World of Warcraft.”
The new Activision Blizzard creates one of the world’s largest video game publishing companies, rivaling the Silicon Valley’s Entertainment Arts.
“The biggest gaming company in the world is here now,” said Chris Swain, an assistant professor of Cinema at USC who co-directs the school’s Game Innovation Lab. “That’s great for LA to be even more of a center of the video game industry, which it hasn’t traditionally been.”
In Los Angeles, it started with smaller companies like Activision, which was one of the first independent video game developers in the area, Swain said.
The merger between Activision, the world’s largest third-party video game publisher, and media giant Vivendi, which also owns Universal Music Group, was announced on Dec. 2. The transaction is expected to be completed in the early part of 2008 and the new company is valued at an estimated $18.9 billion. and subscription-based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences,” Activision Chairman and CEO Robert Kotick said in a statement released earlier this week.
A video gaming industry veteran, Activision was founded in 1979 and has really made a name for itself with popular franchises like “Call of Duty” and “Guitar Hero.” Irvine-based Blizzard Entertainment is the creator of the top multi-player online role-playing game franchise,“World of Warcraft,” which currently has more than 9.3 million subscribers worldwide. Both “Guitar Hero” and “World of Warcraft” have become pop cultural phenomena, marketable to both video gamers and non-gamers alike. In fact, one of the major demographics for “World of Warcraft” is middle-aged women, according to Swain.
“If they can continue to expand the demographic, it just makes it a bigger business and more culturally relevant business,” Swain said.
As games become more expensive to produce, the video gaming industry is seeing more consolidations of corporations in order to make the products more profitable, according to Steve Butts, the executive editor of IGN.
The downside is the larger companies tend to minimize risk to the point where they minimize innovation, Butts said.
“Eventually, creativity can stagnate,” Butts said.
The deal could also give Activision a leg up on the competition between “Guitar Hero” and EA’s “Rock Band” because the Santa Monica company could have access to Universal Music and music rights, Butts said.
“People are already drawing the lines between UMG and “Guitar Hero,” Butts said.
Kotick will assume the role of president and CEO of Activision Blizzard while Bruce Hack, the current CEO of Vivendi Games, will be the vice-chairman and COO.
Originally published in the Santa Monica Daily Press print edition on December 6, 2007. Read the original PDF.