Vivendi Announces Deal with Activision

Vivendi has struck a deal with Activision that would place it squarely against competitor Electronic Arts in the race to be the biggest independent game publisher across the world. Vivendi made its intentions clear Sunday, when it announced its plan of acquiring a controlling stake in Activision.

Making the announcement Sunday, Vivendi put a price tag of $27.50 per Activision share, and also announced a cash payment of $1.7 billion. Together, this would give it a 52 percent stake in Activision. The combined company would then have a valuation of $18.9 billion. Once the deal is through, Vivendi would merge its own gaming operations with those already existing at Activision.

When the deal comes through, it would bring together two companies with different areas of interest in the increasingly lucrative video game business. The new company would be called Activision Blizzard and would be formed towards the end of a year that has seen phenomenal sales of video games, breaking previously existing records.

Activision has focused on creating games for consoles such as the PlayStation 3 from Sony or the Xbox 360 from Microsoft. It also holds franchises for different games. These include skateboard games from the Tony Hawk series, the war game series under Call of Duty, and also Guitar Hero. Guitar Hero is, in fact, one of the hottest selling games currently. It allows a player to strum to tunes played on TV using a plastic guitar.

Vivendi’s area of focus is online games. One of its most successful games is World of Warcraft. Blizzard Entertainment, a unit of Vivendi, has launched this game worldwide, and with over nine million players across the globe, the game has acquired almost legendary status.

The news about Vivendi and Activision merging comes at a time when the scenario is rapidly changing in the gaming industry. No longer is Sony’s PlayStation 3 the rage; now it is the time of Wii, the console created by Nintendo. The winds of change are blowing across other areas as well.

The shift in momentum has not been isolated to brand popularity alone. Today, Electronic Arts, the numero uno among game creators, is showing lower sales figures than its rival Activision. Electronic Arts sales has grown by 25 percent from 2003 to $3.1 billion, while Activision sales jumped a whopping 74 percent during the same period, ending at $1.5 billion.

Vivendi’s decision to acquire stake in Activision seems to be a case of perfect timing, especially considering that the Guitar Hero III offering from Activision managed to offload 3.1 million copies in the first seven days of its release in October. During the same month, Activision could also boast of being the creator of three out of eight best-selling games in the United States.

By acquiring Activision, Vivendi aims to create a rival to Electronic Arts that is of the same size. However, it is not going to be a mere walk in the park, considering the new company would have to overcome serious obstacles to build up a list of titles that can give its rival a run for its money. The two companies also said the new company, Activision Blizzard, would also trade on Nasdaq.