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Building a Bigger Rival for Electronic Arts

Reuters
Sunday, 2 Dec 2007 | 3:17 PM ET

French telecom and media group Vivendi is merging its video games unit with Activision in a $9.8 billion deal that combines the hit "Guitar Hero" and "World of Warcraft" franchises under one roof.

Here are key facts about the deal and the fast-growing video game industry.

  • The new company, Activision Blizzard, will have estimated revenue of $3.8 billion for 2007, which rivals Electronic Arts Inc's full-year forecast revenue of up to $3.65 billion.

The combined entity is aiming to turn an operating profit of $1.1 billion, with earnings per share excluding special items of more than $1.20 in 2009.

  • Vivendi's key game is "World of Warcraft", which has 9.3 million subscribers worldwide who pay a monthly fee on top of the original purchase price. It is working on "Starcraft 2," a highly anticipated sequel to one of the most popular strategy games ever.

Activision's main titles include "Guitar Hero 3," which sold more than 1 million copies in its first week on the market, the highly rated "Call of Duty" military shooters, and the "Tony Hawk" skateboarding franchise. It also makes games based on the "Spider-Man" and "Shrek" films and has deals to make new titles based on the "James Bond" movies.

  • Rene Penisson, Chairman of Vivendi Games, will serve as Chairman of Activision Blizzard. Activision Co-Chairman Brian Kelly will become Co-Chairman of the new company. Activision Chief Executive Robert Kotick will be CEO of Activision Blizzard.
  • The deal calls for Vivendi to fold its games unit, which it valued at $8.12 billion, into the new company, and provide $1.73 billion in cash. The combined company is valued at $18.9 billion,with Vivendi holding a 52 percent stake.
  • The video games industry is on track to top $40 billion in global sales of hardware and software this year, up from about $30 billion last year. The industry is driven by strong demand for new gaming machines such as Nintendo's Wii, Microsoft's Xbox 360 and Sony's PlayStation 3.
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