Ah, irony of ironies. Two days after EA CEO John Riccitiello claimed the game industry is no longer ripe for mergers, Activision and Vivendi Games announced their intent to merge into Activision Blizzard. (Wonder twin powers, activate! Form of known IP! Form of Warcraft!)
Analysts will flutter, of course. But when they hype dies off, what will this ultimately mean for the game industry?
For consumers: not much change. Activision will keep focusing on existing IP, and Vivendi Games will keep focusing on whatever the creative team at Blizzard wants. (Sometimes I imagine the guys at Blizzard pulling an early April fools gag and proposing a massively-multiplayer game called “Janitor Quest,” or a Diablo game subtitled “Looking for Love in all the Wrong Places.” Gotta love Diablo in a leisure suit.)
For developers: one less funding source, and one less route into retail. But while some people will make a big deal of this, it really isn’t so significant. New publishers are still springing up. Major companies in Korea, China, and Japan are opening US offices and dishing out cash to promising US studios. The route to AAA game-hood, while always difficult, isn’t getting much worse.
It gets interesting when you think about other publishers, especially EA. Activision Blizzard is going to command an impressive network and very deep pockets. Activision alone was already capable of negotiating effectively for valuable IP like the James Bond franchise. Now they’ll be an even bigger gorilla at the negotiating table. EA’s going to have to fight harder than ever to win the future Harry Potters of the world.
And, of course, Activision Blizzard will have even more negotiating leverage when dealing with the console makers. But individually, they already had a reasonable amount of leverage (especially Activision.) So I’m not sure I see a huge change here, either.
Lots of people are going to get worked up over this merger, but honestly, I wouldn’t spend too much time thinking about it. This is a classic case of big media getting bigger. Some people will worry that mergers like this will hurt the market by reducing innovation and vesting too much power in individual companies, but I really doubt that. Activision Blizzard will have its hands full competing with a new generation of free games and user-generated content, not to mention indie developers in environments like XBLA and PSN, just like every other publisher. It doesn’t matter how big you get — if you don’t produce compelling content, your customer has way too many other options.
So let the pundits spin their wheels.