- guardian.co.uk, Friday July 11 2008 15.24 BST
Aerosmith on the hugely successful Guitar Hero
Executives from Activision and Vivendi Games are celebrating the completion of their $19bn (£9.7bn) merger today, after shareholders approved the deal.
The new company – to be known as Activision Blizzard – brings together two of the expanding interactive entertainment industry's largest players, which between them are responsible for some of its most successful titles.
Activision, headquartered in Santa Monica, is most famous for games such as Guitar Hero and the Spider-Man franchise, while Vivendi Games is best known for its flagship studio Blizzard – creators of the hugely popular World of Warcraft online game, which has more than 10 million paying subscribers.
Activision Blizzard is set to be the single most profitable video games company in the world, with one analyst suggesting that annual profits in its first year are likely to exceed $1bn (£511m).
It also allows the new organisation to challenge the dominance of Electronic Arts, maker of popular games such as The Sims and the Fifa football series, and surpass it with combined annual revenues in excess of £2bn.
"Activision is a leader in the console business, and Vivendi is a leader in the online PC games industry," said Jean-Bernard Levy, chief executive of parent company Vivendi. "I think this combination makes us a very powerful leader in the industry."
Although Vivendi will own a 52% stake in the new group, executives decided to ditch the French parent company's brand in favour of its better-known subsidiary.
Robert Kotick, the chief executive of the new company, said that he aimed to build on recent successes in Asia, adding that Blizzard had "a level of awareness among consumers in Asian countries that is much higher than usual for a western company".
"They've also invested hundreds of millions in infrastructure around the world which we can use," he said. "Plus we get the association with Vivendi and the opportunities that brings – the chance to work more closely with Universal Music in our Guitar Hero games, for example, is an affiliation which is bound to be helpful."
Despite concerns that an economic downturn could lead to a drop in consumer spending, Levy said he was confident that the new company could survive a downturn.
He told the Guardian that he expected the price of the recent generation of games consoles – including Microsoft's Xbox 360 and the Sony PlayStation 3 – to continue falling, without consumers cutting back on the amount they spend on games.
"We are a very cheap way to get entertained in terms of cost per hour," he said. "If and when people tighten their belts in terms of entertainment – which won't happen as quickly as with travel costs, for example – it's quite likely that we won't suffer too much."
