Activision Blizzard last night announced a self-buyout, making it independent. What does it mean?
Activision Blizzard has bought back its independence from previous owner Vivendi, buying $5.83 billion in shares and a separate fund led by CEO Bobby Kotick purchasing $2.34 billion in shares. The deal makes Activision Blizzard a publicly owned and independent company, after Vivendi had been looking to dump its stake in the publisher as early as June of last year. Back then, experts had pinged the publisher itself as likeliest to buy the majority stake.
While great news for Activision Blizzard, the move carries some underlying risks. For one, the company loses the financial support of a giant corporation like Vivendi, especially in an uncertain economic environment as the industry veers into a new console generation. Two, Blizzard’s breadwinner World of Warcraft again exhibited its vulnerable state, losing 600,000 subscribers last quarter to fall to 7.7 million. The smallest count since Burning Crusade shipped in 2007.
Independence does mean that Activision Blizzard fully controls its own destiny. No answering to the higher-ups. That doesn’t mean things will change significantly, though, because Kotick is a business-first type. He has always been vocal about his business intentions, and under his tenure the results are undeniable: World of Warcraft ten years on has mostly commandeered MMORPGs, and Call of Duty sets a new sales record every year.
However, success might have blinded Kotick into 2013, because AB is only releasing six games, four of which are from monster franchises: Call of Duty Ghosts and Skylanders: Swap Force on most consoles, the second Starcraft 2 expansion and Hearthstone: Heroes of Warcraft, a digital card game for Windows and mobile based on the Warcraft series. (To put that in context, Electronic Arts has 12 games slated for this year.)
Activision Blizzard has essentially mastered how to milk a game for its worth. This causes a rift with the public who decry publishers for doing just that, but more people look to the model as a great way of conducting business. The idea is to enfranchise games, a tactic recently employed by Ubisoft, and what Activision Blizzard hopes to do beyond 2013 with Destiny and Blizzard’s next major project Titan.
Apparently, six years under Vivendi was just a glitch in AB’s plan for industry domination. It comes out stronger in the end, with a strong repertoire and more to come next year. A worry is the publisher’s chances of sustaining that one-trick pony policy in independence, but it understands its practices better than anyone and should walk away cleanly. The company has for the most part mastered brand recognition and marketing, but could that change soon? The video game industry is a volatile one.
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