In December of 2007 the merger of Activision and Blizzard was announced. Blizzard Entertainment, one of four divisions of Vivendi games, was the key ingredient for synergy between the two firms. First, an introduction to the video game software industry is pertinent. This will be followed by some discussion regarding the major trends and major players in the industry. Second, some insight will be provided on the merging companies, Activision and Blizzard. Third, the potential value of the merger will be explored, along with some analysis of the partnership. Lastly, I will give my personal views of the merger itself.
The Industry, domestically the video game software industry was worth $9.5 …show more content…
Opportunities lie in their enormous customer base, growth of international markets, and merchandise sales stemming from existing products. Threats include free online gaming, competitors such as EA, and government regulation of age of use.
The potential value of this merger, in my opinion, is great. The case infers that the video game software industry is not a thinly traded market, evidence for that lies in the vast number of acquisitions Activision had made prior to the merger with Blizzard, and also the existence of many independent developers who strive to partner or merge with publishers. The case does state whether there were any other firms vying to merge with either Activision or Blizzard, and since two of the main competitors were in an acquisition struggle themselves it seems apparent that “the market for corporate control” was operating imperfectly. By that I mean no other firms were competing to merge with Activision or Blizzard. This leads me to believe that besides the existence of free cash flow, Activision and Blizzard saw an opportunity to make above-normal profits. In regards to the merger itself, the category under which the FTC would place the merger of Activision and Blizzard is debatable. While most would agree that these companies are two software manufacturers horizontally integrating; a vertical merger, product extension merger, or market extension merger could all be argued; especially to avoid antitrust