Thoughts on Activision Blizzard purchasing its independence from VivendiPosted: July 26, 2013
The news came down last night: Activision Blizzard and a group of investors led by Activision CEO Bobby Kotick has bought out Vivendi’s 60% controlling interest for $8 billion.
From Game Informer (because I usually go to them first, for whatever reason):
$5.83 billion dollars of the buyout will come from Activision, while another $2.34 billion will come from a group of investors led by Activision CEO Bobby Kotick and co-chairman Brian Kelly. The pair have put a combined $100 million of their own funds behind the purchase. Tencent, which owns 40 percent of Epic Games is part of this group.
This is huge. As the situation stood, Vivendi (aka Soulless Conglomerate) was perfectly willing to extract huge sums of cash from one of its few profitable / well-run subsidiaries by declaring a dividend to their benefit, forcing Activision to take on massive debt in the process. As GI puts it, Activision Blizzard was likely to be bled dry over time by Vivendi’s self-serving financial moves.
As such, and for fans of Blizzard games, this is great news. It was still a huge price to pay for its independence, and so Activision Blizzard will of course still be striving to make great products in order to cover debt and turn a profit. However, there isn’t a gauntlet hanging over the company’s neck like there would have been if Vivendi had indeed saddled AB with mounds of debt and then cast them off.
But what does this mean for the future?
I am not an expert in anything, but to my way of thinking, it means more of “the same.” By that, I mean that we’ll continue to see Activision run in a fiscally conservative manner, investing in high-upside IPs like Destiny and Call of Duty. Blizzard, meanwhile, will continue to develop content for Diablo, Warcraft, Starcraft, Hearthstone, and whatever Titan turns out to be.
Player cost models will not change abruptly, but will continue to evolve over time. This means that the subscription model (which people have been predicting the death of for almost half a decade) for WoW will continue to be in place for a while, since, even at the recently announced “new low” of 7.7 million subscribers, that represents at least $100 million in revenue per month on subs alone. Subscription details could change in the future, however, as Blizzard tries to both facilitate new player growth and retain current players.
The in-game store will become a world (of Warcraft)-wide reality, and real-money vanity items will become more common. The much-talked-about introduction of transmog helms is just the beginning; we’re careening toward a shift in what the “pet store” is all about. Whereas it has, in times B.H. (“before helms“), seemed that each new item in the store was a special thing that many people “had to have,” we’ll soon be in a place where there is so much content on the store that even die-hard fans will have to choose between which items are “have to buy” and which are not (we’re already seeing this with the helms). At some point – particularly with transmog items and the like – there will be many options on the store that will be redundant (“I like the red helm, it looks awesome with my gear, so I will buy that one, and skip the blue one,” etc.). Considering this, I wonder how soon diminishing returns will come into play… I suppose we’ll see as it happens.
At any rate, microtransactions in WoW are here to stay, and the only unknowns are “how much / what kinds of content will they make available?” and “how soon will they be?” Given the modern gaming climate, this is hardly surprising or unforeseen. Activision Blizzard has traded an uncertain debt future (bled dry by Vivendi) for a certain debt future (controlled, responsible debt, as has been Activision’s strategy for a long time now). It is still a business, however, and will always strive to be a profitable one. However, unlike the subscription (which is currently a necessary expense for players wanting to play the full game), the store will remain completely optional for the foreseeable future: transmog items, pets and mounts, etc.
As The Godmother has said (and I paraphrase here), Blizzard has always made end-game progress a measure of gameplay, rather than dollars spent – and when that changes, it will be the end of World of Warcraft. As long as that integrity to gameplay is there on Blizzard’s part – and history shows that is a good bet – players will always ultimately have a choice when it comes to “which / whether to buy” from the store. And that is a good thing.
I’m excited about this news. Activision Blizzard has wrested its creative and financial future from the clutches of a corporate hell, and that is good news for all players who love its games.
Thanks for reading this post by Mushan at Mushan, Etc. Comments are welcome!