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ActiBlizz deal to prompt further consolidation?

Piers Harding-Rolls, senior games analyst at Screen Digest, has told GamesIndustry.biz that the Activision Blizzard merger is a sound one, and could lead to more deals in the future, providing they make good business sense.

Piers Harding-Rolls, senior games analyst at Screen Digest, has told GamesIndustry.biz that the Activision Blizzard merger is a sound one, and could lead to more deals in the future, providing they make good business sense.

"The fit between these two companies is very good," he said. "Aside from Blizzard, Vivendi has struggled in recent times to make a great success of its traditional console and PC game business, so acquiring a profitable publisher such as Activision with a great portfolio of games franchises and excellent senior executives that know how to run a successful games business is something of a coup and allows it to compete more effectively with the other largest traditional publishers," he continued.

"I believe this acquisition could prompt further consolidation perhaps from other large media companies acquiring games publishers or from two publishers merging, but I would expect any deal to be underpinned by a very good portfolio and strategic fit, as exhibited by this deal."

And talking about the potential future for the company once the deal is concluded, he pointed to the strengths of the combined companies as a key point.

"Profitability obviously depends on the performance of future products, but while World of Warcraft and games such as Guitar Hero are doing well I expect it to be strong," he said.

"MMOGs represent high risk investments but when they are as successful as World of Warcraft they offer fantastic operating margins. I expect WoW to generate strong and profitable revenues for at least another three years.

"After that future profitability will depend partially on how well the new company can shift its focus and MMOG infrastructure to a new title."

Blizzard is currently working on a second expansion to World of Warcraft, called Wrath of the Lich King, as well as StarCraft II, an RTS sequel and another as-yet-unannounced title, with speculation rife for some time that the company has begun work on a second MMOG.

Harding-Rolls went on to state his belief that if the company can integrate the businesses smoothly, it will prove to be very competitive, with access to resources that others would struggle to rival.

"Activision Blizzard will have a global footprint with access to high growth markets such as Korea and China through Blizzard, and will have very strong distribution across the whole of the West.

"The new company will also have access to other types of media through Vivendi, such as music, which is a great fit with titles such as Guitar Hero."

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