Vivendi selling off entertainment division

[Cybit]

http://www.heise.de/newsticker/data/ola-30.04.03-000/

Basically, Vivendi's selling off most of its branches except its telco branch. Which means Blizzard is going to be sold.

Now, as much as I don't like Microsoft, they do give their good designers the time they need to design damn good games (see: Halo, Age of Empires), at least more then EA gives them (see: Westwood).

What do y'all think of these developments?

[pakman]

It'd be nice if I could read German. Anyone know where I can translate the page?

[Roland]

They officially announced that a month or more ago. You may even be able to find my post detailing it.

As for who buys Blizzard, I honestly don't know, and don't even care that much. There hasn't been enough CONCRETE information on suitors for the company, so it's virtually impossible to formulate a valid opinion on the future of Blizzard. Only thing I care about is that WoW comes out BEFORE they get bought out. :D

Oh, and that Sony doesn't get them. :P

[--Pete]

Hi,

They officially announced that a month or more ago.

Yep, and the news story in the link from Cybit was dated April 30th. So, definitely fish wrapper. :)

There was a new article in today's NY Times http://www.nytimes.com/2003/06/24/business...dia/24PLAC.html that basically just says there are four bids in the works with a possible fifth showing interest. The fifth bid if it comes is coming from " the NBC unit of General Electric." The other four are summarized as:

"Although the size of the bids could not be determined, a person close to Vivendi said that Liberty Media, led by John C. Malone, had made a bid. So did two investor groups, one led by Edgar Bronfman Jr., the former chief executive of Seagram, and the other by the entrepreneur Marvin Davis.

Metro-Goldwyn-Mayer also submitted an offer, this person said, but only for the Universal film library, which may make it unlikely that M.G.M. will emerge as the winner."

Buzzard is a pretty small piece of a much bigger pie. Looks like Vivendi is only interested in selling the whole pie ("Vivendi would prefer to sell off Vivendi Universal Entertainment intact, though, because a piecemeal sale of assets could result in a high tax bill.").

So, even if Buzzard gets bought up by anyone anytime soon, the question then becomes "what will the new owner do?" The most obvious answers are:

Shut Buzzard down -- not likely since the company is a money maker.
Sell Buzzard off -- possible, especially if whoever buys up the Vivendi entertainment properties mostly wants the movie bits for vanity (not unlikely in the case of Bronfman).
Let it continue to run itself -- this comes in two flavors, with and without "undue" interference. If whoever buys the package has no experience with computer games, then letting Buzzard (and Sierra, which I think is part of the package) continue to run themselves makes sense. Anything more than routine management would probably be a bad idea. A good rule (which unfortunately is often ignored by some business men) is "if it works, don't f* with it."

But, things are still pretty much working at a level whose resolution will probably still not give us a clue as to the long term future of Buzzard. No real need to worry about it, *yet*.

--Pete

[Roland]

That's why I haven't payed any mind to any of the rumors. Blizzard is a very small piece of what is being sold, and virtually insignificant in the grand scheme of things.

No point in speculating, either - this thing's gonna take some time before the ball even gets rolling. And, as you pointed out, even after that, the future of Blizzard will be just as clear as it is now - like looking through asphalt. ;)

[TaiDaishar]

That's why I haven't payed any mind to any of the rumors. Blizzard is a very small piece of what is being sold, and virtually insignificant in the grand scheme of things.

I doubt Blizzard is so insignificant... it may be small but don't forget that every game they developed has become a hit.

Oh and if someone DO buys Blizzard I hope to god it won't be EA, those money mongers destroyed Westwood entirely and when they saw the cash flow from Westwood is starting to dwindle, they shut Westwood down.

[WarLocke]

I doubt Blizzard is so insignificant... it may be small but don't forget that every game they developed has become a hit.

Last time I checked, The Lost Vikings wasn't very widely known. <_<

Blizzard South has an exemplary track record, by all accounts, but North left more than a bit to be desired in Diablo II and LOD.

- WL

[[wcip]Angel]

Whoever decides to purchase Blizzard, I hope they derail the insanity that is this whole Warcraft-series-thingie and turns its attention the -real- Blizzard gravytrain: The mighty Sarah.
(Still miffed about the prospect of "Nova.")

[channel1]

Whoever buys out the game business is either dumb or nuts. Or both.

When the movie studios were getting shuffled, it was noted that they weren't a great deal. Analysts noted that all the buyer got was a library of films, most of them past their first run, a bit of highly overpriced real estate, and a piece of paper that said you could make movies. That didn't turn out to be completely true.

The old film libraries do generate revenue, and will continue to, with leasing to TV and sales as videos. Just because a movie is old, doesn't mean it's not valuable.

How much are old video games worth?

Sure, you have the sheep out there who will buy Diablo 3 and Warcraft 4 just because of the name. WoW will probably return it's development costs, at least.

But, what is Diablo 1 worth? there will still be a few copies sold, but I would doubt that it would begin to cover it's portion of the cost to operate BattleNet. Even Diablo 2/X would not be something that would cover the ongoing cost of the online service. WC3X probably will pull it's weight, at least until it has gone through a full Christmas cycle.

BUT, if I was GIVEN, free, D1, D2/X, WC2/X and WC3/X, I probably could not generate enough revenue from sales of those products to keep BattleNet going.

Part of the operating costs of BattleNet are covered by advertising, but advertising in any medium is risky right now. Too many places to advertise, not enough advertisers. And the really big boys (i.e. Pepsi, Coke) don't do much for 3rd party online advertising, and probably never will.

So, the old video games aren't worth much as something to generate revenue from. Are they worth much as a name license?

I think it would be a much better investment to start out completely from scratch, if you were going to develop high-quality games. The money would be better spent hiring good people to develop, than to buy an eight year old game name (Diablo). Eight years (ten for Warcraft) is hardly long enough to be so ingrained in the culture to make the name worth much. On the other hand, Coca Cola / Coke is valuable. But sheesh, they INVENTED Santa Claus!

Will somebody pay big bucks for Vivendi's game business? Sure. There are lots of investors out there who are complete nut-cases. How else did AOL get big enough to buy out Time-Warner?

-rcv-

[Guest]

"but North left more than a bit to be desired in Diablo II and LOD."

This thread has completely dealth with Blizzard as a business. From an economic stand point D2 has been a great product.

[Guest]

I dont beleive you have any idea whats the operating costs are. I doubt you even have any idea what the initial prfit from selling the game is even.

[channel1]

Well, I just checked the real-time inventory at Ingram Micro Canada. (Ingram Micro is the world's largest distributor. I only checked Canadian stock (Toronto/Vancouver) because it was quick. It is safe to assume that Canadian stock is over 10% of the US stock.

Current stock on all Warcraft titles (WC2, WC Battlechest, WC3): 0 Backordered: 0
Current stock on all Diablo / Diablo2 titles (D2, D2X, D2 Battlechest): 0 Backordered: 0

Granted, this wasn't a very fair test. In another month, they will begin to get in Christmas stock, and then they will probably keep 50,000 or more of the (hopefully) hot titles in stock at any time. On the other hand, they do have quite a few of the newest titles that will get hyped (can you say "Hulk"? :)

My point is, Blizzard/Vivendi isn't getting any revenue from those titles right now. You will see copies in the retail stores, but Vivendi already got their money for them from the distributor. Or they will, depending on the terms (usually 90 days). They might even need to credit some of the outstanding product, if it gets stock balanced from the retailers and the distributors decide to send it back for credit. That doesn't happen too often, but it is where all the $4.99 bargain barrel product comes from.

As for the "initial prfit (profit?)", that depends on a lot of factors. If the distributor thinks that the product will be good enough to not need return privileges, they may buy it outright, and get the product at a substantial discount. The distributor usually gets the largest chunk from the sale of games. It's a safe bet that the manufacturer gets less than half of the retail price.

The cost of general operations, development, promotion and packaging come off the top of what the manufacturer gets back. In the case of BattleNet games, there is an ongoing cost of support, besides the traditional support cost (replacing defective disks, support staff, etc.)

You are right that I don't know what the operating cost of BattleNet is. Blizzard has always been tight-lipped about detail of BattleNet, for obvious security reasons. But, if their current income from BattleNet games is zero, it is pretty safe to bet that the ongoing cost of running BattleNet at this time is coming out of their capital.

My point stands that buying a game company based on their assets of old games is not a great idea. You could probably buy out the folks at ArenaNet for less, and get a development team with a comparable dedication to quality product. Buying Blizzard at this time doesn't get you much more than some real estate, and a bunch of employees that could leave at any time.

(oh, yah- I've been in the games business since 1977, including 15 years in retail)

-rcv-

[Guest]

Diablo2 is a 3 year old game(the exspansion is clase 2 years old I think).

Looking at the current back orders on a 2-3 year old game doesnt tell you much about its profitabilty.

And telling me initial profit "depends on a lot of factors" is just a waste of words - isnt it obvious that it like most everything else in the world depends on a lot of factors.


You should have just said - "I have no idea if I am right , but it seems like a bad business model to me".

[Occhidiangela]

Even if you did not have the 15 years of experience in the game world, from which I suspect your foundation position derives, the logic of what you say makes a great deal of sense to me.

Buying a name can backfire, and I note that Time/Warner cable, a company fused with AOL, seems to go to great pains NOT to take on the AOL brand name as an incentive to the consumer. "Good Will" and brand recognition, and loyalty, are fickle things.

Now, when WoW starts to become a profit center, I suspect that the equation changes as regards the value of Blizzard as an asset. :D

[WarLocke]

This thread has completely dealth with Blizzard as a business. From an economic stand point D2 has been a great product.

My post was in reply to a statement that every game Blizzard has released has been good. It had nothing to do with them as a business.

- WL

[Occhidiangela]

Not good games?

OK, they have their shortcomings, but not good?

I won't get into the 'Not Great' and 'Overhyped' (Aint everything) but I'd say Diablo II is a pretty good game.

On the other hand, Starcraft really is in a class of its own. :)

[Guest]

"My post was in reply to a statement that every game Blizzard has released has been good. It had nothing to do with them as a business."

I dont see the post you are referencing. Please point it out for me.

[Occhidiangela]

The one up there where Tai mentions 'all Blizzard games being a hit.' That, I think, is the post he was referring to in re all Blizzard games being good, and I think that is what Warlocke responded to in the 'not so impressed on Diablo II and LoD sort of comment he made. Looking in threaded view seems to confirm my suspicions.

Does that make better sense of how these posts relate?

[Guest]

A hit implies commercial or popular success, not quality.

I suppose someone could mean it to be a measure of quality, but in a thread like this its about bussiness its pretty clear the success to which hit refers in commercial success.

When some one says "a hit" movie or song they are talking about many people seeing or buying it. When you say "a hit" game it means many people play it.

I dont exspect much from most people here Occhi, but I exspect you at least to not redefine the obvious.

[channel1]

Ghostiger: And telling me initial profit "depends on a lot of factors" is just a waste of words - isnt it obvious that it like most everything else in the world depends on a lot of factors.

Gee, and here I was, wasting time to research for that post, type it up, and all you did was skim over the first line of each paragraph.

You may want to check down the hall, I hear they are giving out blows to the head. :)