Activision Blizzard is making an icy splash across the business news with Vivendi Universal’s plan to sell back roughly 49% of their shares in the company back to Activision Blizzard. The real question that should have been pondered long before this even made news is why was this merger even legally permissible in the first place? Monopolistic laws, in theory, are supposed to be put in place so healthy competition has an opportunity to thrive in the market place. Activision Blizzard has long prohibited legitimate competition in the video game industry, especially after joining forces with Vivendi, so why didn’t that count as a monopoly in the first place?
Activision has long held the position of publishing the lion’s share of video games globally; possibly having less of a grip on Japan’s video game market, but Japan would be the only country exempt from that statement. The other share belonged to Vivendi, and before Blizzard joined Activision they completely dominated the MMO (Massively Multiplayer Online) gaming universe and continue to do so under their monopolistic flagship. Another significant player in the video game world on this level is Electronic Arts, who monopolizes sporting video games to such a degree that people don’t even say they are going to buy a new soccer or football game, they say they are purchasing the new FIFA or Madden. But that is not news to anyone and Electronic Arts is consistently getting sued (currently for Madden’s monopoly of the football video game market). Yet until this Activision Blizzard buyback hit the pages, few lawsuits have arrived at their doorstep.
But now there is a lawsuit, because a large shareholder does not want Vivendi to be able to make the significant reduction in their shares and basically take their company away from the ebb and flow of the Activision Blizzard umbrella. Activision Blizzard has made several statements that they remain confident that this deal will be signed, sealed, and delivered without much more delay. They do not appear in the least to be worried about pending lawsuits, and why should they? They have the lawyer power to get away with anything they want to, and have been doing so for years. So a miniscule lawsuit put forth by one shareholder will not stop their wishes from realization.
When viewed on the surface, the buyback of Vivendi’s shares looks like a maneuver away from the monopoly and video game distribution juggernaut that had been created within the genesis of the merger. In reality though, that is not at all the case. Vivendi has not been a force in console video games for quite a number of years. Their bread and butter is now the portable application market based around Android and iPhone users. Activision Blizzard obviously knows this, and at this point in their business development need Vivendi out of the way so they can continue to steamroll over the competition in their chosen console and personal computing markets. Vivendi is not leaving a sinking ship, but rather Activision Blizzard is kicking them off of their yacht.
Written by Michael Blain