Blizzard and Sierra for sale?

[Michael Bluth]

Summary:

Vivendi hasn't stopped trying to sell its video game parts after all. The struggling company is looking to sell its biggest moneymakers - Blizzard and Sierra. Both companies are responsible for creating some of the best selling games of all time. Reuters reports that Vivendi has looked to three different potential buyers so far - Microsoft and Electronic Arts as well as Japanese games giant Sony. The deal is for all of Vivendi Universal Entertainment and not simply the two gaming companies. Vivendi Universal Entertainment also owns assets in television and film as well as theme parks. The proposed deal is for $15 billion. An EA spokesperson said the company wouldn't discuss the matter "prior to the announcement of an agreement" while spokespersons from the other companies declined comment.

- AVault



Long version:

LOS ANGELES/NEW YORK (Reuters) - Vivendi Universal V.N has held talks with at least three potential suitors to sell its video game arm but no deal is believed to be near, according to banking sources familiar with the situation.

Vivendi Universal Games has talked to Microsoft Corp. MSFT.O , Sony Corp. 6758.T and Electronic Arts Inc. ERTS.O about a possible acquisition, though those conversations were described by the sources as preliminary.

The talks come as Vivendi Universal Entertainment, which encompasses the Franco-American conglomerate's TV, film, music, theme park and game assets, has itself been the subject of a takeover bid, with oilman Marvin Davis spearheading a deal worth about $15 billion for the unit.

Vivendi appeared unlikely to sell off any part of its entertainment unit until it makes a decision on the future of the whole business, a source close to the Davis bid said.

But any eventual deal to spin-off the video game business alone would dwarf more recent game industry mergers, in which publishers like Sony, Electronic Arts and Activision Inc. ATVI.O have bought small game developers in cash and stock deals worth a few tens of millions each, analysts said.

Some industry watchers said Sony, Microsoft and EA, which dominate the market for game consoles and independent software, are likely the only ones in a position to readily acquire Vivendi's game unit, which like the other entertainment assets has been the subject of heavy speculation as its French parent company restructures.

A spokeswoman for the Vivendi games unit declined to comment. A spokesman for Electronic Arts said the company would not discuss merger strategy "prior to the announcement of an agreement."

Microsoft said it does not comment on rumors. A spokeswoman for Sony was not available for comment.

In recent months, senior executives from Electronic Arts, Activision, and other dominant industry players have said the games business is ripe for consolidation, though much of that is expected to come from attrition as smaller publishers find themselves no longer able to compete for limited retail space.

As Vivendi worked through a cash crisis earlier this year, its games business was thought by many analysts to be an easily-sold asset, especially after it sold its publishing division, which had previously housed the games business.

VALUE OF UNIT DEBATED

However, investment bankers and analysts have debated the value of the unit, with some saying Vivendi itself valued the division between $1.5 billion and $2 billion while others said that was far too high.

"There's no way that those assets are worth more than one times' sales," Wedbush Morgan Securities analyst Michael Pachter told Reuters, pegging the unit's annual sales at $600 million.

Pachter speculated that a more likely potential suitor for the unit would be Activision, which he said has $550 million in cash on hand and a recent shelf offering that, combined, would give it more than $1 billion in capital to pursue a deal.

A spokeswoman for Activision said the company would not comment on industry rumors.

Vivendi executives have said the company is on a better footing now, and Barry Diller, the media mogul who runs Vivendi's entertainment assets and also owns a stake in the company, has dismissed Davis's bid as "a lot of silliness." Sources have also said that Diller sees games as an important sideline to the overall entertainment business.

Vivendi's game unit has had a number of popular titles over the years, including PC games in the "WarCraft" and "Diablo" franchises, and games based on J.R.R. Tolkien's "Lord of the Rings" books. Electronic Arts has the rights to make games based on the new "Rings" films.

Various industry sources, including market research service NPDFunworld and retail group the Interactive Entertainment Merchants Association, have said in recent weeks they expect U.S. game hardware and software sales to reach somewhere between $10 billion and $12 billion this year, a new record.

In September, Ken Cron, the head of Vivendi's game unit, told Reuters the French parent company had no plans to sell the games business and was in fact open to making acquisitions.

Reports have since surfaced that Vivendi would consider an initial public offering for part of the games division in 2003, though no papers have been filed to that effect with regulators.

Company sources have said that nothing is expected to happen with any of the entertainment assets until January when the Vivendi board next meets.

- Reuters

[Future Starlocke]

They're losing money because they don't realize their console efforts WILL NEVER pay off. The only big hit they had was Out Of This World (a game I bought too)... if only Interplay would stick to PC.

[Michael Bluth]

Interplay is owned by Titus. Sierra and Blizzard are owned by Universal.

[Blaksmoke]

Does Blizzard have any good games besides the Warcraft series?

[Zelda Prime]

Starcraft...

[Michael Bluth]

And Diablo. Sierra is known for Half-Life and Tribes.

[=NukeBlaze=]

Honestly, You forgot about Startcraft and Diablo Blak?

Although I prefer them to stick to PC as well, StarCraft ghost doesn't look like too bad of an idea. Hopefully its curreect view will still be as pleasurable when I finally get to play it.

[Future Starlocke]

I though Half-Life was made by Valve Studios? Only published by Sierra?

[Michael Bluth]

I think Sierra owns the rights to the game, although I did hear Valve might go with Microsoft for Half-Life 2 (Valve = company formed by former Microsoft employees). But they are known for Half-Life........ (atleast, publishing it).

[Carlos]

If Sony or EA does buy Blizzard, it will be good.

Scenario 1: Sony buys Blizzard:

PS2 will sell Diablo and the 'Craft series.

Scenario 2: EA buys Bliazzard:

It will be on all three consoles....and this will add a lot of good things to the series that they are developing....I mean EA does have experience in making games like Diablo, Starcraft.....

[Michael Bluth]

Originally posted by Nintendo X
Scenario 2: EA buys Bliazzard:

It will be on all three consoles....and this will add a lot of good things to the series that they are developing....I mean EA does have experience in making games like Diablo, Starcraft.....

That would honestly be the worst of the three, if EA were to buy them. EA has no experience at all. They would force Blizzard to pump-out 2-4 games per year, well below what they could be. A-hem, where's Scenario 3?

[Chris]

I honestly would prefer EA to buy them. Ghost stays multi-platform, and since EA is also a supporter of the PC, the Diablo, StarCraft, and WarCraft series will stay on the PC, although I think Microsoft might still have them develop those game for PC as well, but Sony would probably mean StarCraft II on PS2/3, damn that would suck.

[Michael Bluth]

Diablo, Starcraft, and Warcraft on a console controller? Yuck. If Sony were to buy them and put the game on the PS2, I bet they'd put a monthly charge on them like they are going to do with Everquest ($9.99 a month).

[Dark_Cloud]

Originally posted by Phantagram
Diablo, Starcraft, and Warcraft on a console controller? Yuck. If Sony were to buy them and put the game on the PS2, I bet they'd put a monthly charge on them like they are going to do with Everquest ($9.99 a month).

no, i played warcraft 2 on PlayStation and you eventualy get used to the controls. I think it will be easier to use a joystick because when i played it the anolog controlers wernt out yet. I think diablo could be put onto a console controller pretty easy.

[Virtual]

i hope sony buys blizzard.

[Galcian]

if MS buys blizzard I would bust a nut. If they made a new diablo in 3d... oh man that would be so hot.

[Michael Bluth]

A new Diablo ala Age of Mythology-like?

[Galcian]

I was thinking more of Fable.

[Chris]

The next Diablo will probably be 3D anyway. I'm don't think fully 3D, since it's got more action than something like EQ, and hence, more lag, but 3D nonetheless.

And how could you like an RTS on a controller. The hotkeys makes those games. I don't want to have to move the cursor to attack in StarCraft, I just want to hit "A".

[Supa_Nova]

im not even gonna bother reading this, first i didnt reven know they were owned by anyone, and they are making to much money, tons of people play warcraft and cs, and WC3 has broken records