Q&A: Morhaime on Activision-Blizzard union

President and cofounder of World of Warcraft publisher pulls back curtain on the $18.9 billion dollar deal that changed the face of gaming.

It's probably a safe assumption to say that many executives spat out their morning coffee today when news of the biggest merger in game-industry history broke. This morning, Activision and Vivendi Games announced they were joining forces to create Activision Blizzard, a new, publicly traded company.

If the merger is approved, the new entity is expected to leapfrog over Electronic Arts to become the biggest independent third-party publisher on the planet, with estimated joint revenues in excess of $3.8 billion. That princely sum is dwarfed by the estimated combined value of Activision Blizzard's assets--a massive $18.9 billion.

While unexpected, the union makes perfect sense. Though its Call of Duty and Guitar Hero franchises are established success stories in the first-person shooter and rhythm game markets, Activision has no massively multiplayer online role-playing games in its portfolio. Since the Creative Assembly was bought by Sega, its profile in the real-time strategy space has been nearly nonexistent. Enter Vivendi, whose Blizzard Entertainment subdivision owns the most popular MMORPG on the planet, World of Warcraft, and whose RTS roster includes the hugely anticipated Starcraft II.

As the game industry picked up its collective jaw up off the floor, GameSpot got a hold of Mike Morhaime, Blizzard's cofounder, president, and CEO, to get some insider perspective on this landscape-altering union.

GS: Obliviously this is HUGE. Can you speak about the origins of the deal at all?

Mike Morhaime: Well, I guess it originated out of a phone call earlier this year. [Activision CEO] Bobby Kotick went out and had lunch with [Vivendi CEO] Bruce Hack, and they chatted about possible things the two companies could do together. I think both companies left feeling like there was a lot of merit exploring the combination of the two companies. But before I get too far, I just want to clarify something--Vivendi is not buying Activision; they're acquiring a majority stake in Activision Blizzard, which is pretty different.

GS: So it's more of a merger in which Vivendi has a controlling interest.

MM: Yeah, that's perfect. Something Bobby [Kotick] has always wanted to do is grow his company to be the number one game publisher in the industry. This provided him a way to do that. Activision's got a great track record, very strong in console gaming. In fact, the last several months they've been the number one third-party publisher in console gaming.

GS: Yeah. The kids, they like the Guitar Hero.

MM: Call of Duty has also been doing very well...

GS: Really? I hadn't noticed.

MM: [Laughs] Right. Anyway, we've been very strong in PC games and online games. We're the publisher of the number one massively multiplayer online subscription game in the world--9.3 million subscribers and counting. We're the only successful western publisher in Asia.

GS: I hear you're popular in Korea.

MM: [Laughs] Yeah, a bit.

GS: Well obviously this is very exciting. I mean, the total deal is worth nearly $19 billion. That's just staggering. However, it's not the only big deal of late and comes not long after EA bought BioWare/Pandemic, in large part for their upcoming massively multiplayer online role-playing game. Now, Activision Blizzard will be taking that project on head-on. Was this deal accelerated at all by the BioWare/Pandemic buyout?

MM: I don't really think there was any correlation. We've been talking about this a long time before we heard about the other deal. There was a lot of due diligence. There was a lot of understanding of Vivendi's business and Activision's business. It really took some time.

GS: Now, one of the first questions people ask when a deal like this goes down is, "Who's getting laid off?" Are there any plans for staff reduction of redundant positions in the Activision Blizzard organization? What's going to happen in terms of the management structure?

MM: Bobby Kotick will be CEO of Activision Blizzard, the public entity traded on NASDAQ of which Vivendi will have a majority interest. I will remain as president and CEO of Blizzard Entertainment, reporting to Bobby. Michael Griffiths will be president and CEO of Activision publishing, also reporting to Bobby. Activision publishing will include all non-Blizzard Vivendi games assets.

GS: So what happens to Sierra Entertainment, then? Is that brand going to remain or are they going to be subsumed by Activision?

MM: [Pauses] I think it's too early to talk about the branding strategy going forward. I think those decisions will revolve around conversations that haven't happened yet. I do know that Mike Griffiths in his role as president and CEO of Activision Publishing will be responsible for all of the Vivendi games.

GS: So will all Activision Games be branded with a new Activision Blizzard logo?

MM: I'm not sure about a logo--that's something we'll have to discuss. But I think this issue is very important from a consumer-facing standpoint, so I want to emphasize it: The Activision and Blizzard brands will remain. We're not going to put Blizzard Entertainment logos on Guitar Hero boxes, and we're not going to put Activision logos on World of Warcraft boxes.

GS: Right. However, there is a big fear among certain games now that, with the creation of this megacorporation, game quality will suffer. What kind of assurances can you give the myriad Blizzard and Activision fans that this deal will in no way change the quality of your games?

MM: I spent a long time speaking with Bobby Kotick about our culture, philosophy, and commitment to quality at Blizzard. And no one at Activision or Vivendi has any desire to change that. Why would they? Activision runs an autonomous studio system. Their studios operate with a lot of creative freedom, and it's been very successful for them. That's something that may be different from the [way] other large publishers operate. But both Activision and Blizzard respect the talent that creates games, and this is going to be able to provide us with a stable, secure infrastructure with which we can take care of our people making games.

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Discussion

219 comments
Coseniath
Coseniath

Lol vamenti. even ur own company doesn't believe that you are saying. At her announcement ncsoft is talking about 34,7million $ in 3 months which means if u divided by 3 for the months is 11,5million $ per month and when the subscribers pay 13$ per month we are talking about 900000 subscribers. Stop telling the fairy tale of 15milion... And if you or anyone doesn't believe it just watch ncsoft's official page and not rumors who everyone can say... ncsoft: http://www.ncsoft.net/global/board/view.aspx?BID=mc_press&BC=&SYear=&SType=&SWord=&PNo=1&BNo=103

fuzzy_hippo
fuzzy_hippo

come on diablo 3, or a new console game.

UAGFX
UAGFX

Vamenti...... Just wow..... You actually gave me a head ache in real life... Personally I think this merger will be great. You never know what could happen if they use the companies to combine creativity to make something new and different. Plus with the extra revenue there could be better development teams made for special projects or for current major titles.

snowyjoe
snowyjoe

so bigger company means bigger games? Or just more money invulved?

ChinoJamesKeene
ChinoJamesKeene

Blizzard should be even bigger, they deserve it. Though i dislike their lead designer on SC2, so im still holding my breath. But the merger is very much name only it seems, and even then their branding is so strong it'd be dumb to change anything.

DaMastaGangsta
DaMastaGangsta

[This message was deleted at the request of a moderator or administrator]

kalkhaja
kalkhaja

LFG TH's Proving Ground activision, one of my favourite publishers with Blizzard, my FAVOURITE company (besides Subway)

barlienb
barlienb

Well, so there's basically no difference... Just to be the biggest I guess.

DanzigThrall
DanzigThrall

i dont think starcraft ghost will ever be resurrected Dualmask

ihma
ihma

whoever wrote this is an idiot, he should have added a link to the faq on blizzards site, all it really says is that they share profits and loses now http://www.blizzard.com/press/activision-faq.shtml also, the deal is still subject to stock holder approval, so it might still get turned down

DragonMage2k4
DragonMage2k4

Coming soon from Activision-Blizzard, "BARD HERO". You get to play the electric lute for various popular songs at the local taverns across Azeroth. Can't wait to play Disturbed's "Down with the Sickness" at the Booty Bay Club. :)

DDSolar
DDSolar

OMG this news is huge, its like if nintendo joined ms

Dualmask
Dualmask

Hmm, maybe Starcraft Ghost can be resurrected now.

another_drew
another_drew

I don't care as long as we get the Starcraft sequel we've all been longing for.

Vamenti
Vamenti

http://www.arena.net/team.php ----this link provides detailed info on the Arenanet dev team. Read and weep you **** fan boys because there is nothing left of Blizzard. Mike O'Brien, Patrick Wyatt, Jeff Strain the three co-founders of ArenaNet how simple is it. BLIZZARD HAS NOTHING TO SAVE ITSELF THIS IS WHY WE DONT HAVE ANY NEW DIABLO OR WARCRAFT ITS OVER!

leem2k1
leem2k1

Vamenti: Blizzard has no future? Are you sure? They own the worlds most popular MMO and are currently making arguably the most anticipated game in RTS history. I don't see them fading into obscurity any time soon. And for a bunch of "amature devs", they sure have done well for themselves, huh? They've made some of the most popular games in PC gaming history.

wii-g
wii-g

well, great 2 hear Activision is doin great.

EE2lemmonhead
EE2lemmonhead

@atopp: if you look at the Q&A on blizzard.com they will funciton the same as before. for blizzard fans, it will be lke nothing happened

ThreeVo
ThreeVo

GhostStalkerX1 Okay... now u hve to put marketing costs, development costs of the comming expo to WoW, funding emplyment for GMs for multiple servers, Labor cost for server maintence(including bug testers, patching, balancing issues) and all this transfered over to asia and EU. More subscribers = More serveres required = More GMs for server observing = More staffing = increase in labor percentages. And thats not including dev team responisble for crafting new content with ongoing patches (creating new instances, designs for new armors and items, new world enviorments) ..... im suprised they havent increased the subscription cost by a dollar yet.

GhostStalkerX1
GhostStalkerX1

WoW is a fun online game true. But, for $15 a month it can get hefty in some casses. I mean it would be nice if they droped that fee a bit. Cmon, if there are 1 million ppl playing wow That 15 a month times 1 million. Do that math that alot of money a year. Cmon lets have a price drop in monthly fees.

Import2Ner
Import2Ner

I, for one, don't mind these two companies merging. I know from experience that I am impressed with more of the Activision titles than anything from Electronic Arts. Granted there are some games I do get from EA but lately it seems like EA is more about quantity than quality whereas Activision hasn't gotten that way. As long as quality doesn't suffer, I'll be happy.

atopp399
atopp399

I just hope this doesn't affect the quality of future Warcraft, Diablo and Starcraft games...

theaudience
theaudience

skate. > tony hawk rock band > guitar hero enough said.

Vamenti
Vamenti

Blizzard is a load of crap it had no future, all Blizzard consists of is amature devs fixing **** trying to make World of Warcraft better. Anyone heard of ArenaNet (Guild Wars)? this software studio consists of Blizzards top developers the fathers/creators of the Diablo, Starcraft, Warcraft and World of Warcraft. What about PlayNC it also has ex-Blizzard developers. PlayNC is Korea's largest software/publisher which also dominates the world MMO market. Linage 15million subscribers, no one ever heard of this game before? The Creator of Fallout also joined up with PlayNC and is starting a new RPG project as we speak. Really all this will do is provide Vivendi more market share in an effort to consume more profits and dominate other markets that 3rd party devs are trying to make a good dollar out of. Competition just got even worse I hate to say t but we dont need any more big merges ITS A JOKE!

jcloverboy
jcloverboy

Hopefully this can create chance to see Warcraft on consoles.

lamprey263
lamprey263

@Erebus: The marketers just violated the Blizzard brand name.... a brand that was synonymous with "the most quality games in the market." I have nothing against Activision or Blizzard, but killing off the "Blizzard" brand was about as smart as AT&T killing off Cingular.... You obviously didn't read the article, did you? "The Activision and Blizzard brands will remain. We're not going to put Blizzard Entertainment logos on Guitar Hero boxes, and we're not going to put Activision logos on World of Warcraft boxes". Plus, there's "I will remain as president and CEO of Blizzard Entertainment... Michael Griffiths will be president and CEO of Activision publishing". Nothing is threatening either of their products!! And you obviously aren't aware that Activision produces some of the most top notch games around as well. So what if one quality name shares relation to another? That's much different than AT&T's crap service killing Cingular's name, and is far from a fair analogy.

Merl57
Merl57

well his promise about quality being thrown out for big corp money makers wasn't reassuring, its inevitable, sighs, whenever someone is innovative no one cares, when innovation sells products then they are consumed by larger companies, cycle of life I guess.

Erebus
Erebus

The marketers just violated the Blizzard brand name.... a brand that was synonymous with "the most quality games in the market." I have nothing against Activision or Blizzard, but killing off the "Blizzard" brand was about as smart as AT&T killing off Cingular....

Gergroy_
Gergroy_

markevens and str8, you guys are aware that blizzard was already owned by vinvendi right? they didn't just publish blizzards games. So if there is a question of blizzard being a sell out, it happened long ago. But we all know that they have been allowed to operate as they always have, so what is to complain about, nothing will change.

SteveTwo
SteveTwo

None of these mergers have suprised or impressed me in the least. The economy has finally woken up to video games and now it's doing its thing. In the end, this changes nothing for the user. It's like hearing that the principal of your college or your boss moved to a different house in the same town. It might be a big deal higher up the chain, but it doesn't directly change anything below it. It will have an influence for sure, but everything has an influence and everything is influenced, that's life and nothing much to be suprised over.

Chief_Kuuni
Chief_Kuuni

well it's a good deal whatever happens next, hopefully

bwgamer
bwgamer

ok so is WOW coming to the 360 or PS3 anytime soon?

linksfire
linksfire

now that they have combind maby activision will get blizzards diablo franchise up and running again with diablo 3

markevens
markevens

Okay, to str8, Blizzard did not sell out. Vivendi, which publishes Blizzard Entertainment Games is with activision to form "Activision Blizzard." A name is just a name, and Blizzard already has all the creative freedom they need. to cb-spike: Personally I enjoyed those remarks. Stating the obvious by understating is doesn't change the statement, it simply added to it. Remember that this is a discussion between 2 people, not a simple question and answer session.

Me2NiK
Me2NiK

I'm inclined to think that this is a very, very bad thing for PC gamers.

Str8Trance
Str8Trance

no MasterChief725...Diablo 3 was definitely ALREADY in the works. Lets all not forget what anniversary it is...any1? Blizzard SOLD out...

MasterChief725
MasterChief725

that is awesome, but I will not be satisfied unless Sierra is also included in the deal, I mean, what about crash, world in conflict, spyro, and first and foremost....FEAR!!! But either way, Starcraft II, WOW, the next COD, Guitar Hero, Doom, Quake, and Wolfenstein are all under one hood. That is awesome. Maybe they will make Diablo III now?

cb-spike
cb-spike

Beside the spelling and grammar, what's up with GS making jokes? "Yeah. The kids, they like the Guitar Hero." "I hear you're popular in Korea." Call me cynical or bitter, but I'm here to read the news and the interview not to read comments like that.

Str8Trance
Str8Trance

also...if you "flame" me...Im going to tell you how.

Str8Trance
Str8Trance

A; Before you all blow ur load...Activision already was a powerhouse. B. So was Blizzard. C. Blizzard SOLD out!. D. I dont care how you see it.

mhump2002
mhump2002

All I wanna know is where is the DLC for GH from Vivendi Universal Music is gonna hit XBL.

felshs
felshs

i dont care who made what games at all. brand mean nothing to me. as long as its a great game, and the type of game that i wanna play, i will buy it.

dragonwarlock77
dragonwarlock77

*long overlydramatic groan* It was nice knowing ya Blizzard.

MC_DeLite
MC_DeLite

@ joltmajor - Read that again, please. They're NOT comparing one company's revenue to another's assets. It clearly states that AB's estimated joint revenues are in excess of $3.8 billion, while the value of their assets is nearly $19 billion. That whole paragraph is talking about AB, and no numbers were mentioned in relation to EA. Dig?