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Europe approves Vivendi Activision deal

by Scott Bicheno on 17 April 2008, 11:49

Tags: Vivendi Universal Interactive (NYSE:VIV)

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Consolidation

The ever-more influential European Commission has decided that the video games industry will still be competitive if VU Games and Activision merge to form Activision Blizzard.

Activision Blizzard will be the largest pure video games publisher (as opposed to Sony, Microsoft and Nintendo), taking that mantle from EA.

EA is trying to take-over Take Two Interactive and its key property – Rockstar, which publishes Grand Theft Auto – in a hostile bid. You have to assume that this development puts additional pressure on EA to do the deal.

The only worry about all this consolidation is that games publishers will end up with a oligopoly, just as the music industry has. Our concern is that it will also follow the music industry in only supporting ‘sure-fire’ blockbusters and becoming risk-averse.

This means that true creativity and original thinking goes unsupported and you get the turgid mix of aged rockers and sterile, soulless, prefabricated guff that the big four record labels have the gall to expect us to give them money for these days.

And breathe.

Of course, one of the big four is already owned by Vivendi: Universal. This led the EC to have a look at possible vertical implications of the deal, as it detailed in its announcement:

The Commission also investigated the vertical relationship between Vivendi, through its subsidiary Universal Music Group (UMG), in the upstream market for the licensing of music rights and Activision's activities in the downstream market for game publishing.

Game publishers license music rights for use in their games, in particular music games. The Commission concluded that the vertical relationship would not give rise to competition concerns, as competing game publishers would continue to have access to a sufficiently large portfolio of music rights from alternative suppliers.

Let’s just hope that consolidation in the games industry doesn’t produce the same result as it has with music or we might have them crying for compensation of lost profits too.



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