Vivendi, Ubisoft, Activision … Why consolidation continues in video games
The video game sector has recently experienced a series of cascading financial transactions carried out by two incumbent operators on publishers of new generation products.
On November 2 Activision Blizzard (Call of Duty / World of Warcraft) announced its intention to buy King Digital Entertainment (Candy Crush) for the tidy sum of $ 5.9 billion. As for Vivendi, the French multinational announced yesterday a new acquisition of shares in Ubisoft (11.52%), world number three in games, and Gameloft (17.34%), a leading player in mobile games.
At the origin of this start of consolidation, free-to-play, the development of which has revolutionized the sector and forced certain players to rethink their strategy from top to bottom. Bobby Kotick, CEO of Activision Blizzard said at the time of King’s takeover that smartphone games were the fastest growing segment of the game market, with overall revenues reaching over $ 36 billion (all publishers) at the end of 2015.
It is therefore a bet on the future for Activision which envisages the end of the current cycle of eighth generation consoles. With the acquisition of King, it completes its offer on an offer segment that it was unable to reach until then, since as much as it was successful on console, it has never been successful on mobile. This operation allows it to become essential on consoles, PCs, smartphones and tablets. The bet seems, at least on paper, largely winning.
Indeed, this change thus does not seem only to stem from economies of scale or financial strategy but also from commercial and operational strategy. By having all of the existing game media, Activision could consider joint projects with King, such as streaming Activision games to mobile through King.
Vivendi’s vision, on the other hand, appears broader and more complete than that of Activision Blizzard. The group wants to build an anthology of content and it was then logical according to a source within Vivendi to acquire a company producing games. To this end, Vivendi recently purchased various media and content companies, such as Canal + and the online video platform Dailymotion.
Jointly investing in Gameloft and Ubisoft would therefore participate in an “operational convergence strategy” which should enable it to link the group’s content and platforms with the productions of the two companies in the gaming sector. The possibility of a forced merger between these two companies at Vivendi’s initiative cannot be entirely ruled out. And this, all the more so since if Vivendi goes to the end of its objectives and manages to secure a majority stake in the two companies and to integrate them, it will then have at its disposal a content creator company (Ubisoft) in s. ” ensuring a large and diverse audience (Gameloft). The result of such an operation would then fit perfectly into the “Bolloré collection”.
With these acquisitions, the two companies are implementing a multi-platform and digital strategy that will allow them to reach all audiences through a presence on all the supports of this ecosystem and to establish themselves as leaders in digital entertainment.
Diane mullenex, Partner Pinsent Masons, is both A Lawyer and Solicitor England & Wales. Within Pinsent Masons, she is notably in charge of international development and management of the Telecommunications and Online Games and Gambling Departments.
Frederic Ichay, Partner Pinsent Masons, is a lawyer at the Court. Specialist in corporate law and in international Mergers and Acquisitions in the energy and communication sector, he works mainly in France, Africa and Asia.