Divnich: Game company mergers better than conglomerate purchases

The simExchange analyst Jesse Divnich, commenting upon the Activision/Vivendi merger, thinks that acquisitions by media conglomerates can have a negative effect on creativity and orginality.

"For this situation, the industry should be glad that it was two videogame companies that merged and not the result of an acquisition from a media conglomerate, which would only create more red tape and poor game execution," he told GamesIndustry.biz.

"Rock Band, for example, was created by Harmonix, who was bought by MTV, which is owned by Viacom, but published by Electronic Arts; the end result was a great game by Harmonix but one that had terrible marketing and PR execution."

Divnich worries about the effect of mergers and acquisitions on creativity and originality.

"Electronic Arts, a publisher who used to pave the way in creativity and design has resorted to recycled yearly releases and movie licensed titles as it is less risky against profits—something shareholders prefer," he said.

"Which Need for Speed are we up to? 8? 9? Can anyone tell the different between Madden 07 and Madden 08?"

These situations plague any large media organisation and are prevalent throughout the conglomerates, Divnich noted, referring to ongoing television shows such as Survivor and Road Rules as well as the current plethora of superhero movies.

"That is what media conglomerates do. They find a good idea or fad, usually from someone else, they buy the rights, and then squeeze every last ounce of juice (profits) out of it as quick as they can."

Divnich doesn't believe that the Activision/Vivendi deal had anything to do with EA's recent purchase of Bioware/Pandemic, but is merely part of an ongoing trend.

"Mergers like these take a lot of time before anything ever gets announced. This particular one was in talks along before the Bioware/Pandemic deal was announced.

"If anything, these two independent events shows a continued consolidation in the videogame sector which isnât going to stop any time soon. The industry would benefit more if we got more videogame company mergers over media conglomerate acquisitions," he added.

Divnich expects such mergers and acquisitions, already prevalent among media conglomerates, to continue in the videogame industry as companies seek to expand their portfolios and diversify their products and services.

"There is no doubt in my mind that these recent buyouts and mergers are just the first of many to come."