The Funware Blog @ rmbr

PaidContent.org is reporting that Activision and Vivendi have agreed to merge and create a company worth 18.9 Billion that will, reportedly, have the highest margins in the games industry.

WoW. That (World of Warcraft) is precisely what this is all about. In fact, this merger is proof-positive of what I’ve been saying for the past year: the core videogame business is lame. And by lame, I mean “on its way to pasture”. In fact, I’m not the only person that agrees. The WSJ reports that Activision’s CEO, Robert Kotick even said that the success of WoW made them want to get into online games, but they couldn’t figure out how. The emphasis is, obviously, mine.

Geez, guys. So, you couldn’t figure out what everyone in Asia (and most of Facebook’s users) already knew: that the future of games is about pervasive experiences that play across platforms and market segments? That if my mom and I can’t both find something interesting the “platform”, that it’s not much of one after all. So, in order to get a piece of that pie, you combine two of the largest and (already) top-heavy game companies into one entity. Why aren’t you buying Three Rings, or Nexon or another company with “new” mojo, instead of one that is, frankly, resting on its laurels and that has only one (albeit huge) hit on its hands?

The truth is that even WoW, with its millions of players, is a niche product. And while it’s a successful niche, you can’t build a $19Bn business on it. What you need are smart, directional moves in the direction of broad game experiences: casual and Funware both. You need to do things like hire the powerful and amazingly talented Kathy Vrabeck to run your casual game division - as EA did, and make a real commitment to the future of gaming.

The upshot here I suppose is that this merger will only hasten the demise of the core gaming sector. With one less competitor, AAA game development costs approaching $10M, and a continued lack of creativity/brain drain in the biz, it’s only a matter of time before even the least cynical 17 year old XBOX360 owner decides that they’ve had enough and start playing indie games.

So congratulations to everyone who made out well in the deal, and all my friends who stand to profit. I’m really looking forward to this next round of competition in the core game space, because it’s going to be brutal and prove an important point about large, creative organizations: they rarely never maintain their edge.

This entry was posted on Sunday, December 2nd, 2007 at 5:41 pm and is filed under musings. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.