Vivendi/Activision Merger to Take on EA

In a deal that would create the biggest video game company on earth, French entertainment and telecommunications giant Vivendi will purchase a controlling interest in video game maker giant and merge its own video game operations into Activision. The resulting company will be called Activision Blizzard and will be worth about $3.8 billion, higher than the value of the current video game champ, EA, which is worth $3.2 billion.

"This alliance is a major strategic step for Vivendi and is another illustration of our drive to extend our presence in the entertainment sector," Vivendi CEO Jean-Bernard Lévy says. "By combining Vivendi's games business with Activision, we are creating a worldwide leader in a high-growth industry."

As a result of the transaction, Vivendi will control 68 percent of Activision Blizzard, a company with some of the best-selling video game franchises on earth, including Call of Duty, Diablo, Guitar Hero, Starcraft, and World of Warcraft. What's most interesting about the merger, aside from the sheer scope of the transaction, is that the companies were largely complementary: Activision has historically sold standalone games for PCs and various consoles, while Vivendi has seen the most success with subscription-based online games. Its World of Warcraft game, for example, has almost 10 million subscribers.

EA, the current market leader, is a traditional game publisher like Activision, but it recently purchased BioWare/Pandemic and Mythic, two companies that specialize in online subscription-based games. In an official statement, EA wished Activision Blizzard good luck and said it was "looking forward to the competition."