Activision has merged with Vivendi Games in a move that has solidified Blizzard as the most powerful video game company in the world. According to Yahoo Finance the company is now worth $18.9billion, some $4.8billion more than the next in line, Electronic Arts. Activision Blizzard is now the proud owner of World of Warcraft and the Diablo franchise, amongst a host of other popular games. Does this mean games such as the upcoming Diablo 3 will become more World of Warcraft MMO oriented? The short answer is no. Firstly, the team working on Diablo 3 have been very clear with their intention to retain Diablo's distinctive non perpetuating player world. But more importantly, the move by Activision is a merger, not a takeover, with Vivendi maintaining a majority shareholding in the new company.

The real gain by the merger is not so much in the market share of the combined entity, but rather the ability for the entity to produce improved margins on their sales. This could be a good thing for gamers. Firstly, Reuters report that Activision Blizzard is now said to be able to operate on a 30% margin for its game releases, which is anything from 10-20% higher than that of its competitors. This means more profit. When margins are low, the risk is higher, and so the games that publishers back are carefully chosen. A poor choice in game development can be seriously costly and result in even greater risk scrutiny upon developers. When profits and market share are high, the risk is lower, and so game company's can afford to take more of a risk. This can be good news for would be developers. Taking greater risks might be risky, but it is also how the really great, great games come about - those untried and unproven unexpected gems. The reverse of this situation is evident in the current state of the movie industry, where there is a severe shortage of risk taking movie producers and, as a result, we keep seeing the same old same old movies. We hear claims that the movie industry is suffering in earnings because of pirating, when the general public at large knows it is suffering because the movies that are coming out are largely trash - no innovation, no risk taking - nothing new. Of course, this news doesn't necessarily mean Activision Blizzard will automatically start taking greater risks, they are a corporation hell bent on maximising profits after all. But it does at a minimum allow greater opportunity for Activision to fund research, development, and innovation and, at least occassionally, to back proposals that otherwise would not receive funding.

Activisions sudden increase in market share will also force a rethink by the competition. It is expected other gaming companies might follow suit; already the rumor is EA, publisher of Crysis and the Battlefield series, has Take-Two Interactive in its sights. Take-Two are the publishers of Grand Theft Auto. It remains to be seen if this takeover will eventuate, but it is certainly indicative of the merger and takeover war that may lie ahead. Competition is a good thing for the gamer, although in this case we can rest assured there'll be no prices being driven down. Admittedly, when beasts get bigger they have, in the past, had a tendency to become their own pricing worst nightmares and, in fact, have in their larger-scale messes fallen behind in key fields like innovation. Microsoft is one such example. But we're hoping the Activision merger will do the reverse. In fact, we're taking a glass is half full approach to this news, and hoping that they see this merger as a chance to use their market share and resources to fund more top game developers and ultimately enhance the quality of games hitting the market worldwide. Perhaps more importantly from the eyes of the gaming consumer, perhaps such improved margins may also stave off the inevitable game price rise....we'll be watching to see.

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