Big Business: The world of the conglomerate in the gaming market

What is a conglomerate?

A conglomerate is a combination of companies that are made up of different divisions, each with distinct identities operating in different sectors of the market – and possibly different industries altogether. They are often formed through mergers or acquisitions.

Advantages of a conglomerate?

• Diversification results in reduction of investment risk – a good year in a corporation’s games division may offset a poor year in a corporation’s movie division!

• Synergy created between divisions eg.Time Warner includes several linked businesses such as internet access, content, film, cable systems and television. This allows cross-promotion and economies of scale.

• Vivendi is a French multinational mass media and telecommunication company based in Paris.

• The company has activities in:• Music• Television and film• Publishing• Telecommunications• the internet• ….. And videogames

• Vivendi is a French multinational mass media and telecommunication company based in Paris.

• Although you may not have heard of Vivendi, you may have heard some of the assets the firm owns:

• Canal+ Group (TV Channels)• Universal Music Group• Vivendi Entertainment• Maroc Telecom

• ….And 61% of Activision Blizzard

• Activision and Blizzard Entertainment are subsidiaries of Activision Blizzard.

• Activision is an American video game publisher and is now one of the largest third party video game publishers in the world.

• Activision still develop and publish games such as Call of Duty, Crash Bandicoot, Spyro the Dragon and Prototype (Vivendi owns the IP to all of these franchises)

• Blizzard Entertainment is a video game developer and publisher responsible for several successful games including Starcraft, Diablo and the MMORPG – Massive Multiplayer Online Roleplaying Game – World of Warcraft

• This subscription based title can earn Blizzard over $1 billion annually.

• Activision own a number of subsidiaries of their own – to ensure they can benefit from vertical integration: enjoying advantages of owning firms at every stage in the games making process.

• The following studios are owned by Activision:• Developers:• Beenox (developed The Amazing Spider-Man)• Demonware (Developed software to assist matchmaking

in Call of Duty)• High Moon Studios (Transformers series of Xbox/PS3

games)• Infinity Ward (developed Call of Duty Modern Warfare

series)• Toys for Bob (Developed Spyro/Skylanders series and Tony

Hawk games)• Treyarch (Developed Call of Duty Black Ops series)• Neversoft (developed Guitar Hero series)

Skylanders Giants and the role of the conglomerate

• Skylanders Giants is developed by Toys for Bob and published by Activision

• Both of these companies are part of the same conglomerate so will both receive a synergy boost in working together, as opposed to an outside company.

Skylanders Giants and the role of the conglomerate• Their parent company Vivendi

has a number of business interests that could aid the release of Skylanders Giants.

• The game could be well supported from Vivendi’s Canal+ group of TV channels through promotion and marketing.

Skylanders Giants and the role of the conglomerate• Vivendi owns the Universal Music

Group – one of the largest music publishing companies in the world

• As you have seen in past lessons, many games release spin-off merchandise such as music soundtracks:

• Who is to bet that Activision Blizzard owners Vivendi would not use Universal’s expertise and vast experience in this field to produce, market and release Skylanders Giant: The Official Soundtrack?

Task:

• Draw a conglomerate map showing how a French company working out of Paris, Vivendi, is linked with – and profiting from! – kids game Skylanders Giants.

• You can use any program to do this but you must Blog your map so you may have to take a screenshot of your map if you using another program.

Example:

Faceless conglomerate

inc.

Howard Games Publishers

Howard Games Developer

Howard Movie Publishers

Howard Magazine Publishers

Howard Umbrella Manufacturers

Release of Return of the Media Teacher on PS3 and Xbox

Howard holding

company

Task: • Draw a conglomerate map showing how a

French company working out of Paris, Vivendi, is linked with – and profiting from! – kids game Skylanders Giants.

• You can use any program to do this but you must Blog your map so you may have to take a screenshot of your map if you using another program.

• If you finish, draw a conglomerate map for Grand Theft Auto 4 or 5 – Homework to complete both of these tasks for next lesson. Also, read the latest announcements about GTA5 in time for Thursday!