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How Vivendi Games Was Saved By World of Warcraft
Vivendi Games, once a struggling division of the French media conglomerate Vivendi, experienced a monumental turnaround thanks to one groundbreaking game: World of Warcraft. Launched in 2004, this massively multiplayer online role-playing game (MMORPG) quickly became a phenomenon, gathering more than 10 million active players worldwide. It not only transformed the gaming landscape but also saved Vivendi Games from financial ruin.
A New Market for Vivendi
Rene Penisson, president of Vivendi Games, acknowledged that World of Warcraft created an entirely new market for the company. “I believe a great market is opening,” Penisson said in an interview with Reuters. “It’s changing the way people play video games.” The game’s success in attracting millions of players helped establish online gaming as a dominant force in the industry.
Even rival companies like Infogrames, which owns Atari in the U.S., predicted that online gaming would drive future growth in the gaming industry. In fact, Infogrames claimed that online games would account for a quarter of all games sold within three years. World of Warcraft, with its intricate world filled with druids, goblins, and epic battles, led this charge, proving that online games could create deep, immersive experiences.
The Power of Expansion Packs
Vivendi’s confidence in World of Warcraft’s continued success was bolstered by the overwhelming response to its expansion packs. In 2007, the release of The Burning Crusade shattered sales expectations, and the company anticipated a similar performance from the next expansion, Wrath of the Lich King, slated for release later that year.
Expansion packs allowed Vivendi Games to keep players engaged while boosting sales. These updates added new regions, characters, and gameplay features, ensuring that the game remained fresh and exciting even years after its initial launch. This strategy of continual updates not only helped retain a loyal player base but also contributed to the company’s remarkable financial recovery.
A Financial Turnaround
Between 2003 and 2007, Vivendi Games more than doubled its revenue, surpassing ‘1 billion (or $1.52 billion). The company turned a ‘200 million operational loss into a ‘181 million profit during that period. The driving force behind this transformation? World of Warcraft. “World of Warcraft has been the essential element that transformed Vivendi Games,” Penisson explained. Without such a massively successful title, Vivendi Games might not have caught the attention of Activision, a major game producer behind hits like Guitar Hero.
The Activision Blizzard Merger
World of Warcraft’s success was so influential that it led to a significant merger. In December 2007, Vivendi Games partnered with Activision to form a new powerhouse in the gaming industry: Activision Blizzard. This $18 billion deal created one of the largest gaming companies in the world. Depending on stock performance, Vivendi would own between 52% and 68% of the new entity, which would combine the resources of both companies to dominate the gaming market.
Penisson, who would become the director of Activision Blizzard, expressed his excitement about the future: “The combination of the two companies creates a bonanza group in terms of product portfolio and development potential.” By merging with Activision, Vivendi Games secured its place as a major player in the global video game industry.
A Bright Future for Vivendi
Looking ahead to 2009, Vivendi Games projected impressive financial results, with expected revenues of $4.3 billion and an operating profit of $1.1 billion. These numbers reflected the company’s solid foundation, built largely on the success of World of Warcraft and the strategic partnership with Activision.
Thanks to World of Warcraft, Vivendi Games went from a company on the brink of failure to a dominant force in the video game industry. The game’s innovative approach to online play and its ability to engage millions of players worldwide not only saved Vivendi Games but also set the stage for the company’s future success as part of Activision Blizzard.