Eighteen Years Ago Today, Shareholders Voted To Create Activision Blizzard

On July 8, 2008, Activision’s shareholders voted to approve a merger with Vivendi Games. The deal was closed the next day. What emerged was Activision Blizzard, the holding company that would go on to own the most commercially successful franchises in gaming history.

It also ended up being the subject of an industry malpractice lawsuit before it was sold to Microsoft for $68.7 billion. Activision Blizzard is no longer an independent corporation, but here’s how it got there.

A Merger Nobody Expected Much

In 2006, Activision was still in a strong position, but massively multiplayer online games were growing, and the recurring revenue model they offered made one-off titles look unsustainable by comparison. Activision has nothing like it.

Bobby Kotick reached out to Vivendi CEO Jean-Bernard Lévy, initially hoping to acquire Blizzard Entertainment outright. Blizzard, at the time, had more than 9.3 million World of Warcraft subscribers worldwide and showed no interest in selling. What Vivendi was offered instead was a planned merger so that Vivendi would retain majority control at 54% of the shares. Kotick wasn’t comfortable giving up control, but a conversation with Blizzard CEO Mike Morhaime changed the equation. Vivendi’s existing relationships in China and across Asia were something Activision said it could not replicate on its own.

The deal was approved by Activision’s board in December 2007, cleared by the European Commission in April 2008, and shareholders voted in favor of it on July 8. Kotick was named CEO of the new combined company.

Blizzard Survived, Sierra Did Not

Blizzard has maintained its independence and leadership structure throughout the merger. Sierra Entertainment was treated differently. Kotick was specific about what will happen to Vivendi’s other assets: if the project doesn’t meet Activision’s margin requirements, “they probably won’t be kept.” Several of Sierra’s titles were reissued to other publishers – Ghostbusters, Brütal Legend and Prototype among them. The Sierra label itself was discontinued.

It was a clear early sign of how Activision Blizzard would work. Blizzard was an asset that Kotick wanted access to and managed accordingly. Everything else was tested for commercial performance only.

Between 2009 and 2015, Activision Blizzard was breaking records with remarkable consistency. Call of Duty: Modern Warfare 2 brought in $310 million on its first day in 2009. Black Ops grossed $360 million the following year. Modern Warfare 3 hit $400 million in the US and UK alone in its first 24 hours in 2011, the biggest entertainment launch in history at the time. Skylanders created a new category of toys-to-life product. Destiny launched in 2014 and set the record for the biggest first-day sales of any new gaming franchise.

In November 2015, King was acquired for $5.9 billion, adding Candy Crush and the mobile revenue stream that would eventually give the company K to ABK. In 2018 it was the largest game publisher in the Americas and Europe by revenue and market capitalization. The Overwatch League launched the same year, attempting to build a traditional gaming structure around esports for the first time.

Where the Separation Began

In early 2019, Kotick announced a bankruptcy and 775 layoffs in the same breath. Bungie’s publishing deal with Destiny 2 was terminated after failing to meet revenue expectations. The focus is noticeably less close to Call of Duty, Candy Crush, Overwatch, and Blizzard’s main properties. While the numbers remained strong on the outside, the internal reality of the company was a completely different story.

In July 2021, the California Department of Fair Employment and Housing filed a lawsuit alleging sexual harassment, workplace discrimination, and retaliation against Activision Blizzard. The case resulted in an SEC investigation, multiple walkouts, the loss of sponsors for several major events, and hundreds of allegations from current and former employees. The picture that emerged in the months that followed was of a functioning culture that had been in deep trouble for years. The DFEH case was finally settled for $54 million in December 2023.

Microsoft announced its intention to acquire Activision Blizzard for $68.7 billion in January 2022. The deal took eighteen months to complete, first blocked by the FTC and the UK’s Competition and Markets Authority before Microsoft agreed to transfer the cloud gaming rights to Ubisoft as a compromise. The acquisition was completed on October 13, 2023. Kotick left on December 29 of that year.

Eighteen years from a shareholder vote to a Microsoft subsidiary. The company founded on this day in 2008 broke records, created one of the most visible IPs in sports, pioneered the eSports league franchise model, and became a cautionary tale about institutional culture. While Blizzard, Activision, and King continue to operate under the Xbox umbrella, Activision Blizzard as an independent entity no longer exists.

The date it was established

October 1, 1979

Parent Company

action blizzard

Headquarters

Santa Monica, California, United States