Activision Blizzard Buyout From Vivendi To Allow Gaming Freedom

Activision Blizzard is looking to the future with its buyout of shares from Vivendi.

As previously reported by The Inquisitr, Activision Blizzard separated from Vivendi in a $8.2 billion deal.

As of last month, Activision Blizzard had $4.55 billion in cash and investments and no debt. The leaders of Activision Blizzard invested $100 million of their own cash, but the company had to borrow $4.75 billion to finance the buyout of shares from Vivendi. This will leave $3 billion in cash for Activision Blizzard to fund ongoing game development.

Despite putting Activision Blizzard in debt, Baird analyst Colin Sebastian says the deal is a good one for the future of the gaming publisher:

“This looks like a win, win, win for Activision, Vivendi and Activision shareholders. It’s a better outcome than a special dividend to Vivendi, and I expect Activision will function even better as an independent company without the overhang of a struggling parent.”

Activision Blizzard generates about $1.1 billion per year, so they’re expected to be debt free once again within four years. Investors agree that the Activision Blizzard buyout is a good deal since shares of Activision Blizzard surged up 15 percent to close at $17.46, a price point that hasn’t been seen since 2008.

So what will Activision Blizzard be doing with all that money? Activision Blizzard is mostly known for World of Warcraft and Call of Duty. Console gaming accounts for more than half of the entire $66 billion gaming industry. While the Xbox One and PlayStation 4 are on the horizon, competition from mobile and tablet based gaming has eaten into Activision Blizzard’s market share in the gaming space.

World of Warcraft is still a huge money maker for Activision Blizzard, but WoW has slowly been losing gamers over time. World of Warcraft is expected to be switch to the free to play business model, where monthly fees are gone but game companies make money by selling in-game items, perks, and sometimes even currency. These types of micro-transactions might actually increase the potential profit margin for Activision Blizzard is gamers buy into the new system.

How do you think the Activision Blizzard buyout will affect the future of gaming?