Written by Patrick Mulhern  on December 11, 2007

Special: Like five Transformers connecting into one mega-Transformer.

Tweet

Comments

Since Blizzard released the money-machine that is World of Warcraft talk of Vivendi Universal selling Blizzard's parent company, Vivendi Games, to the highest bidder went the way of the Dodo. As it turned out, VU seemed to just be waiting for the opportune time to make their business gambit. In the end, instead of selling their newly born cash-cow, they went the other route and invested billions into Activision and creating Activision Blizzard, a merger of the two game companies. Both companies have a troubled pasts with Activision going bankrupt and Vivendi Games' Blizzard Entertainment and Sierra Entertainment being bought and sold numerous times since their respected creations in 1991 and 1979. Today we shall delve deeper into history, examine the theory behind the merger and what we can expect in the future.

Activision
As age comes before beauty we shall start with Activision, who was founded way back in the days of Atari 2600 as the first independent developer and distributor of video games. The initial founding is well documented as a direct response to Atari's failure to give any credit to game designers in their early years. Four such designers left Atari after being told Уyou are no more important to Atari than the person on the assembly line who puts the cartridges in the box,Ф despite the fact that they had hard evidence showing their titles accounted for more than 50% of Atari's software sales. The same year that Activision released their first batch of titles Atari began using their vast amounts of money to sue them into oblivion. For two years the "Gang of Four," as they became known, fought against their former employer, eventually getting the copyright and patient infringement suit thrown out and establishing the third-party market in the process. The next few years for Activision was all roses with the company even managing to pull in $1 million in revenue per employee for a total of $60 million.

It wasn't until the great video game crash of 1983-84 that Activision started to struggle. Unlike many of the copy-cat companies that popped up in that time-span, Activision wasn't killed by lack of quality on their part. What hurt them the most was the sheer amount of video games that one could purchase for the same price as a single Activision title. By many accounts a parent of the time could pick up 5-8 shovelware titles for the price of a single Activision game, devastating their sales. But Activision's previous successes allowed them to storm through the many hardships that plagued the industry for years, even purchasing text-based specialist Infocom in 1986 only to have incoming CEO Bruce Davis shut them down in 1989.

Davis actually did more than shutdown the heralded text-adventure creators. Shortly after taking office he sued Infocom shareholders for additional money, believing that Activision paid too much for the company. Davis' lack of experience in the field led to more questionable choices until his changes forced the last remaining founder, David Crane, to leave and found Absolute Entertainment in 1988. Times remained tough for Activision as they continued to struggle from the crash of 1983, forcing them to dabble in the creation of business and productivity software. Just before Activision shuttered the doors of Infocom the company re-named itself to Mediagenic to show its dedication to the business and productivity sectors. Mediagenic continued to release games under the Activision and Infocom brand until a rough 1991 lead to the company to file for bankruptcy and later being bought out by BHK Corporation. The buyout lead to current CEO Robert Kotick replacing Bruce Davis and a complete restructuring and return to the still-popular Activision name.

From 1992-1993 the company remained quiet as Kotick trimmed the companies debt and moved its headquarters to Los Angeles. Finally in 1994 the company returned to the scene with Pitfall: The Mayan Adventure and followed up with strong franchise releases such as Quake II, MechWarrior 2, Return to Castle Wolfenstein and Tony Hawk's Pro Skater. Success under Kotick continued into the new century as the firm has remained close to id Software and their properties like Doom 3 and Enemy Territory: Quake Wars while continuing to create or license their own franchises including Call of Duty, Guitar Hero and the X-Men Legends series.

To this day the industry's first third-party developer is one of the oldest companies in the turbulent game industry and has managed to stay afloat largely based on strong talent and great timing. If it wasn't for their testicular fortitude the company would have never gotten off the ground, succumbing to the early lawsuits from Atari. In a show of irony Activision has managed to outlast Atari in all of its re-branded, re-launched forms including the latest attempt at revival by Infogrames, who recently announced Atari's dismissal from developing in the North American market. By the seat of its pants Activision has established themselves as a force to be reckoned with, currently the leading third-party publisher of 2007 in a field with dozens of competitors. A field they created.

Sierra Entertainment
Vivendi Games has always had something of an identity crisis and recently it published games solely under the name Sierra Entertainment. But Sierra had a long history well before that. The company was founded back in 1979 as On-line Systems, around the same time as Activision. Their entry into the market was created by the married couple of Ken and Roberta Williams. The pair teamed up to create Mystery House on their kitchen table boxing and distributing the title themselves. Little did they know that their part-time creation would revolutionize the PC gaming industry due to Mystery House's inclusion of computer graphics.



The two person team swung enough money from their $24.95, custom cover, hand-packaged title to enable them to move out of their LA home and continue working on games full-time. After expanding the employee-base with mostly friends and family and producing numerous other non-franchise titles the company almost went bankrupt due to low sales of cartridge-based titles which they were forced to create. Sierra was strong-armed into the production of Atari VCS and VIC-20 titles by venture capitalists who invested in the company in the early years. The millions of dollars in unsold cartridges almost caused the leading adventure game company to close its doors.

Sierra On-line was then saved by some good luck and foresight on the part of its founders. Around a year before the disastrous foray into cartridge technology the company managed to negotiate a deal with IBM. The deal had IBM paying for all the development, marketing and advertising costs of a new title as long as it showcased their new machine, the PCjr. Although the PCjr was almost destined to fail due to its shoddy design, the Tandy Corporation released their Tandy 1000 just weeks after the PCjr was discontinued giving Sierra a lucky break as the Tandy 1000 was compatible with the PCjr (although this wasn't advertised) and MS-DOS. Despite the initially slow sales attributed to the relatively low adoption rate of the PCjr the critically acclaimed King's Quest eventually took off as the Tandy gained in popularity, which launched the company into years of innovation and financial gain.

Roberta and Ken William's little company experienced an incredible amount of growth on the back of the King's Quest franchise. One may want to call this period the golden years for Sierra On-line as they launched multiple franchises such as Space Quest, Police Quest and Leisure Suit Larry, while maintaining the popular King's Quest series. They also managed to license popular Japanese games for the American market, while at the same time acquired numerous smaller companies and their properties between 1984-1995. But so many years can't go by for any business without a few missteps.

Sierra's slip-ups didn't truly start to rear their head until late in the "golden ages." In 1991 the company tried to merge with their competitor Br°derbund, only to have the deal fall apart before closure. The following year Ken Williams met with John Carmack and John Romero and offered to buy the fledgling id Software for $2.5 million, but the deal was rejected. id Software went on to pioneer the first-person shooter genre which is often credited as one of the reasons for the slow decline of the adventure game genre. Before being purchased by CUC International in 1996, the Sierra team managed to put out numerous non-franchise hits including Phantasmagoria and a new franchise from the mind of Jane Jensen, Gabriel Knight.

At this point, CUC International put in such a high bid for Sierra that the shareholders couldn't resist. The massive conglomerate bid roughly 90% higher than Sierra's current stock price which was eagerly accepted by investors. Unfortunately this was the beginning of the end for Sierra's glory years as the CUC management began restructuring their software company, which included Blizzard Entertainment, eventually consolidating it into CUC Software with Bob Davidson of Davidson & Associates as CEO. As the year progressed, more consolidation and business shenanigans went on behind the scene ultimately leading to Ken Williams resigning as Sierra's CEO at the end of 1997 and the conclusive end to Sierra's golden years and the beginning of some turbulent times.

Before the close of 1997, CUC Software merged with another conglomerate, HFS Incorporated and created Cendant Corporation. By early 1998 it was revealed that Cendant was using shady accounting practices, causing several hundred million dollars to be misrepresented. An investigation was quickly brought up and ended in 2001 with the federal grand jury indicting two members of the Cendant Board of Directors, Walter Forbes and Kirk Shelton, for accounting fraud. Cendant sold off the entire consumer software division to French media company Havas in November 1998, in hopes of maintaining profitability during the scandal. The deal closed in 1999 and that same year Havas was then purchased by another French company, Vivendi, who then created Vivendi Universal Games as their software company.

Since the loss of the original Sierra On-line team, numerous sales and constant restructuring the once well known Sierra On-line was largely relegated to becoming just a publisher instead of the publisher and creator of ground-breaking content and technology it was in its glory days. The firm even dropped their prized series King's Quest along with adventure games in general because the genre wasn't deemed as profitable enough. In 2002 the company finally changed its name to Sierra Entertainment and in 2003 stopped being a developer for the first time.

Over these bumpy years and despite itself, Sierra managed to hold a reputable name based on titles it published. The firm released such ground breaking titles as Relic Entertainment's freshman offering, the 3d space combat title Homeworld, the revolutionary FPS Half-Life from Valve and 2000's 3D real-time tactical title Ground Control from Massive Entertainment. Before dropping development all together they produced or contracted third-parties to continue the SWAT series, Tribes and The Incredible Machine. Before the decade closed the firm put out one more title from the Gabriel Knight series, Gabriel Knight 3. Unfortunately for adventure fans this would be a swan song because at the same time Sierra confirmed that GK3 would be their last adventure title for some time. "Some time" would actually last four years, until the 2003 release of the tepid Leisure Suit Larry: Magna Cum Laude.

In 2002 the company officially became Sierra Entertainment and new president Mike Ryder hoped to re-launch the company's former adventure franchises for the new gaming generation. Other executives didn't feel the same way, leading to Ryder being let go. The rebranded company managed to hold onto its reputation again thanks to two solid titles from previous partners Relic Entertainment and Valve. In 2004 Sierra shipped Homeworld 2 and Half-life 2, but despite the profitability of the game's division parent company Vivendi trimmed the division down, shuttering Impressions Games and Papyrus Design Group. In all, over 350 people were forced to find new employment. All was not lost for Sierra however, as shortly after this layoff, Vivendi because using the Sierra name exclusively on every game it would publish.