Joystiq

What about building new Blizzard titles using Activision IPs? In a very roundabout fashion, Morhaime essentially said, Not happening unless we want it to. What about Activision bringing their own properties online with a little encouragement from Blizz? Activision CEO Bobby Kotick said, "As far as our properties online for the future, I don't think we're comfortable commenting on what we intend to do with our properties in terms of the online exploitations today. Perhaps as we get closer to the closing, we'll provide some more visibility in that regard." Perhaps...

One of the key discussion points was Blizzard's huge success (revealed in yesterday's press release to be revenues of $1.1 billion in '07, operating margins of over 40% and approximately $520 million of operating profit). That success was previously hidden within Vivendi Games which was, in itself, buried within the enormous Vivendi company as a whole. The new entity puts Blizzard front and center. One financial analyst noted, "Most of the world that I follow materially underestimated the operating values of Blizzard, obviously. They were well-hidden."

Despite what would seem to be market saturation with over 9 million WoW subscribers, Morhaime says they continue to grow their subscriber base, citing nascent broadband penetration "in territories like Russia, Eastern Europe, and India." For those stats junkies out there, he cautions, "I don't think we're going to be in the habit of giving out future subscriber projections."

According to Kotick, the new company will employ "around 6000 and half of those will be engaged with product development." What about Sierra, Sierra Online, and Vivendi Mobile, the other more or less unsung components of Vivendi Games? Besides calling it a "significant investment," Kotick said they're "very confident and committed" to making those brands profitable.

So with Blizzard and Activision each sticking to their own specialty, what benefit will there be besides bragging rights? Figuring out how to break into the Asian markets. Morhaime: "Blizzard has developed great expertise over the years in both online gaming and really as the only Western publisher to achieve significant success in Asia. These are some areas that could potentially benefit Activision if, in no other way, simply having conversations on how we've achieved this." Kotick followed up that sentiment later, saying, "We think there's a tremendous opportunity to leverage the institutional expertise at Blizzard and at the Blizzard offices in Korea and China to our benefit."

And finally, when asked "Why now?" Kotick ended the Q&A portion of the call with the following explanation, which we've transcribed in its entirety: "When you think about the growth and opportunity for market expansion that are taking place today; when we think about the new hardware -- the Wii, the Xbox 360, the PlayStation 3; changes that are taking place online with broadband penetrations increasing at very rapid rates across all geographies, for the first time you can step back and honestly say that the mass market that we've all been looking for in interactive entertainment, is arriving. Things like physical interface, or better production values, or the transformation from a solitary experience to a more social gaming experience, these are all catalysts for much bigger and broader audiences than we've ever seen before. And it's best for us today to be, on a combined basis, to be the number one company in the category with the highest operating margins, the greatest portfolio of assets across all gaming platforms and all geographies, to take advantage of all those growth opportunities we see in the coming years."

Read - Activision Blizzard slideshow [Warning: PDF link]