6:55 pm PT: We're inside the Vibiana awaiting Activision's press conference. The place looks like a renovated church. Along the middle are rows of chairs, and at each corner are L-shaped couches with tables filling the square, covered in sushi and edamame. The music just changed from Santeria to Foo Fighters' "Everlong." As a reminder: this it, folks, for Activision, so any big announcement they have will likely come out in the next hour or so.

7:08: We've moved to a what is the equivalent of the third row inside of a horseshoe of couches. Still nothing but the Activision (and not Activision Blizzard) logo across all the monitors throughout the venue.

The middle of the biggest convention in the industry probably isn't the best time to trumpet some record earnings, but the fiscal calendar waits for no convention, as they say. Activision's first quarter in fiscal '09 (and their last quarter before officially becoming Activision Blizzard) was the best non-holiday quarter in the company's history, with revenues coming in at a whopping $650 million (well above the projections $500 million).

Unsurprisingly, the quarter's Guitar Heroes (both On Tour and Aerosmith) contributed a lot to the bottom line. More surprisingly, the Kung Fu Panda game also contributed a fair share, representing as Activision's largest Dreamworks-associated game to date. Now that's one large panda!

Bobby Kotick, CEO of newly minted mega-publisher Activision Blizzard, has forecast the "the natural evolution" of the Guitar Hero franchise: iTunes. "I don't think there have been a lot of credible alternatives to iTunes but Guitar Hero certainly has that potential," Kotick told Financial Times.

While Kotick stopped short of actually detailing the proposal (we're imagining a typical music download service that features some Guitar Hero compatibility), Activision's merger with Vivendi Games ostensibly unlocks the Universal Music catalog, and Vivendi chief exec Jean-Bernard Levy added that the company has payment and processing capabilities in "virtually every country." Certainly, Activision Blizzard has a strong enough backbone to launch an iTunes competitor -- and an untold war chest ($3.5 billion, you say?) to make a bid for the highly coveted Beatles songs -- but to date, releasing 3 or so tracks a month ain't gonna cut it. Let's just get the Guitar Hero DLC updates on par with Rock Band's. Then we'll talk iTunes, m'kay?

Due to the conference's inabilities to meet its exuberant demands (1,000 brown M&M to fill a Brandy glass), Double Fine's Brütal Legend will not be making an appearance at next week's E3 Media and Business Summit.

Designer Tim Schafer and co-conspirator Jack Black made the announcement yesterday while floating across the River Styx on a yacht made entirely from the bodies of those whose heart stopped when LucasArts ceased making adventure games. The duo then proceeded to fly off on black motorcycles so fast that they broke the sound barrier and permanently deafened every person within a 20 mile radius, with engines that sounded like a Schecter guitar plugged into a wall of Marshall amps cranked to 12 (yes, one louder than 11).

... Okay, so that's not really how it happened. Rather, Schafer told MTV Multiplayer via email that the game wouldn't be at E3, but he hopes to discuss it soon after, "as soon as the dust settles from this whole [Activision Blizzard] merger thing." We're not surprised, of course, given Activison won't be attending E3 at all, but it sounds like the game will be missing out on the publisher's non-E3 event set for next Tuesday.

Stockholders have approved the merger of Activision and Vivendi Games to form the goliath Activision Blizzard. GameDaily reports the deal officially closes on July 9 and the new company will trade on the Nasdaq under Activision's ATVI ticker. This instantly makes Activision Blizzard the new alpha dog in the industry with a value of $18.9 billion -- EA now trails with $14.1 billion.

Without getting into the nitty-gritty details, Activision Blizzard is expected to have the highest profit margins in the industry. Activision Blizzard should also continue to enjoy bagiggles of cash flowing into its coffers unless franchises like World of Warcraft and Guitar Hero suddenly self-destruct.

Following the Motörhead set earlier this month, more Guitar Hero III downloadable content lands on the PS3 and Xbox 360 today, with the three-song Isle of Wight Track Pack now available on both consoles for purchase and download.

The pack features "Problems [live at Brixton] by The Sex Pistols, "Shoot the Runner" by Kasabian, and "I Predict a Riot" by Kaiser Chiefs. The set costs 500 Microsoft Points, or $6.25 USD on PS3. For a taste, check out the above video for Kasabian's "Shoot the Runner." It's kinda rockin'.

[Via X3F]

EA's VP of corporate communications, Jeff Brown, says that Activision and Vivendi pulling out of the ESA shows a "lack of leadership" from the two (soon to become one) large publisher. Brown tells GI.biz that EA has no plans of leaving the lobbying and business affairs group, expressing that a big company like EA has a "responsibility to consumers" to work on policy issues and it should be done through "industry consensus."

EA will not be leaving the ESA, but Brown urges the organization to make a strong case to remaining members. He insists that it's the ESA's job to "prove" that membership is for the good of the publishers, but believes with Activision/Vivendi leaving, along with LucasArts announcing its departure last week, that the organization will be proving itself more. Now, whether that proving is in the public spotlight or behind the scenes (which is normal for a lobbying group) is something the ESA is going to have to work out after these very public publisher exits.

Vivendi Games, soon to merge with Activision and become the goliath Activision Blizzard, saw its sales fall 24% from Q1 last year, thanks to the lack of a World of Warcraft expansion. The percentage may be down, but the money still flows like an Azerothian river, with Blizzard contributing €192 million of Vivendi's €221 million in sales this quarter. Vivendi also announced that WoW added another 700,000 players and the Sierra divisions performed "slightly higher" than last year.

With Vivendi expecting the next WoW expansion, Wrath of the Lich King, sometime later in 2008, we'll plan on a Naaru size jolt to Activision Blizzard's cash flow at that time. For now, Vivendi will just have to enjoy the disgusting amounts of cash it gets from WoW, instead of the nauseating amounts Activision Blizzard will make from the WotLK release.

In advance of this Thursday's release of Activision's Q4 financial results, Wedbush Morgan analyst extraordinaire Michael Pachter expects Activision's sales were up 88% this quarter over last year, based on NPD data. GameDaily reports Activision's guidance expected revenues of about $350 million this quarter, but Pachter believes it's more like $425 million.

Pachter further notes that Activision may see revenues decline this fiscal year as sales from Guitar Hero III and Call of Duty 4 wane, though the big thing for investors remains the approaching merger with Vivendi Games. Activision Blizzard should be a reality in the next few weeks and Pachter maintains a "Buy" rating on the company.

Following up on a rumor posted on Kotaku, we've just learned that Activision and Vivendi Games has discontinued its membership with the Entertainment Software Association. This information comes in the wake of yesterday's announcement that Activision and Vivendi would not attend E3 this year.

The ESA's Rich Taylor, senior VP of communications and research (full quote after the break) says, "We can confirm that Activision and Vivendi Games opted to discontinue their membership. The ESA remains dedicated to advancing our industry’s objectives such as protecting intellectual property, preserving First Amendment rights, and fostering a beneficial environment for the entire industry."

It appears that one member of the Activision family has been disowned. GamesIndustry.biz reports that Activision will be closing Underground Development, its development studio in Foster City, California. The studio currently holds 45 employees, whom Activision is currently trying to relocate to other studios.

Underground -- formerly known as Z-Axis -- was acquired by Activision back in 2002, and was renamed to Underground just last month. The studio worked on the Dave Mirra BMX series, the Aggressive Inline series, and was notably the developer of the shudder-inducing BMX XXX. Most recently, the studio completed work on X-Men 3: The Last Stand, and the port of Enemy Territories: Quake Wars for the Playstation 3, due out in May.

The European Commission has given permission to the games division of French telecom and media group, Vivendi, to run free into the arms of Activision. This is one of the final loose ends left in the $9.85 billion deal spawning the behemoth known as Activision Blizzard (or by its street name: Actilizzard? Blizzavision?). Vivendi will procure a 52% stake in the EA rival and is expected to have annual revenue of $3.8 billion.

The Commission essentially needed to approve that there weren't any antitrust issues in the mega-merger. In its report the group stated that there are several effective competitors in the market, such as EA and the game console manufacturers. Guess it's time to start ordering the office stationary.

Thanks to a pending merger with Blizzard, the Activision family is going to be growing in the near future, but a look at its current development resources reveals that the company already has a pretty diverse galaxy of stars. With such a variety, how will you ever keep track of all the devs under the Activision bumbershoot? Worry not, dear reader.

We've got you covered.

(Also: Check out our other family albums.)

Blizzard might get a free pass when Activision officially takes over Vivendi Games, but the Sierra branch of the company isn't so lucky. Variety reports that Sierra developers will have to justify their games currently in development to Activision executives once the merger is complete and re-pitch their work to survive.

Variety believes games expected this year like Bourne, Prototype, Brutal Legend and Ghostbusters are safe, but that games for '09 (titles that we'd probably hear about for the first time at E3) are all in limbo. For example, will there be another Bourne game when it conflicts with Activision's James Bond license? The fate of Sierra titles now lies in the whims of Activision execs.

*In case you're justifiably young enough not to know who Roberta Williams is, here's a link.

Soon-to-be CEO of merged mega-publisher Activision Blizzard, Activision head Bobby Kotick mused on latent cash cows at the Morgan Stanley Technology Conference in Dana Point, California. Kotick clearly senses the possibility of transforming his million-dollar franchises into billion-dollar franchises. MMOrph them! "[What] would be the natural evolution of a property like Call of Duty into a massively multiplayer environment -- how do you monetize that?" wondered Kotick. That is the question, Bobby. Lucky for you, you can just sit back and let the WoW think tank (a.k.a. your $1b investment) do the answering ... *fingers crossed*.