• The Wall Street Journal, Monday, December 3, 2007 12:15 PM

Vivendi plans to take a controlling stake in U.S. videogame maker Activision, minting a new rival to Electronic Arts, the current top player in the industry. The French entertainment and telecommunications group will merge its own gaming division into Activision and contribute cash to form a new company called Activision Blizzard.

The merger brings together complementary pieces: Activision's top-selling games include Guitar Hero, on which players use a guitar-shaped controller to play along with popular songs, and Tony Hawk, a skateboard-game franchise. Its business model is based on selling games for a one-time fee of $50 to $60. Vivendi's gaming business, on the other hand, relies on online games played by people all over the world at the same time. Vivendi's Blizzard division created the mega hit World of Warcraft game, which has 9.3 million subscribers.

The deal shows how game companies are jockeying for position at a pivotal time in the fastest-growing sector of the entertainment business. Revenue in the global games industry is expected to jump 18.5% to $37.47 billion in 2007, says PricewaterhouseCoopers LLP.

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