Buy Low, Sell High: Vivendi's History in Video Games

By Ian Stokes on at

In March 2018 the multinational corporation Vivendi sold their entire 27.3% stake in the video game publisher Ubisoft — the final act of a three-year struggle for control, in which Ubisoft resisted what it regarded as a hostile takeover attempt. Vivendi had previously pulled the same trick with the Guillemot brothers' other gaming company, the mobile publisher Gameloft, which the corporation took over in 2016.

Of the 30,489,300 shares offloaded by Vivendi, the majority were sold to either the Guillemot brothers (Ubisoft was founded by five brothers from Brittany, the most well-known of whom is CEO Yves) or shareholders already associated with Ubisoft. Not all of them, however. Around 8% of the shares were sold to two new investors: Ontario Teachers’ Pension Plan (the stock market is a weird place) and Tencent, the massive Chinese conglomerate which owns League of Legends developers Riot Games and is the biggest gaming company in the world.

Vivendi has in fact done remarkably well out of the whole affair, selling an initial investment of €794 million for an eventual total of around €2 billion, a substantial return. The question is, why did Ubisoft so fervently resist Vivendi's advances? I asked Ubisoft and got an answer from worldwide PR director Michael Burk, who was unusually candid: “Ubisoft’s agility, creativity, and culture are linked to our independence. From the beginning, we made the case that it was not in the best interests of all of our stakeholders – employees, shareholders, and, most importantly, players – for Ubisoft to become part of a media conglomerate with a questionable track record in our industry.”

The last part should draw your eye, that “questionable track record.” Vivendi may not be a big name in the gaming industry today, but was a major player for over a decade, owning industry legends like Sierra Entertainment and even Activision Blizzard during its tenure as a major games publisher. But how did a French water supply company (you heard right) even get into such a prestigious position in the first place, and how did it lose a gaming empire?

Water Start

Few companies have origins so grandiose as Vivendi. An imperial decree put forth by Emperor Napoléon III in 1853 led to the creation of Compagnie Générale des Eaux, a new water supply company in France. Water was the company's business for over 100 years, but in the 1970s it began diversifying: moving into waste management, energy, transport services, construction, and property generally. In 1998, Compagnie Générale des Eaux changed the name to Vivendi and began pushing into the entertainment sector.

Vivendi Games

Huge mergers with the French media giants Pathé and Seagram (then the owners of Universal Studios) thrust Vivendi into the entertainment industry in late 1999/2000. Vivendi once again changed its name, this time to Vivendi Universal, looking to capitalise on the credibility that the Universal brand had within the entertainment sector. But Universal wasn’t the only big name that Vivendi picked up in the Seagram merger, as the Canadian company also owned a sizeable gaming division. Vivendi now had control of several gaming studios, including Sierra On-Line and Blizzard. These studios were consolidated into a single division within the company hierarchy under the name Vivendi Universal Games.

By the early 2000s Sierra was largely a publisher of games, having cut down its internal development workforce massively during the late ‘90s. Despite this change in direction, Sierra’s name still carried significant clout and they had published several high-profile games prior to the Vivendi acquisition including Half-Life and Homeworld, developed by Valve and Relic Entertainment respectively.

While Sierra had transitioned into a publishing role, Blizzard were still going strong as a developer. Coming off the back of StarCraft’s release in 1998, which is widely considered to be one of the best real-time strategy games of all time, Blizzard followed up with the hugely successful Diablo 2, which took the Guinness World Record at the time for fastest-selling video game. Universal’s existing game publishing label, Universal Interactive, was also housed under the Vivendi umbrella. Previously known for publishing both the Crash Bandicoot and Spyro the Dragon games, the label was folded into Vivendi Universal Games in 2003 to consolidate their publishing efforts.

Vivendi didn’t stop the acquisition train there though. Eager to bolster development capabilities, it purchased several existing studios over the next few years. Notable purchases included Massive Entertainment in 2002 (which 16 years later is making The Division 2 for Ubisoft), and Fox Interactive in 2003 (developers of, among many other curiosities, Virtual Springfield).

Bad Times

While this bold push into the entertainment industry seemed successful, Vivendi’s buying spree was about to bite it firmly on the backside. In June 2002, The Economist reported that Vivendi was €19 billion (£16.7 billion) in debt. This dire situation was compounded by plummeting share prices and a series of credit rating downgrades which threatened to extend the company's debts further.

Despite efforts to hold back the tide, in 2003 Vivendi reported a net loss of €23.3 billion (£20.5 billion), the largest recorded operating loss in French history. This massive loss was primarily attributed to a write-down charge of €18.4 billion (£16.1 billion). Don’t worry, I had no idea what that meant either: basically, Vivendi’s assets were re-evaluated and found to be worth less than previously thought. These write-downs came largely from outside the video game side of the business, with Universal Music and Canal+, a French TV service, accounting for most of the damage.

Vivendi was bloated, stuck with massive debts and a tonne of new businesses to keep afloat, so did the only thing it could – and went on a diet. Impressions Games and the Papyrus Design Group, two smaller game studios that Vivendi had picked up during the Seagram merger, were shut down in 2004, taking around 50 jobs with them. A staggering 180 jobs were cut from Sierra’s Los Angeles offices in that same year whilst its Bellevue office was completely shuttered, taking another 100 jobs with it. Alongside the massive job cuts Vivendi also offloaded assets. In October 2003, Vivendi finalised a deal with NBC owner General Electric for Vivendi Universal, the TV and film arm of the business. The two businesses would merge to form NBC Universal, with Vivendi retaining a 20% stake in the new company.

Good Times

The spree of cuts and sales righted the ship, but Vivendi needed to get back on course to becoming a media empire. It had lost almost all of its entertainment properties in the NBC Universal deal and, while it retained Universal Music and a smattering of smaller TV businesses like Canal+, it needed to start rebuilding.

Despite the deep cuts to the TV and film divisions over these years, Vivendi Games was still going strong. Sierra published smash hits like The Simpsons: Hit & Run and F.E.A.R. over this period, while in November 2004 Blizzard Entertainment had modest success with something called World of Warcraft. I jest of course, as WOW would go on to shape the PC gaming landscape for the next decade and is still going strong to this day, with the latest expansion, Battle for Azeroth, due to land this August.

This was success. And such success that Vivendi was inspired to boost its internal development studios, looking at these existing partners and recent hits for direction. On the strength of The Simpsons: Hit & Run and the Crash Bandicoot sequels, Vivendi acquired developers Radical Entertainment in 2005.

Vivendi also snapped up the UK developer Swordfish Studios, though they would only release one title during their time under the French giant, the forgettable World War II shooter Cold Winter, before being sold off to Codemasters in 2008. The final addition to this portfolio came in the form of a fledgling High Moon Studios, picked up off the back of their successful debut title, Darkwatch.

It was at this point that Vivendi built their first, and only, original studio – Vivendi Universal Mobile Games. Founded in March 2006, the studio was based near Paris, France and was tasked with growing Vivendi’s influence in the-then burgeoning mobile games market. Vivendi had already had successful ventures in the mobile market, bringing titles in the Crash Bandicoot and Spyro the Dragon series to mobile formats, along with that odious little man Leisure Suit Larry.

A month later, in April 2006, Vivendi announced it would finally be dropping the Universal branding as per their earlier deal with NBC. Vivendi Universal Games became Vivendi Games, and subsidiary teams also dropped the moniker.

With the financial side now under control, Vivendi was finally back on track. The revolutionary World of Warcraft was the hottest thing in gaming and several other studios were producing positive results. Radical Entertainment saw success with the 2006 launch of Scarface: The World is Yours, a pseudo-sequel to the Hollywood classic. In the same year Massive Entertainment released World in Conflict, a real-time strategy title for PC which garnered high praise and topped charts in North America. Beyond Vivendi’s own studios, Sierra’s position as a publisher of third-party content was also paying dividends, publishing high-profile titles like psychological-horror shooter F.E.A.R. and Half-Life 2, one of the most universally lauded games of all time.

It wasn’t all jam, however. Swordfish’s Cold Winter had released to a resounding meh, and fatigue was starting to set in on the Crash Bandicoot and Spyro the Dragon franchises, both of which had long since left their original developers and critical acclaim behind them. Too many of Vivendi’s other titles were niche releases which, while successful in their own right, weren’t helping Vivendi achieve the market position it was seeking. This is how an anonymous source who worked at Vivendi Games put it: “Not every IP was a Half-Life 2 or a World of Warcraft, but the hard work and dedication of casting each title in the best possible light was credit to all departments.” Vivendi would need a plan to escape becoming 'just' another mid-tier publisher. Luckily, the company had just that.

Join me, and together we can rule the galaxy

In December 2007 it was announced that Vivendi Games merge with fellow games publisher Activision, forming a new company called Activision Blizzard. Vivendi was the majority stakeholder in this new company, taking 52% of the shares while the rest was spread out amongst other private investors. Jean-Bernard Lévy, Vivendi CEO said in a statement that “This alliance is a major strategic step for Vivendi […]. By combining Vivendi’s games business with Activision, we are creating a worldwide leader in a high-growth industry.”

The choice of name for the new company was telling, however, with Blizzard getting the spotlight while Sierra and Vivendi’s other studios sat quietly in the background awaiting an uncertain fate. Looking back at the statement released by Activision Blizzard upon the company's inception, Blizzard’s legacy and value were given more space than the rest of Vivendi’s studios combined:

Blizzard owns the #1 multi-player online role-playing game franchise, World of Warcraft, which currently has over 9.3 million subscribers worldwide. Blizzard’s World of Warcraft, Warcraft®, StarCraft® and Diablo® games account for four of the top-five best-selling PC game titles of all time. Vivendi Games also owns popular franchises, including Crash Bandicoot™ and Spyro.

When the deal was finalised in 2008 and the dust had settled, Sierra was no more. Activision Blizzard did away with the brand entirely, selling off many planned titles to other publishers including Brutal Legend, Ghostbusters: The Video Game, WET, and The Chronicles of Riddick: Assault on Dark Athena.

“There was a sense of sadness,” says our former Vivendi employee, reflecting on these losses. “Bruce Hack [CEO of Vivendi Games at the time] was leading a really smart business strategy just prior to the merger, and the titles that got dropped and picked up by other publishers made for a really strong portfolio.”

Sierra’s portfolio wasn’t the only casualty of the merger though, and several other studios would find themselves either up for sale or on the chopping block. In 2008, not long after the merger had been finalised, Swordfish Studios and Massive Entertainment were sold off to Codemasters and Ubisoft respectively. The short-lived Vivendi Mobile Games also closed its doors in the following year. Blizzard aside, High Moon Studios and Radical Entertainment were all that remained of Vivendi Games by the end of 2009.

Activision Blizzard Buys Itself Out

The newly formed Activision Blizzard would go from strength to strength over the next few years. Call of Duty exploded in popularity after 2007’s Call of Duty: Modern Warfare and the series would go on to define the console generation with numerous, best-selling iterations. At the same time, Guitar Hero was at the peak of its popularity, with the successful releases of Guitar Hero World Tour and Guitar Hero 5 in 2008 & 2009 respectively. Flooding the market with plastic instruments and yearly entries saw fatigue set in by 2011's Guitar Hero: Warriors of Rock, but Guitar Hero had a hugely successful run at the top.

Elsewhere, Spyro the Dragon had been repurposed as the face of the Skylanders franchise with a new toys-to-life initiative which saw massive success amongst younger gaming audiences. The first game Skylanders: Spyro’s Adventure launched in October 2011 to enormous commercial success. By March 2012, just six months after launch, Activision had sold over 30 million Skylanders toys. Talking with VideoGamer in 2012, Activision product specialist Noah Kircher-Allen said, “We had very high hopes for it, but it far exceeded our expectations […] it was maybe two or three times what we thought it was going to be.”

Despite this success, the writing was on the wall for a split with the parent company. Vivendi was, once again, facing debt issues and a major overhaul of the company was underway. Activision Blizzard was profitable but no longer had a place in Vivendi’s future, as it refocused and doubled-down on the music industry. There was also the looming threat of Vivendi voting to force a cash dividend payment from Activision Blizzard, which would have left the gaming giant facing a $3 billion (£2.2 billion) bill, $2 billion (£1.5 billion) of which would have gone Vivendi’s way.

In June 2013 the inevitable happened. Activision Blizzard announced that it would be buying itself out to the tune of $8 billion (£6 billion). Of that, $5.83 billion (£4.3 billion) would be fronted by Activision Blizzard, while the rest would come from ASAC II LP, a private investment company chaired by Activision CEO Bobby Kotick. Vivendi retained 12% of Activision Blizzard, but no longer had control or the threat of voting for cash payouts. Over the next two years Vivendi would sell off this 12% stake, divesting entirely in 2016.


Over the course of this 13 year run in the industry Vivendi rose from a small-time player to the biggest third-party publisher in the business. During this time it bought, shuttered, and sold numerous studios, but only founded a single development studio of its own.

It’s easy to look back over the Vivendi timeline in the games industry and say it should have done this or that, ignoring the massive changes that were hitting the industry over these years (and produced many other high-profile casualties). Speaking to a former employee gives a glimpse of a demanding but invigorating working environment: “There was a lot of hard work, a fairly intensive travel schedule, and all the learnings and demands of working on titles that were breaking the box copy/week one sales model. That’s probably the biggest misconception people may have had about the company looking from the outside in. We really were dealing with games as a service emerging as a new, disruptive factor in the games market. It was really exciting to be a part of that.”

The surprising thing is that, after speaking to a handful of former Vivendi Games employees, all have fond memories of their time. ”Ultimately, it’s the people and the games that make for a great job within this industry, and I think there are some great titles in Vivendi Games’ back catalogue, and the people who helped publish them were among the best I’ve ever worked with.”

Another Vivendi alumni, who again prefers to remain nameless because of their current job, says simply: “Vivendi had always been good to the group.”

Despite the feelings of those who were there, it’s hard to argue that Vivendi proved itself a good fit for the games industry. The studios and publishers under its control produced great games, in some cases titles that defined whole aspects of the industry, but the parent company itself never really seemed to capitalise and build on them. Vivendi Games was certainly a diverse and successful publisher, but all of that is now encompassed in Activision Blizzard, Codemasters or, appropriately enough, Ubisoft. One of the French publishing giant's great hopes for next year is The Division 2, currently under development in Sweden by Massive Entertainment, a former Vivendi studio.

“Vivendi’s renewed interest in games has kicked off a comedic run of discussions about getting the gang back together,” remarks one of our sources. It’s a nice thought, but of course Vivendi's renewed interest has ended up going nowhere. It's easy to see why such a grand French company might, when looking to have another go, immediately fixate upon a huge and successful French publisher. It's also easy to see why the Guillemot brothers, five men hailing from the tiny farming town of Carentoir, might resent Napoleon III's water company trying to muscle in on their lives' work. Ubisoft fought tooth-and-nail to keep Vivendi away, and eventually won out.

It seems like the best result for both companies. If Vivendi was to re-enter the gaming business in 2018, it would bring no expertise or experience, just a proven track record of layoffs and poor financial management. For now Vivendi has to be content with Gameloft, and otherwise soldier on with its TV and record companies. Which, of course, is music to Ubisoft's ears.