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Elevation Goes Public

Discussion in 'Game/SP News & Comments' started by chevalier, Dec 20, 2005.

  1. chevalier

    chevalier Knight of Everfull Chalice ★ SPS Account Holder Veteran

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    New York times has published an article dealing with the recent merger and future plans of BioWare and Pandemic under the lead of Elevation with John Riccitiello, Electronic Arts CEO from 1997 to 2004, as the CEO. While Elevation owns controlling interest in both developers, the latter are supposed to achieve more independence as a result of the deal. What is even more significant, there are plans to make the new venture go public. Here's a snip:

    By having the two studios join forces, Elevation is hoping to gain better leverage in contract negotiations with major publishers, like Electronic Arts, Activision and THQ, which market games and get them into stores.

    The leaders of the combined operating company, temporarily named VG Holdings, also hope to take the entity public, an unprecedented move for a game studio that does not double as a publisher.

    In that respect, they are trying to emulate Pixar, the movie studio. Pixar is a public company that has retained its identity as a creative business that is not controlled by a single media conglomerate.

    "We don't see why there can't be the same model in the video game industry," said Josh Resnick, 38, the president of Pandemic.

    Read the whole thing at New York Times and feel free to share your opinion here at SP.

    Also, an article was posted at IGN yesterday, dealing with the same matter. Here's an excerpt chosen to illustrate the controversy surrounding this move which the article is trying to show:

    According to BioWare/Pandemic, this action was taken in order to provide them with more creative control over new projects as well as allow them to reap a larger share of eventual profits. In essence, by becoming a public company, the assumption is that BioWare/Pandemic can assume a greater share of the financial risk of game development than they would normally be able to as a private company and therefore have more negotiating leverage with publishers/distributors.

    However, financial analyst Michael Pachter is highly skeptical of the plan to the point of stating that the company "doesn't have any chance of success... there's not an appetite to segment the different links in the value chain." What Mr. Pachter implies is that the financial markets see no reason to invest in a company that concentrates its efforts in one part of its "value chain" -- in this case, game development -- when investors can take advantage of companies that control the entire length of the value chain from development to distribution such as Electronic Arts and Activision.

    The rest is at IGN.

    [ December 20, 2005, 20:52: Message edited by: chevalier ]
     
    chevalier, Dec 20, 2005
    #1
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