Big 'WoW' at Vivendi
(Fortune Magazine) -- In 2002, Vivendi (Charts) shopped its anemic games division but couldn't find a buyer. Major layoffs followed. Now the unit has become Vivendi's star: In the second quarter, sales at Vivendi Games jumped almost 30 percent over the previous year, helping drive the company's overall revenue growth to 4.8 precent - a big jump over expectations.
The game changer was Blizzard Entertainment's World of Warcraft, a "massively multiplayer online game" that lets devotees interact in a Dungeons & Dragons-like fantasy realm. Often abbreviated as WoW, it has 6.5 million users worldwide who bought the packaged game and now pay a subscription fee (about $15 a month in North America).
Others, such as Sony (Charts) with Everquest, have enjoyed some success with similar games, but not on the scale of WoW, which has more than a million subscribers in North America. The game is now so popular that some analysts believe it is choking off its rivals. "This is a combination of the right product, the right timing, and the right execution," says Michael Pachter, a gaming analyst at Wedbush Morgan.
Vivendi's failure to sell its games division will probably continue to pay off. This fall Blizzard will release an expansion pack - World of Warcraft: The Burning Crusade - which should keep subscribers interested. And the game will soon enter a business that has long been closer to Vivendi's heart: A World of Warcraft movie is now in the works.