Mark Bracken, vice president of marketing and business development for Adelaide-based games developer Rat Bag, said the ongoing success of the games market will largely shelter the local games development industry from adverse effects.
-Publishers need to keep product in their pipeline for future sales," Bracken told ZDNet Australia. -They need to keep the money coming in, and games are making them money at the moment, so if anything we will be better off."
The boardroom tussle that apparently precipitated Messier's departure was focussed on a series of costly Net acquisitions, including the US$372 million it paid for MP3.com. However, unlike such Internet-based operations Bracken said the games market is a proven revenue raiser for the media giant.
Edgy after a series of high profile corporate collapses, investors reacted strongly to suggestions by French newspaper Le Monde that Vivendi tried to add US$1.35 billion (1.5 billion euros) in profits to its accounts in 2001 through the sale of shares in British Sky Broadcasting.
However, Bracken believes the financial turmoil reflects broad concerns with the corporate sector, rather than a reaction to the multi-faceted entertainment empire Vivendi has created. In fact, Bracken predicts Blizzard Entertainment, the games publishing arm of Vivendi Universal, may play a key role in resuscitating the company.
-The formula is right, Vivendi holds a number of studio licences, and these days games development is all about getting a licence first and then developing the game, as opposed to the other way around," Bracken said. -As far as Vivendi is concerned, Blizzard is just a money-making machine, they don't make a product that doesn't sell under two million units."
New management, new vision?
Messier's exit will likely bring forth new management, whose mission will be to reduce the company's crippling debt, and should clear the way for a re-examination of its VUNet division.
"It would be no surprise that (Messier's successor) will be looking at these assets with a finer eye," said Michael Nathanson, an analyst at investment research firm Sanford Bernstein. "The pressure on the company is to get its balance sheet in order."
Messier had hoped that by merging his French company with US-based Seagram and France's Canal+ he could build a media company to rival AOL Time Warner, with the ability to deliver movies and music over wireless connections and the Internet. However, that vision was blurred by the company's financial difficulties, and the idea of binding the company's various businesses with cyberglue has largely been scrapped.
Messier wouldn't be the first executive to leave a major media company following a big bet on convergence. AOL Time Warner CEO Gerald Levin stepped down in May for personal reasons, but not before the company's stock price plummeted to historic lows as investors openly questioned Levin's wisdom in selling Time Warner to AOL at the height of the dot-com bubble. Messier and Levin both pinned the future of their companies to new media convergence, only to watch their companies' stock collapse in the short term.
Reports have circulated that the board plans to replace Messier with Jean-Rene Fourtou, the vice chairman of drug company Aventis. Meanwhile, a proposal to split up the company has come from members of Vivendi's board--a charge led by the Bronfman family, which sold beverage maker Seagram and entertainment assets such as Universal Pictures to Messier.
Speculation has been rife about what splitting Vivendi could mean for the entertainment world. Some reports speculate that USA Interactive CEO Barry Diller, who sold his entertainment assets to Vivendi, could take a more prominent role in running the Universal film studio.
Coming up short
Coming up short
The possibility of a breakup raises questions about VUNet's future. The unit is miniscule compared to its cousins in the Vivendi family. In the first quarter of 2002, VUNet reported revenue of US$46.6 million on a pro forma basis. However, the division also reported a loss of US$38.6 million before interest, taxes, depreciation and amortisation (EBITDA).
In the same quarter, revenue from Vivendi's film studios reached US$1.1 billion, largely from the success of movies such as "The Scorpion King" and "A Beautiful Mind." And despite an overall slip in CD sales, Universal Music Group continues to be the largest record company in terms of market share.
A representative for VUNet declined to comment but noted that Vivendi's Internet operations remain business at usual.
Although analysts expect changes, some say they will be good if the company is allowed to focus on its strengths.
As it stands, VUNet is an assembly of many acquisitions completed shortly after Vivendi merged with Seagram and formed Vivendi Universal in 2000. The company later bought MP3.com,--despite an infringement suit brought against it by the recording industry--online subscription company EMusic, online gaming sites Uproar and Flipside, sweepstakes site Iwin.com, and music editorial site GetMusic.
Focusing on a few elements rather than the entire mixture may be the vision of Vivendi's new executives, according to analysts.
"Given today's culture and climate, the premium is on discipline and doing things that are real natural extensions of your core competencies, instead of making moves that are highly speculative," said Robert Batchelder, an analyst at research firm Gartner.
