The $18 billion takeover by Vivendi of Activision changes the rules of the computer game business.

It creates, alongside Electronic Arts, the second console-independent games major — replicating a process that happened in the music industry over the past two decades, where the medium-sized companies disappeared, leaving behind only a handful of majors.

As if to emphasise the point, both EA and Activision Blizzard are about the same size as Warner Music and EMI in the music business — but the games companies sit on inflated valuations of around $18 billion compared to a miserly $1.1 billion for the publicly traded Warner.

With computer games costing far more than CDs, and piracy not yet rampant, now is the time to bulk up. Scale is necessary to avoid overdependence on one franchise — for Vivendi’s Blizzard division was totally tied to the fortunes of Warcraft. If it were to be banned in China, say, it would be a disaster.

Both EA and the new Activision Blizzard both have the strength to stand up to the console makers, Sony, Microsoft and Nintendo. That means they can better weather problems with releases from the manufacturers, and have the financial resources to demand better terms so console makers can’t favour their own developers.

Now, Vivendi will pay no more than $2.4 billion of cash to gain control of the enlarged Activision Blizzard. The French company concedes a minority stake — of between 48 and 32 per cent — but gets Activision’s proven management, who are on a hot streak with Guitar Hero and Call of Duty.

Such good performance never lasts, but the overall business is stronger, and Vivendi has a games major to go alongside the world leading Universal Music. As for everybody else, whether Britain’s little SCi Entertainment, France’s Ubisoft or THQ or Take Two of the US, the middle of the market is going to be uncomfortable place to sit. Expect more deals.

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