Adam Creighton, Computer and Video Gaming: Namco Bandai acquiring D3 Publishing

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Adam Creighton, Computer and Video Gaming (Subscribe)

Sunday, February 15, 2009

Namco Bandai acquiring D3 Publishing

Interesting. Namco Bandai has already reached agreement to get 70%, stake in D3 Publishing, and have made their intentions clear they want the other 30%.

Like Square-Enix, Namco Bandai is looking to expand Westward content, and they get that out of the box (in a compelling way) with a bunch of the D3 commercial and casual franchises (Puzzle Quest, anyone?).

Backing up a bit -- why the acquisition in the first place?

Besides being a good move for Namco Bandai for the stated reason of Westward expansion with development and publishing resources and IP (games catalogue), Namco Bandai is more than just about games, and D3 is more than just about games (though that’s their lion’s share).

Namco Bandai is games, animation, and toys (sister spinoff company Nacmo Ltd. (“Namco 2”) is about arcades, theme parks, and R&D; and there are several other Group Companies; etc.).

D3 is about Games, and Music, and Publications, so it’s a good match as far as diversification goes, but it’s not “too odd”. And since the Music and Publications side aren’t primary for D3, they’re easier to divest or terminate after poaching any resourcing that does contribute positively to the acquisition (making cuts to support core business and/or placate shareholders without negatively impacting core business, etc.).

From the acquisition, Namco Bandai also has a goal of “more innovation and providing more efficiency through shared use of technology such as game engines.”

D3 also owns middleware provider Vicious Cycle Software (Ben 10, the Vicious Engine built in service of the Matt Hazard franchise, , etc.).

For obvious reasons, I'm particularly curious as to what they do with this acquisition offering.

A few scenarios (and they could be either / or, combinational, etc.):

Existing titles continue forward – I don’t think Namco Bandai will want to change tech in games in production unless they want to significantly redo their timelines, which -- particularly due to the current economic conditions -- I would think they won't do. They'll either stay on task with potential revenue makers or cancel titles. Like everyone else, they need to desperately accelerate revenue for promising titles (for themselves and for shareholders) and (in this case) shore up acquisition bleed.
Vicious Cycle becomes internal tech – Obviously, this acquisition means the Vicious Engine becomes internal tech, which could cause problems with licensing externally in the future, effectively removing them from the middleware playing field (possibly). Witness Electronic Arts's purchase of Criterion's RenderWare (though there's more to that). Or look at Intel's acquisition of the Offset engine (I'm still fascinated to see what comes out of that).
Hard times for Vicious? – Keep in mind the acquisition is for D3, the parent company for D3 Publishing, the parent company to D3 Publishing US, the parent company of Vicious Cycle, which has the Vicious Cycle Studio, Monkey Bar Games, Vicious Cycle Engine middleware and licensing division, etc. And the Vicious Engine is already used for only a fraction of the overall parent companies' and subsidiaries' titles.

Far be it from me to wish ill will on any people, but there is a scenario that says Namco Bandai could spin out different parts of the acquisition that aren't core to Namco Bandai. This could create opportunities or challenges for Vicious, but it would mean they would no longer have the benefits of a parent company for shoring up revenue, a given distribution pipeline, etc. I expect this scenario (if it’s even realized), to be a longer tailing affair.

And not necessarily related just to Vicious, but if Namco Bandai is not able to get the other 30% stake in the acquisition, I would see them being even more aggressive about the prioritization of their portion of D3’s business affairs.

And if I were running Namco Bandai?

I’d probably split up development resources across other Namco Bandai development projects, seat more Namco Bandai leadership into D3 Namco Bandai Publishing (North America) side of the house, and distribute the Vicious Cycle Engine team (functionally and / or geographically) in support of development projects, and possibly to Namco 2 for R&D.

Oh, and I’d probably try to buy Funimation and Funcom (for both film/commercial animation and game development/publishing). But that's me thinking with my Big Boy World Domination Acquisition pants on.

Out.

Labels: announcements, Business Development, companies