As John Chambers busied himself with preparations for going public, the bank sent the company's vice president to discuss negotiations.
For now, AOL found itself in a precarious position, but their alliance was essentially defunct.
Cisco worked fervently to engage MCI, aiming for a fruitful merger.
In December 1989, a game titled "Lost Vikings," developed by Blizzard, passed Nintendo's review and became the first American game eligible for porting to Nintendo consoles. This decision sparked excitement within the industry, with various American gaming magazines heralding it as the future star of American gaming! However, this recognition irked EA. If Blizzard was deemed the future star, what did that make EA?
As a publicly listed company, EA could not stand idly by while another company overshadowed its prominence. Meanwhile, Sega was making waves by introducing the 16-bit Mega Drive game console in the U.S. and, recognizing the situation, EA chose to partner with Sega to develop sports games for Mega Drive as a strategy to directly confront Nintendo.
"Does Nintendo want to dismiss my EA games? I'll cooperate with their competitor and bring them down!" EA thought. Nintendo had similarly positioned itself as a significant rival, largely due to its incredible success in the gaming marketplace. Known as the "fast gunner" of the gaming world, EA was capable of producing three games in just one month!
However, despite the self-proclaimed superiority of its rival, Nintendo in the 90s stood virtually untouchable. The partnership between EA and Sega was ostensibly motivated by profits, as EA generated substantial revenue producing Nintendo games due to its rapid development pace. Additionally, as a game-publishing company, EA thrived on profiting from the successes of others!
The computer version of "The Lost Vikings" could only run on DOS and had sold inadequately. Its port to Nintendo would likely perform similarly.
After all, this was Blizzard's first game—a trial run. Henry hoped for the development of "Warcraft," but he worried that Blizzard might lack the capability. "Dune II" was the pioneer of real-time strategy games, and while "Warcraft" followed in its footsteps, it was undeniably innovative and set the groundwork for a new genre of networked gameplay.
Henry formulated a plan to acquire Westwood, the game company behind "Dune II", merge the two companies, and develop "Warcraft" cooperatively, injecting his guidance to ensure success. It seemed the safest route.
He rushed over to Blizzard, addressing Mike Morhaime, Allen Adham, and Frank Pearce: "I'm planning to acquire another game company, and then we'll merge to produce a new game together!"
"Mr. Williams," Mike began with some discontent, "when we founded the company, we agreed that we would maintain independent rights to game development. Now you want to impose external game development on us?"
Henry concealed a smile. It appeared that their confidence was dwindling without recent accomplishments!
Henry maintained a friendly demeanor, produced the game design manuscript he had prepared, and handed it to them. "This is a game I designed titled 'Warcraft.' If you're not interested in this project, I'll simply pursue another company!"
The trio examined the blueprint, and as they read, their eyes widened in awe.
Henry's game proposal left Mike and his companions completely astonished. They immediately implored him, "Mr. Williams, we want this game!"
"But didn't you just say you wanted to maintain development independence?" he inquired.
"Mr. Williams, perhaps we were mistaken!" the three men confessed sheepishly.
After considering their response, Henry realized it may not be wise to merge Blizzard and Westwood. Instead, he decided to establish a new game group company. Blizzard and Westwood would operate as subsidiaries, granting them both operational independence while encouraging collaboration and competition.
As the saying goes, competition breeds excellence!
If Blizzard became too comfortable, it might lose its innovative edge. Henry recognized that he couldn't continually guide them to develop successful games.
"Alright, you can retain autonomy on the game, but it must be developed in partnership with other companies. Additionally, I will launch a gaming group company that incorporates Blizzard and operates under that umbrella!"
Mike pondered for a moment before agreeing, "That works for us!" The arrangement allowed them to keep their equity intact and retain rights over game development while also reaping the benefits that came with being part of a larger corporate structure.
Before long, Henry registered a game company in California, naming it Firefly Game Company!
Although Prestige Capital Company encompassed Henry's assets, he decided to transfer shares of Blizzard to his private name to delineate corporate equity. Subsequently, Blizzard would operate under the auspices of Firefly Game Company.
Westwood, founded in 1985, had yet to produce a signature title. Henry initiated talks for an acquisition, securing Westwood with relative ease. To sweeten the deal, he awarded Westwood's founders, Brett Sperry and David Allen, a 10% ownership stake. Without the founders' participation, Westwood would be left without its heart and soul—better to maintain that connection!
Henry invested $3 million to acquire 80% of the company's shares, relocating Westwood to Silicon Valley to operate separately from Blizzard.
Currently, both Westwood and Blizzard would focus on developing "Warcraft," while Firefly Game Company also needed to establish its distribution channels! In fact, setting up these channels was more critical than rushing out "Warcraft!"
The commanding truth was: channel security reigns supreme!
EA's dominance as a global gaming giant stemmed largely from its impeccable distribution channels, allowing it to release games while remaining profitable. With the capability to publish numerous games, it enjoyed a hefty revenue stream. The unfortunate truth was that there was no guarantee of profitability for CDs developed independently, but with a consistent publishing flow, earnings remained steady.
With so many large and small game companies worldwide, competition naturally flourished. By publishing other companies' games too, Firefly could bolster profits, easily reaping hundreds of millions if they secured several successful titles.
Nintendo was, in fact, akin to a publishing company relying on its gaming console platform while profiting via its royalty system.
Likewise, the six major Hollywood studios grew powerful due to their strong distribution networks!
For Firefly Game Company to emerge as a gaming industry leader, establishing formidable distribution channels was paramount! Fortunately, many subsidiaries belonging to Henry already existed and could provide an invaluable head start. Among these, the channels of West German Publishing House were crucial, as many outlets sold books, music CDs, video tapes, and game cards—all in one place. With the support of West German Publishing House, Firefly Game Company would quickly dominate this segment of distribution.
However, this initial step wouldn't suffice. Supermarkets, electronic retail stores, and gaming consoles all awaited expansion from Firefly Game Company.
Establishing a comprehensive distribution channel would be a lengthy journey!
But Henry remained unfazed, brimming with confidence that he'd create a distribution network recognized as the most extensive and efficient in the world!