When Activision and Vivendi Games announced in December 2007 that they would be merging in an mmoabc8.9 billion deal, it floored industry watchers, if not simply for the sheer scope of the deal.

At the time of the announcement, Activision and Vivendi Games said that their combined revenues would hit around $3.8 billion for calendar 2007.

EA"s most recent fiscal year brought in $3.67 billion.

With the Activision Blizzard deal closing this week, we now officially have a Goliath vs. Goliath situation.

But while both have size on their side, they"re still both very different companies in different stages. Activision Blizzard, it would seem, can do no wrong. The Call of Duty franchise is bigger than ever (EA"s Medal of Honor now pales in comparison), Guitar Hero is a mainstream darling (EA-distributed Rock Band is still gaining traction) and let"s not even mention Blizzard"s World of Warcraft (bigger than everything) or Diablo III... or StarCraft 2 (both of which will be huge).

EA"s not exactly hurting by comparison, but right now, the company is focusing on establishing new, unproven franchises: Spore, Skate, Army of Two, Dragon Age, Rock Band, Mirror"s Edge, Dead Space, FaceBreaker, for example. Sure, the staples are still there, from Madden to Tiger to Battlefield, but EA"s in reboot mode while Activision is stomping around like some kind of crazed hit-making, franchise-flexing Yeti.

Analyst Colin Sebastian with Lazard Capital Markets offers, "There is no doubt that Activision Blizzard has more product momentum at this point, but I think where you see the biggest difference is actually in the profit margins."

Sebastian said that on a similar revenue basis, he expects Activision Blizzard to generate operating margins of less than 25 percent this year versus greater than 15 percent for EA.

"We actually expect solid growth this year from EA. They have a lot of titles launching, particularly in the second half of the fiscal year," Sebastian forecasts.

IDC analyst Billy Pidgeon agrees that while Activision Blizzard and EA are at different points in their respective cycles, EA is laying the groundwork for big franchises, and could even be ahead of the curve.

"Yes, Activision Blizzard has killer franchises and the WoW money printer, and [Bobby Kotick] is positioning Activision as the biggest mega-publisher in the industry.

"However, it"s presumptious to assume Activision Blizzard will be holding at top position, as I see EA creating new IP ahead of crucial industry trends, while Activision Blizzard franchises are primarily mature. For instance, Guitar Hero seems to be following Rock Band in design."

Pidgeon also argues that earning a top spot in the industry could spark the ire of hardcore gamers--and even arrogance with the new megapublisher itself. "Activision Blizzard should realize that with a #1 spot comes "most hated" status from specialist media and fanboys. The new publisher could be gaining a vulnerability of the hubris variety."

Jesse Divnich with Electronic Entertainment Design and Research admits that it"s always risky for a publisher to introduce new intellectual properties--especially at EA"s current rate--but, he says, EA has "always had one of the best track records in the industry for establishing new intellectual properties. Their recent Army of Two release is a great example of that."

Divnich adds that Activision Blizzard and EA do have some overlapping products, such as Rock Band and Guitar Hero; Call of Duty and Medal of Honor; Tony Hawk and Skate. But the market has grown to such a point where two giants can co-exist.

"There is plenty of growth to go around," Divnich claims.

But let"s not forget EA"s instant-growth solution: acquisitions. Our readers know that EA has made a hostile bid for Grand Theft Auto house Take-Two, a transaction valued at over $2.1 billion.

Analyst Michael Pachter says that an EA-Take-Two combo would be bigger than Activision Blizzard, "but only by 10 percent."

Pidgeon says that an EA-Take-Two combination would multiply the strengths of the two companies, and mitigate their weaknesses.

"It is definitely the right move for EA to compete for #1 and for T2 to realize its potential," Pidgeon argues.