Activision today announced that it has acquired U.K.-based video game developer Bizarre Creations, one of the world’s premier video game developers and a leader in the racing category, a $1.4 billion market that is the fourth most popular video game genre and represents more than 10% of the total video game market worldwide.

This acquisition represents the latest step in Activision’s ongoing strategy to enter new genres. Last year, Activision entered the music rhythm genre through its acquisition of RedOctane’s Guitar Hero franchise, which is one of the fastest growing franchises in the video game industry.

With more than 10 years’ experience in the racing genre, Bizarre Creations is the developer of the innovative multi-million unit franchise Project Gotham Racing, a critically-acclaimed series for the Xbox and Xbox 360. The Project Gotham Racing franchise currently has an average game rating of 89%, according to GameRankings.com and has sold more than 4.5 million units in North America and Europe, according to The NPD Group, Charttrack and Gfk.

Bizarre Creations is currently finishing development on the highly-anticipated third-person action game, The Club, for SEGA, which is due to be released early 2008. They are also the creators of the top-selling arcade game series Geometry Wars on Xbox Live Arcade.

Bizarre Creations and its games have won numerous industry awards including: Best Racing Game for Project Gotham Racing 2 from the prestigious British Academy of Film and Television Arts (BAFTA); the Industry Grand Prix Award from Develop; MCV’s UK Development Team 2006 award; Best Racing/Driving Game from IGN; Game of the Year from OXM and Gamespy for Project Gotham Racing 3; and IGN’s Best XBLA Game for Geometry Wars: Retro Evolved.

"Activision continues to grow and drive greater value for our shareholders by broadening our portfolio and entering new gaming categories with strong global appeal," said Robert Kotick, Chairman and CEO of Activision, Inc. "Bizarre Creations is the leading independent developer with a proven track record in developing highly successful and influential original properties, especially in the racing field. They are one of the most innovative and creative studios in the industry, and we are very excited to welcome this talented creative team to Activision."

Mike Griffith, President and CEO of Activision Publishing, Inc., added, "Bizarre Creations will play an important role in our growth strategy as we develop an original new intellectual property for this important racing segment, expand our portfolio in other genres and utilize their proprietary technology for cross platform development."

Martyn Chudley, Managing Director of Bizarre Creations, said, "Our goal at Bizarre Creations has always been to do all we can to nurture our creative and passionate teams, who excel at and enjoy what they do. Activision’s independent studio model will continue giving us creative freedom to build exciting new brands. Their financial support and marketing prowess will also enable us to build upon the commercial success that we currently enjoy, and take the company - and our games - to an even higher level."

Under the terms of the acquisition, Bizarre Creations will become a wholly owned subsidiary of Activision and the company’s management team and employees continue with the company as their teams start to develop two new AAA titles alongside their current projects. The 160-person development studio is located in Liverpool, England. Financial terms of the agreement were not disclosed. Activision expects that its first game from Bizarre Creations will be released after fiscal year 2009.

So what do you think of this news? Is it a blow for Microsoft? let us know your thoughts as usual.