Activision Buys Candy Crush Maker, King, for $5.9 Billion
The company behind the biggest triple-A game on the market has purchased the company behind the biggest mobile game on the market. Activision, a publisher whose portfolio includes Call of Duty among other hits, has purchased King Digital Entertainment for $5.9 billion.
Activision CEO Bobby Kotick says that the new combined entity is the largest and most profitable company in “interactive entertainment.” In the press release announcing the purcahse, Activision claims that its non-GAAP revenue for the last twelve months is $4.7 billion while King’s is said to be $2.1 billion. The two companies are said to have combined earnings before interest, taxes, depreciation and amortization of $2.5 billion. With those numbers, it’s probably not an inaccurate statement.
The deal is expected to be completed in Spring 2016. There are a few hoops that need to be cleared. The deal has to go to King’s shareholders for approval. Because King is based in Ireland, the deal has to be approved by the Irish High Court and antitrust authorities before getting legal approval.
The question really is why Activision purchased King. In its press release, Activision talked about expanding its audience to include more casual gamers and gamers in developing countries through King’s games.They also mentioned diversifying their portfolio (code for a backup plan in case interest in the status quo drops off) and cross-promotional opportunities (so Hearthstone ads in your game of Candy Crush).
What Activision is really paying for is expertise in the mobile space. That’s where everyone sees the growth opportunities but it’s also where Activision is weakest. EA has a pretty good grasp of the mobile space. Square Enix is trying to figure it out and slowly figuring it out with the latest Lara Croft, Hitman and Final Fantasy offerings. And now Nintendo is dipping its toe into mobile through a partnership with DeNA.
Right now, all Activision really has in the mobile space are some Skylanders games that I didn’t know existed until I did research for this article and Hearthstone. While King isn’t exactly a mobile action game dev or even has what a very diverse range of gameplay mechanics in its games, they at least know how to make successful mobile games. If Activision wants to leverage their massive franchises (and they have a lot of big franchises) in the mobile space, they could certainly do worse. The status quo wasn’t working so this is worth a try.
Source: Activision Blizzard