Activision Blizzard, already a huge name in the games industry, just became quite a bit huger. Yesterday, they announced that they would be purchasing King Digital Entertainment. King owns Candy Crush Saga and Bubble Witch Saga, two of the most popular mobile games ever created.
As a quick reminder, Activision Blizzard owns Call of Duty, Skylanders, and World of Warcraft, and they published Destiny. Their most successful original mobile game to date is Hearthstone, a card game set in the Warcraft universe, though they have also published Angry Birds games in the past. The acquisition of King gives Activision Blizzard access to an even wider mobile audience.
“The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment,” said Activision Blizzard CEO Bobby Kotick. “With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before.”
Activision Blizzard paid $5.9 billion for the acquisition, despite the fact that King was valued at $7 billion just one year ago. But don’t be deceived, this is still a huge amount of money. For comparison, Microsoft paid $2.5 billion for Mojang (of Minecraft fame) and Facebook paid $2 billion for its acquisition of Oculus (makers of the virtual-reality headset Oculus Rift).
It can be very difficult for a mobile game company to recreate the kind of success that King has seen with Candy Crush Saga. According to the Wall Street Journal, over 40% of King’s revenue in the first half of this year came from Candy Crush Saga—a single game. Earlier this year, Rovio (creators of Angry Birds) was forced to lay off hundreds of employees because, like King, their financial model was dependent on the success of just a couple games, and eventually those games started to get old. King’s acquisition is probably great news for King shareholders, who will now see some much needed diversification. We’ll have to wait and see how well the purchase works out for Activision Blizzard.
In the meantime, keep your fingers crossed that we won’t get microtransactions all over our Skylanders.