Activision’s Candy Crush Deal Proves That Girls Got Game Too

4 Nov 2015 | Author: | No comments yet »

‘Call of Duty’ meet ‘Candy Crush’: A look at 5 major game mergers.

Los Angeles: Activision’s deal unveiled Tuesday to acquire “Candy Crush” publisher King Entertainment for $5.9 billion eclipses several recent video game industry acquisitions.Video game publishing giant Activision Blizzard will buy King Digital Entertainment, the creator of popular mobile game Candy Crush for $US5.9 billion. Activision, whose games include the “Call of Duty” series, said in a statement the purchase “will create one of the largest global entertainment networks with over half a billion combined monthly active users in 196 countries.” California-based Activision has some of the best-known video game titles on the market, including “World of Warcraft,” “Diablo,” “Guitar Hero,” “Skylander” and most recently “Destiny.” Activision said it believes the addition of King’s business, which it called highly-complementary, will position it “as a global leader in interactive entertainment across mobile, console and PC platforms.” It added that the move “positions the company for future growth.” Since 2003 King Digital has “built one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter (of) 2015,” King CEO Riccardo Zacconi said in the joint statement.

The buyer, Activision Blizzard Inc., is making a massive bet on a sector expected to grow by 15% a year as video games migrate at light speed from consoles to mobile devices, according to investment bank Digi-Capital. Activision Blizzard and King: The publisher of the successful “Call of Duty,” ”Skylanders” and “Guitar Hero” series will be adding another popular — but not growing — franchise to its arsenal: “Candy Crush.” Activision Blizzard’s $5.9 billion purchase of mobile game maker King Entertainment would sweeten the publisher’s push into mobile gaming in recent years, following the release of “Call of Duty” and “Skylanders” editions for portable devices. 2. The purchase, approved by the boards of directors of both companies, has King’s shareholders receiving $18.00 in cash per share “comprising a total equity value of $5.9 billion and an enterprise value of $5.0 billion,” according to the statement.

The agreement adds a top mobile publisher to the arsenal of the biggest US video-game maker, positioning Activision to capitalise on growing smartphone-based play. By comparison, last year Microsoft Corp. paid $2.5 billion for Mojang, the developer of the wildly popular building game “Minecraft,” and paid $970 million for game streaming site Twitch. The deal dwarfs other recent entertainment acquisitions such as Disney buying Lucasfilm for $US4 billion, Microsoft purchasing Minecraft for $US2.5 billion and Amazon acquiring Twitch for $US970 million. And now it’s betting on mobile games: Just about every smartphone owner has a few of them loaded, and an expanding base of hardcore mobile gamers, with money and time to spare, could mean big profit.

Zynga of “Farmville” fame and “Angry Birds” maker Rovio Entertainment know this all too well; both companies have moved to cut expenses this year to squeeze out profits as they struggle to find new stars. Amazon and Twitch: Despite a reported acquisition attempt by Google, online retail giant Amazon successfully captured video game streaming service Twitch for $970 million in 2014. In the year since Amazon bought Twitch, Google competitively launched a dedicated rendition of YouTube for gamers, while Twitch hosted its first fan convention.

But they expected King to see whether four new games slated to debut over the next year could restore revenue growth and maintain profit margins before reshuffling. King, based in Dublin, will continue to be run by chief executive Riccardo Zacconi as an independent unit of Activision with the deal expected to be completed by spring 2016. Mobile gaming is “the largest and fastest-growing area of interactive entertainment,” expected to generate more than “$36 billion of revenue by the end of 2015 and grow cumulatively by over 50 percent from 2015 to 2019,” the statement read. King’s two hits, “Candy Crush Saga” and “Candy Crush Soda Saga,” were among the six most-downloaded game apps across the world in September, the firm said.

Founded in 2003 as a gaming website, King counts among its chief rivals Asian technology companies Tencent and Mixi as well as Finland-based “Clash of Clans” developer Supercell. Candy Crush remains a top seller – it is third in downloads in the Apple App store – but the company has struggled to replicate the game’s success. Nintendo, the console and game maker, still hasn’t released a mobile game, and last week said that the debut of its first one would be delayed until March. “But when they saw what the combined network would do, to be able to reach audiences around the world, I think they found there would be more opportunity to express themselves creatively and commercially,” he said. But analysts have wondered whether King could generate enough sales off new games fast enough to make up for falling revenue from existing titles, whose popularity has begun to wane. King, with 1,600 employees, will become a stand-alone operating division, alongside Activision Publishing, Blizzard Entertainment and a newly announced but yet-to-be-named e-sports division.

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