With the acquisition of King, US developer Activision Blizzard, known for such popular video games as Call of Duty or World of Warcraft, made it pretty clear that it also wants to focus on mobile gaming.
The acquisition price was of $5.9 billion, and just to put things into perspective, Disney paid $4 billion for Lucasfilm, the film production company that brought us Star Wars. King is the largest game developer ever in the history of Facebook.com, but I still think that the company is overvalued.
“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,” stated Activision Blizzard chief executive Bobby Kotick in an interview with the Reuters news agency.
The main goal of Activision Blizzard in this whole deal is to increase its demographic, with a particular focus on female gamers, who represent 60% of King’s audience. Why do so many girls and women enjoy Candy Crush Saga and the other, less popular games made by the social games company? The answer to that question is rather simple: there’s no hardware needed, apart from a smartphone or tablet. Female gamers who play Candy Crush Saga don’t need to invest in expensive mechanical keyboards, futuristic mice, blazing fast monitors, or headphones with a crystal clear sound.
That’s exactly what Activision Blizzard was lacking, as its own games (Call of Duty, in particular) require either expensive video game consoles or gaming computers to be played. On top of that, the games are not free, costing between $30 and $60. Candy Crush Saga, King’s
With offices in both Dublin and Stockholm, King Digital Entertainment will continue to operate as an independent unit under chief executive Riccardo Zacconi.
As Zacconi explained, “Since 2003, we have built one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter 2015. We believe that the acquisition will position us very well for the next phase of our company’s evolution.”
Piers Harding-Rolls, Head of Games at IHS Technology, emphasized the impact that King’s most popular game has had: “Candy Crush Saga was such a massive global hit, it’s a very difficult challenge to replicate that even if they release sequels or expansions to the original theme or release new titles. The share price reflects that. It’s a big move by Activision who have gained access to an audience that does not overlap with its existing market, particularly in Asia.”
More precisely, King’s shares were $15.54 when the bell rang yesterday, which is a lot more than Zynga’s $2.45. Activision Blizzard probably wanted to seem generous, as it offered King $18 per share.
“For Activision, it will provide a step-change in its penetration of the mobile gaming channel, which is the fastest growing segment of the video games market. For King, it offers the potential to leverage its mobile and social gaming expertise across Activision’s large games portfolio and reduces its reliance on its own blockbuster games like Candy Crush,” concluded analyst Eric Opara at Edison Investment Research.
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