Just when you thought the return of Vivendi into mobile games was big news, its former subsidiary and now an independent company Activision Blizzard too is set to jump onto the mobile games bandwagon.
Activision Blizzard late last night announced that it was acquiring King Digital Entertainment for $5.9 billion, thus combining the two giants from different video game platforms.
A statement from the company says that it is positioning itself for domination in all the segments of gaming:
Activision Blizzard believes that the addition of King’s highly-complementary business will position Activision Blizzard as a global leader in interactive entertainment across mobile, console and PC platforms, and positions the company for future growth. The combined company will have a world-class interactive entertainment portfolio of top-performing franchises, including two of the top five highest-grossing mobile games in the U.S. (Candy Crush Saga, Candy Crush Soda Saga), the world’s most successful console game franchise (Call of Duty), and the world’s most successful personal computing franchise (World of Warcraft), as well as such well known franchises as Blizzard Entertainment’s Hearthstone: Heroes of Warcraft, StarCraft, and Diablo and Activision Publishing’s Guitar Hero, Skylanders and Destiny, along with over 1,000 game titles in its library.
King since the launch of Candy Crush Saga in 2012 has positioned itself as the ‘King’ of casual games in the free-to-play market. Ever since the game has been the highest grosser across the App stores and still continues to rule the roost.
The same cannot be said for its other games which have not been able to match the success of Candy Crush and the company has seen a drop in its financials. Consumer spending on Candy Crush saw a huge splash of $1.33 billion in revenue for 2014 (just on the match-3 game) according to King’s financial statement but fell 13 per cent y-o-y in the second quarter of this year, suggesting that King may just fall into the category of being a one-hit wonder.
Also looking at Rovio, which saw tremendous success with Angry Birds, its 51st game in 2009, has since been trying to replicate its success with its other games, but has failed miserably. Recently the company laid off 213 people from its educational division and is facing a tough time coping in this battle to conquer heavily cluttered free-to-play market. Its profits too dropped 73 per cent in 2014.
Activision is paying $18 a share, a 20 per cent premium to King’s $14.96 per share price and is using $3.4 billion in cash, plus a $2.3 billion loan, to pay for the deal.
“The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment. 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,” said Activision, CEO, Bobby Kotick in a statement.
The acquisition will take place through a subsidiary ABS Partners, Activision said and will be accretive to 2016 adjusted revenue and per-share earnings by about 30 per cent. The companies will have a combined active monthly user base of nearly 550 million, Activision said.
King, which is based in the United Kingdom and has 1,600 employees, will continue to operate as an independent unit under CEO Riccardo Zacconi.