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MarketWatch/WSJ reports:
Activision Blizzard Inc. late Monday said it is acquiring King Digital Entertainment PLC for $3.4 billion in cash plus debt, combining two giants in the videogame industry.
The deal gives Activision a powerhouse in console videogames with hit franchises such as "Call of Duty" and "World of Warcraft," a beachhead in the fast-growing business of mobile games.
King shot to fame in 2012 with its hit "Candy Crush Saga," helping to position casual and inexpensive smartphone apps as a viable alternative to pricier games played on TVs and personal computers. While many of King's other mobile games haven't reached the same level of success, "Candy Crush" and its sequel are still among the top-grossing apps on Apple Inc.'s App Store.
Activision can't pay for the full value of Candy Crush out of pocket:
Activision said it is paying $18 a share, a 20% premium to King's 4 p.m. ET price of $14.96 on the New York Stock Exchange on Oct. 30. On Monday, King shares rose 3.9% to $15.54. Activision is using $3.4 billion in cash, plus a $2.3 billion loan, to pay for the deal.
(Score: 4, Insightful) by jmorris on Wednesday November 04 2015, @12:55AM
That valuation is simply put, insane. They are a one hit wonder, most of the revenue is already banked and does anyone think there is another five billion worth of in-app purchases left in the Candy Crush Saga players? Plus all of those inane TV ads have to keep being paid for to keep the idiots playing at all. This is what a market top looks like. Extra frothy valuations, lots of questionable M&A activity.
(Score: 4, Insightful) by bob_super on Wednesday November 04 2015, @01:02AM
It's not too far from other recent valuations for holders of massive customer databases full of excessively personal info.
Oh, and this one makes an old game, too.
(Score: 2) by frojack on Wednesday November 04 2015, @02:46AM
It does move Activation into mobile devices, where they have been struggling to produce anything of interest.
If the Candy Crush designers have even one more hit using their current engine they may pay for themselves in a year.
But mostly I suspect its an IP grab.
No, you are mistaken. I've always had this sig.
(Score: 1) by khallow on Wednesday November 04 2015, @03:29PM
If the Candy Crush designers have even one more hit using their current engine they may pay for themselves in a year.
It'll need to be a far bigger hit than their current ones were to do that.
(Score: 2) by Phoenix666 on Wednesday November 04 2015, @03:45PM
What IP is there to grab? There's nothing remarkable about the code behind that game. They got lucky with an initial combination, a la the Eternal Golden Braid, and then the MBAs moved in and fucked it up.
Washington DC delenda est.
(Score: 2) by frojack on Wednesday November 04 2015, @07:08PM
For some values of "fucked".
5.9 Billion buys a yacht or two, wouldn't you think?
No, you are mistaken. I've always had this sig.
(Score: 3, Interesting) by Tramii on Wednesday November 04 2015, @05:22PM
It does move Activation into mobile devices, where they have been struggling to produce anything of interest.
What about Hearthstone? It supposedly generates $20 million in revenue per month: http://gamerant.com/heartstone-profit-monthly-900/ [gamerant.com]
(Score: 3, Informative) by Non Sequor on Wednesday November 04 2015, @02:02AM
The IP will be worthless and the user base will be gone within 5 years. These things are a terrible investment after they've already made it big. Apparently Rovio (of Angry Birds fame) had their profit fall 73% in 2014.
It would make more sense to invest in these things as some kind of limited partnership: https://en.wikipedia.org/wiki/Limited_partnership#United_States [wikipedia.org]
You set up a studio that interviews indie developers and funds some of them so that you can throw a bunch of game concepts out into the market and you can hopefully get a decent success rate on some of the concepts that are wildly profitable for maybe 5 years and then burn out to make up for the ones that never take off.
No one is going to have a career working on Angry Birds or Candy Crush. They're just fads and they aren't predictable enough to make them repeatable. It is okay for something to be ephemeral.
Write your congressman. Tell him he sucks.
(Score: 2) by frojack on Wednesday November 04 2015, @02:51AM
The IP will be worthless and the user base will be gone within 5 years.
Why? Is the mobile industry suddenly going to shift to a different processor or something that makes the render engine useless?
Are all those players going to swear off any more games using that engine?
5 years is a long time to reel in profits, not only from Candy Crush, and follow ons, but also to move some of the Activision titles that have never done well on mobile platforms. They King programmers may pay for themselves within 2 years, let alone 5.
No, you are mistaken. I've always had this sig.
(Score: 2) by Non Sequor on Wednesday November 04 2015, @04:04AM
As far as I can tell, all of these types of games end up showing some signs that people get tired of the gameplay and/or become less susceptible to the monetization scheme. Even with a new coat of pant one or two times per year it starts to wear thinner as time goes on and you have to come up with something much different to generate the same kinds of profits. The trouble is, someone else is probably going to come up with something "much different" before your company does. The second act is the problem here. That was the basis for my suggestion that you set these things up to be a one act play to begin with (where I'm including follow-up titles and merchandising as part of that one act).
From Wikipedia, it looks like Candy Crush's revenue peaked in 2013 and sharply fell in 2014. Both of these years are $1b+, but Activision isn't going to get that. They're getting post-peak years and while it's going to continue to operate at a profit for a little while, the $3.2b valuation only makes sense if you have some level of belief that 2013 and 2014 are indicative of something that King's management can repeat, if even at a lower level.
Write your congressman. Tell him he sucks.
(Score: 2) by frojack on Wednesday November 04 2015, @07:08AM
This news article:
http://www.bloomberg.com/news/articles/2015-11-04/activision-s-candy-crush-deal-proves-that-girls-got-game-too [bloomberg.com]
suggests that part of the draw was the percentage of women that Candy Crush type games reel in.
That might mean that the historical track record of the gaming industry may be due for a rewrite.
No, you are mistaken. I've always had this sig.
(Score: 3, Insightful) by RamiK on Wednesday November 04 2015, @02:57AM
If you're trying to convince the guys who brought you Call of Duty: Modern Black Warfare Ops XXIV that they need to be original to keep selling... Well friend, you're barking at the wrong tree.
Besides, they're probably right. If the same bored office workers can keep on playing solitaire and minesweeper decades after decades, then they'll never get tired of Candy Crush.
compiling...
(Score: 2) by Pino P on Wednesday November 04 2015, @03:37AM
But why pay microtransactions for Bubble Witch when Frozen Bubble is free and Free?
(Score: 0) by Anonymous Coward on Wednesday November 04 2015, @05:34AM
Microsoft made Solitaire and Minesweeper "free-to-play"; they now charge $10 a year (or $1.50 a month) to make ads go away. That's Microsoft's play to make Windows users stop "freeloading" on Solitaire and Minesweeper.
(Score: 2) by davester666 on Wednesday November 04 2015, @04:29AM
Just like a lot of other tech mergers, in a year or two, there will be a 90+% writedown of the "asset", with an "oh, well, at least we tried".