Yet although the recipe for success is basically the same, King Digital’s evolution was entirely different from Zynga’s.
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But while you might be thinking that’s a lot of money to drop on even one of the highest-grossing mobile games around, it’s clear that Activision isn’t just looking at adding the sweets-matching puzzle game to its shelf alongside Call of Duty and Hearthstone.
Jefferies analysts Brian Pitz and Brian Fitzgerald said buying King, based in Dublin, gets Activision into the sector, but said that replicating the success of Candy Crush Saga is a daunting task.
The deal will create the second biggest game company in the world, after Tencent, says the research firm Newzoo. It operates in three segments: Activision Publishing, Inc. and its subsidiaries engaged in publishing interactive entertainment software products and downloadable content; Blizzard Entertainment, Inc. and its subsidiaries engaged in publishing real-time strategy, role-playing PC games and online subscription-based games, and Activision Blizzard Distribution, which is engaged in distributing interactive entertainment software and hardware products. Not to mention its colossal properties such as World of Warcraft and Starcraft when the company merged with another major player in the gaming industry nearly eight years ago.
Under the terms, King’s shareholders will receive $18 per share in cash which represents a 20-per cent premium over King’s stock price on 30 October, according to a joint statement.
“Candy Crush Saga” established King Digital as a global gaming power on cell phones and other mobile devices.
More importantly, the deal will allow Activision to go beyond traditional gaming systems and into the burgeoning mobile games market. The deal is worth $5.9 billion; Activision will pay $3.6 billion in cash in addition to a $2.3 billion loan from the Bank of America Merrill Lynch and Goldman Sachs Bank USA.
The game is already plagued with bugs and complaints, where accidental purchases are made with the unconfirmed click of a button and draining user’s wallets, and this new development could cause many more bugs. According to Fortune, King’s 500 million monthly active users has been declining, which, in turn, resulted to the developer’s decline in revenue. Company shares were at $17.73 on Tuesday.
However, compared to the share price of $22.50 King fetched during its initial public offering previous year, it sells at a discount of 20%.
After the acquisition, Riccardo Zacconi – the co-founder of King – will continue to serve as the company’s CEO.
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“The combined revenues and profits solidify our position as the largest, most profitable standalone company in interactive entertainment”, said Activision Blizzard CEO Bobby Kotick.
