Activision Blizzard Acquiring King Digital Entertainment

Santa Monica, California-based Activision Blizzard is an interactive entertainment major known for its games Call of Duty, Destiny, Skylanders, World of Warcraft and others. It added that the move “positions the company for future growth”.

And while “Candy Crush” is notoriously addictive, it has waned in popularity for a few time, and it’s unclear when or if King Digital’s next hit mobile game will come.

Singapore’s Nonstop Games, which developed multiplayer mobile strategy game Heroes Of Honor, was acquired by King in August a year ago for up to US$125 million.

Mobile games are meant to be played while waiting in line at Starbucks, while hardcore gamers may spend hours on a console or online game, said Michael Pachter with Wedbush Securities. According to the research firm Newzoo, mobile games will surpass $40 billion in revenues over the next three years, yet, Kotick realized his company really didn’t understand how to make casual games well.

Chances are also that most of the people logged in to play are doing it for free and exit without spending a single cent.

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.

“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, ‘” he continued.

While King is profitable, its revenue is sliding.

“Candy Crush” invites on Facebook may be irritating, but they certainly are popular.

“We expect a heavy dose of scepticism from investors especially given the large deal size”, said the brokerage, which nonetheless recommended that investors buy Activision shares.

The deal also will help Activision diversify its customer base.

Activision’s fortunes tend to hinge on its latest “Call of Duty” game. Launched in 2003, the violent, first-person shooter games generated $11 billion in sales through the end of the 2014 fiscal year. Quite simply, games produced by King Digital Entertainment have received much appeal due to its ease of use and accessibility to its users. “King has a truly fantastic management team and over 1,600 incredibly talented employees and we are excited to welcome them into the Activision Blizzard family”. According to them, “The combination increases Activision’s scope and scale, but more importantly gives the company another top-quality IP (intellectual property) creator”. Activision is taking over premium of 16 percent over King’s current market value, showing how the company’s affluences have highlighted since its 2012 initial public offering at $22.50 per share and is paying $18 per share in cash.