Activision Blizzard Buys King for $5.9 Billion; Push to Mobile

Activision Blizzard’s 3Q Earnings report brought a greater-than-average amount of news:

Less than two weeks after naming new leadership to a new eSports division, the interactive entertainment company announced it has “King Digital Entertainment for $5.9 billion in equity value ($5.0 billion in enterprise value).” Full company presentation here.

Victoria Ho writes in Mashable that “the price tag of $5.9 billion is a massive sum to pay for King, which has in recent years struggled to maintain its reign over mobile gamers. Since the success of Candy Crush Saga, which has topped charts for years since its debut in 2011, King hasn’t been able to produce an equivalent title.”

“The company has produced some 200 titles, but none have surpassed Candy Crush.”

But much of the analysis points to a clear reason for the acquisition: Mobile.

Writes Mashable: “King commands the attention of some 340 million monthly active players, making it one of the world’s biggest mobile publishers.”

“Activision, on the other hand, is a multi-billion dollar stalwart of the bigger world of traditional video games, covering desktop and console titles, and rivals firms like Electronic Arts (EA). Activision owns blockbuster franchises like Call of Duty and the World of Warcraft series, which it acquired after a $9.8 billion merger in 2008 with Blizzard Entertainment owner Vivendi.”

“With the growth of mobile gaming, Activision has started to take this segment seriously. Currently, mobile games already contribute 11% of its revenue, similar to EA, which makes 12% from mobile.”

The Street reports that Activision CEO Bobby Kotick said during an investor call on Nov. 3, “We will have one of the largest entertainment networks in the world, with over half a billion monthly average users.”

In other news from the earnings release, while the company had better-than-expected results with digital earnings growing 38% Year-Over-Year, one of its big titles might be shrinking.

Tech Times reports that “despite the anticipation surrounding the release of World of Warcraft Legion, Activision Blizzard Inc. announced in its latest earnings report the number of World of Warcraft subscribers has fallen to 5.5 million, down 100,000 from just three months ago.”

“Moving forward, Activision Blizzard will not report Warcraft‘s subscription numbers but instead focus on other metrics, although it did not specify what these metrics will be. Still, the report states that World of Warcraft remains the number one subscription-based MMORPG in the world.”

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