Gamers and market analysts alike are waking up to some unexpected news this morning: Activision Blizzard will be acquiring King, the makers of Candy Crush Saga (and a variety of other casual mobile games) for $5.9 billion.
That’ll buy a whole lot of gum drops and Swedish fish.
The nitty gritty of the deal says that Activision Blizzard will be buying King’s outstanding shares on the NYSE for $18 a share — but we’re not financial analysts, so if you’re curious about the market implications, you can read the nuts and bolts of the deal in the official press release.
Here at Gamezebo, we’re a little more interested in answering your more pressing questions, like “Huh?” and “Whuuuuuuut?” (We’re also interested in making some joke about this being a really expensive in-app purchase, but we’re just not witty enough to cross the finish line on that one.)
The official company line behind why they’ve made this deal sounds like the sort of non-specific power talk that you expect when one giant company buys another:
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.
If we were to speculate though — and that’s the thing we’re very best at — we’d say that the purchase of King fills a unique void in Activision Blizzard’s portfolio. If we divide Activision Blizzard into two groups, Activision Publishing and Blizzard Entertainment, (man, that was easy), you can see two unique approaches to a changing market that, in my humble opinion, represent some of the boldest and most successful moves in the mobile and free-to-play spaces to date.
On the one hand you have Blizzard, a company that seems to have mastered free-to-play gaming for the “traditional” gamer. Developing successful free-to-play formulas is difficult no matter how you slice it, but doing so for core gamers who (and yes, I’m generalizing) are vehemently opposed to the model is nothing short of miraculous. But with games like Hearthstone and Heroes of the Storm offering true F2P experiences, and classics like Starcraft II, Diablo III and World of Warcraft getting “free-to-start” twists, I’d be hard-pressed to find a company that’s doing it better right now.
In fact, they’re doing it so well that people are scratching their heads about their next release, Overwatch, wondering how (or if) the company will try to F2Pify a game that so clearly deserves a premium price tag.
On the other hand is Activision: a company focused on AAA, full-priced console games that has boldly started releasing some of those very same games with a free-to-start twist on mobile. Anyone can go and download Guitar Hero Live for free, unlock all the songs for $49, or go buy a guitar and have the complete experience, just like a console owner. They did something similar with Skylanders Trap Team last year, and will be doing so again shortly with Skylanders Superchargers.
In short, this is a company that gets free-to-play. But the one thing they’re missing is that traditionally casual focus.
If you’re a market watcher, it might be tempting to write King off as a one-hit-wonder. After all, subsequent releases have failed to reach the heights that Candy Crush Saga once did — but this is a company that’s built a stable audience. 8 of the Top 50 grossing games on the App Store belong to King. And when folded into the Activision Blizzard empire? You’ve now opened up a wealth of licensed properties that could help their casual titles reach an even wider audience.
I’m not saying you’ll definitely be getting a Warcraft match-3 RPG that earns gold for your WoW account — but it’s not necessarily a crazy of an idea, either. Cross-game concepts like this could, in theory, result from today’s acquisition.
And even if this is just wishful thinking (which, yes, it probably is), having Activision Blizzard’s money behind King’s properties should be more than enough to give their competitors the heebie jeebies.
In a headline, $5.9 billion may sound like a lot of money. After all, Disney only paid $4 billion for Star Wars. But video games are operating on a huge scale. The September 1st release of Metal Gear Solid V, for example, had bigger first day profits than Jurassic World and Avengers: Age of Ultron combined. When you think about it in those terms, $5.9 billion for King starts to make a little more sense. Activision Blizzard knows what they’re doing in free-to-play, but casual has been their one weak spot. They’ve just bought a $5.9 billion solution.
Really though, there’s just one thing I want out of this deal: a Candy Crush Bubblegum Troll Skylander. Make it happen, Activision Blizzard.