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Activision to Buy King Digital for $5.9B
- minimaxir 11y agoThis is the exact same as Zynga buying OMGPOP just for Draw Something, and we know how turned out. Except with 10x bigger numbers. King, in fairness, has multiple games in the App Store at the top of the Top Grossing charts in addition to Candy Crush Saga. No idea what Activision gets out of this. (games like Call of Duty have been sneaking ad-hoc microtransactions similar to F2P games)
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- knorby 11y agoThey get one of the very few companies in mobile gaming who are able to repeatedly make hits. There are lots and lots of one hit wonders, and maybe that's all that King is, but they seem to have somewhat of a leg up on anyone else.
- jrpt 11y agoNot really, the main difference is retention. Candy Crush Saga and Candy Crush Soda Saga have been in the top of the charts for years consistently, whereas Draw Something (or Draw My Thing, the web version) never had good retention from what I hear, or what you'll see if you look up the games in the charts. That being said, it remains to be seen what will happen once Activision takes over.
- loganu 11y agoThat was my first reaction. I played Draw Something for a week or so, 3 years ago. I know many people still play Candy Crush Daily. The purchase to get Draw Something was probably premature, whereas this is a more established market.
- hugh4 11y agoCertainly it beats Draw Something in sticking power, but are people still going to be playing Candy Crush in five years, ten years? There's a lot of other companies I can buy for five billion dollars and be confident that they'll still be selling stuff in a few decades' time, but this one doesn't fill me with confidence. Worse news: the thing that they sell is something that people regret buying.
- princeb 11y agovery few people are going to be playing anything for five years or ten years. few games last that long. activision's world of warcraft has defied all expectation. by all standards the graphics look extremely dated. ea has been making sports games with annual refreshes, and this other major studio that makes the assassins creed series are also doing the same thing - large AAA-level open world games with in app purchases AND annual refreshes, which seems to be the way forward now in video game profitability.
- violentvinyl 11y agoI can't help but wonder how much this has to do with the style of game. As far as software enforced rules go, Draw Something is VERY open, where a game like Candy Crush only accepts input that moves the game in the direction of their choosing (towards purchases usually). Most of my experience with Draw Something comes from watching a child play, and by "play", I mean they would write the word out. I failed to find a way to convincingly explain that this ruins the game. At 8 years old, it's extremely difficult to explain why someone should be following rules that the software doesn't enforce.
- hkmurakami 11y ago
- mbesto 11y ago> No idea what Activision gets out of this. Two things: One, King has more sustainable revenues than OMGPOP. Two, they get to tell their shareholders they are competing in an established area of high growth (i.e. mobile apps).
- Steko 11y ago> exact same as Zynga buying OMGPOP I realize analogies aren't meant to be perfect but when you stress the 'exact same'-ness I'll confess I find Activision is nothing like Zynga here. Zynga was already focused on social/mobile games like OMGPOP and bought them defensively (Words WF was hemorrhaging daily users to Draw Something at time of the purchase). Meanwhile Activision and King are focused in completely different niches and Activision isn't in danger of disappearing or cannibalized to bits by copycats overnight. Second, King appears to be remarkably safer investment than one hit wonder OMGPOP. They've kept multiple titles in the top 20 for several years running and their annual gaming revenue is on scale with Nintendo[1]. Given that Supercell is not on the market is there an aquisition target remotely as good as King which is demonstrably great at the one thing Activision is terrible at? (granted Blizzard is doing well in mobile with Hearthstone). [1] http://www.newzoo.com/wp-content/uploads/2011/06/Small_Newzoo_Top10_Public_Companies_Game_Revenues_FY2014_v2.png http://www.newzoo.com/wp-content/uploads/2011/06/Small_Newzo...
- minimaxir 11y agoFair differentiation. I may be too addicted to hyperbole. :P The F2P environment has been shifting to be more user friendly, and consequently less revenue-generating. I'm still uncertain that King's brand of F2P is sustainable in the long term.
- Steko 11y agoI think revenue is up right alongside user friendliness. Exploitative f2p games fall by the wayside and the most successful formula seems to be: (1) make a game that's great even for people who spend nothing, (2) take advantage of network effects to get a large sticky playerbase and (3) profit off a fraction of the players. Boom Beach is my favorite mobile game by a large margin, I've spent a whopping $5 (on account of relying on the wiki for costs) and there are players in global top 50 who have spent nothing. I feel zero compulsion to spend anything except perhaps to reward the company for hundreds of hours of ad-free gaming.
- rplnt 11y agoSlightly off-topic, but OMGPOP had the best version of Tetris I've ever played. It was multiplayer, had lots of powerups, it was really well done. But then the fucking Tetris Company came (as expected). Can't understand how they can get away with it.
- austenallred 11y agoNo, it's not. Blizzard has no idea how to make money from mobile. King makes an absolutely ungodly amount of money (especially measuring per user). Blizzard knows it needs to be able to make money from mobile eventually. Hence, a huge price. Blizzard isn't just buying King for Candy Crush. They're buying King because they know how to make Candy Crush.
- mcv 11y ago> They're buying King because they know how to make Candy Crush. A coworker was under the impression that King had trouble duplicating the success of Candy Crush. No idea if that's true, but if it is, it could be that it was a lucky hit, and King actually had no idea how to make these games successful. Perhaps Supercell would have been a better target; they seem to have a number of reasonably successful games. More minor successes might be better than a single smash hit if you're more interested in the underlying knowledge.
- fasteddie 11y agoKing has had many top hits in the same vein as CCS. Farm Heroes, Bubble Witch, Pet Rescue etc. None as enduring as CCS, but profitable hits just the same. They have a good formula: get it up cheaply on their web portal, iterate, and launch the winners on mobile. They know what they are doing.
- mcv 11y agoI stand corrected. Or maybe I should inform my coworker that he should stand corrected.
- oli5679 11y agosoda, candy and farm are the same game with slightly tweaked skins and account for 80%+ of King's shrinking share of the Western Casual games market. Meanwhile their non-match games struggle. Your friend was correct...
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- kin 11y agoDraw Something didn't make nearly the amount of money that King is making with all of its games at the top of the grossing charts. OMGPOP's aquisition if I remember correctly was more about users directly competing in Zynga's space, and you're right it didn't work out well for them. Activision/Blizzard doesn't have a huge presence in the casual space. This expands their market and doing so with success. It should at the very least turn out better for them.
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- interesting_att 11y agoTo echo another commentator's post, King has had sustainable revenue across multiple titles for years. Mobile isn't going away, and I don't suspect King will either. The synergy is obvious: King will share plenty of F2P monetization design + data to Activision's other mobile titles. Activision will supply King with basically unlimited funds for expansion + very valuable IP. Any hit that King has on FB/mobile, Activision can bring it onto consoles. And any hit Activision has on the consoles, King can try to bring it on mobile.
- TorKlingberg 11y agoKing has multiple games in the top charts, but they are also spending a lot on advertising. I would like to know what their unit economics are like.
- xfour 11y agoAnd in Cash.. 18.00 a share... 20% premium Thought for sure when I saw the announcement was going to be using the incredible run-up on the ATVI stock we've been seeing lately. How exactly they are going to find the 30% increase in revenue year after year on a company that feels exactly like Zynga in its prime. Perhaps Bobby knows something, but I can't seem to be grasp this one.
- jonknee 11y agoTo be fair, King IPO'd at $22.50 a share so a lot of people lost out on this deal regardless of the premium. It may not be all cash, the details are still pretty scarce. Update: even worse, nearly 30% of the float is short. There will be a lot of red tomorrow.
- forrestthewoods 11y ago"even worse, nearly 30% of the float is short. There will be a lot of red tomorrow." I feel silly asking... but I don't know what this means exactly. Can you explain? :(
- jonknee 11y agoA lot of people were short the stock (e.g. borrowed shares to sell them) and are now on the hook to buy them back for very close to $18 where it will open tomorrow. Shorting is a way to make money when the share price falls. There are always shorts, but King had a ton. If you shorted KING at something greater than $18 you lucked out and have made money, but if you shorted at say $17 you will end up losing $1 per share. It has been under $13 in the past three months so some shorts are going to be losing a fair amount of cash.
- forrestthewoods 11y agoAhhhh. Got it. Thanks!
- flashman 11y ago
- brad0 11y agoHahaha, I remember when Activision said that the mobile space was not worth getting into. Now five years later they're having to spend $5.9B just to continue to be relevant. Riccitello is the reason why EA is still relevant, shame they got rid of him before his mobile efforts paid off.
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- pfisch 11y agoYou know they might be primarily trying to buy user data and analytics data here. I mean the games are good too, but they must have a crazy treasure trove of user data.
- jrpt 11y agoThat can't be correct given the price, and the fact that King had over $2B revenue and $500MM net income last year. These games make millions of dollars a day. They don't get bought just for data. The simplest explanation is that Activision Blizzard wants to go bigger into mobile gaming and sees King as a good acquisition for this.
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- ocdtrekkie 11y agoThese are two companies that deserve each other. (But yeah, it's been a long time since Activision has been relevant, and they haven't done mobile right, obviously, this might be a good first step for them.)
- firebones 11y agoBy what measure do you say that it's been a long time since Activision has been relevant? They have decades long franchises that print money and they've tripled in price in the last 5 years, up 5x over the last decade and 33x in the last 12 years.
- Tloewald 11y agoCough -- Blizzard -- cough.
- ocdtrekkie 11y agoWell, Blizzard was doing its own thing before Activision, and is still doing it now. It's somewhat off on its own thing still in my mind, despite the combined company.
- maccard 11y agoCall of duty? Sky landers? Destiny?
- jpobst 11y agoFrom next year's Call of Duty: You were killed by L33TGUY37. You are out of lives for today, would you like to: - Purchase 5 more lives for $2.99? - Spam your social media for life requests?
- minimaxir 11y agoTo elaborate on the nature of Call of Duty's microtransactions I mentioned above: Call of Duty: Advanced Warfare has Supply Drops (http://callofduty.wikia.com/wiki/Supply_Drop http://callofduty.wikia.com/wiki/Supply_Drop ). At the game's release, you get Supply Drops every few multiplayer games, which have chances of dropping cosmetic gear for your character, or weapons with statistical modifiers. (naturally, you mostly got cosmetic gear). While the weapons w/ modifiers were technically balance, some weapon modifiers synergize a little too well with a given weapon and they became the most-used weapons in the game. Then Infinity Ward added the ability to buy as many Supply Drops as you want for $1.99 each. (Later, they did implement daily challenges for a bonus Supply Drops along with Prestige challenges for the good weapons, in order to make things more fair.)
- Impossible 11y agoInfinity ward didn't make Call of Duty Advanced warfare, it was Sledgehammer games. Everything else seems to check out though. I'm a Sledgehammer employee that worked on the Daily Challenge feature.
- minimaxir 11y agoAh, something felt off as I wrote that. That makes more sense.
- Splines 11y agoThe only way to win is not to play.
- corporatesss 11y ago
- evmar 11y agoIt occurs to me that this is an interesting outlet for all these US megacorps with tons of money overseas that they're unwilling to take back to the US for tax avoidance reasons -- can they purchase non-US companies with that money without repatriating it?
- forrestthewoods 11y agoYes. That was a common point when Microsoft bought Minecraft for 2 billion.
- socalnate1 11y agoI met Bobby Kotick (Activision CEO) as an Intern at Activision in 2008 and I asked him specifically if they were considering getting into "casual games" which were just starting to come into their own. I'll never forget his answer: "No one has figured out how to really make money with casual games yet, but once someone does, we'll just buy them."
- Steko 11y agoShame he didn't move a little faster, he could have had Supercell for half what he ended up paying for King.
- pavs 11y agoDang, I always thought COC was bigger money maker than Candy Crush.
- Steko 11y agoOh it is, but they sold half the company for $1.5 billion in 2013. Seems like a steal today, the other big mobile studios must be chomping at the bit seeing King go for $6 billion and knowing they are all that's left.
- baldfat 11y agoWell here we go with another few days of news with the word "Bubble" in it. I can't imagine that this deal will be profitable, but with profits at $604.5 million it is hard to argue that this deal should have been cheaper.
- hkmurakami 11y agoGotta hand it to SoftBank and Gung-ho for buying half of Supercell for what is now a cheap price.
- yelnatz 11y agoSmart guy.
- austenallred 11y ago"Activision acquires Candy Crush maker King Digital Entertainment for $5.9B in the largest accidental in-app purchase in history." - https://twitter.com/sean_a_rose/status/661398624421605376 https://twitter.com/sean_a_rose/status/661398624421605376
- abrodersen 11y agoAparently a mobile game is worth $2 billion more than the Star Wars franchise.
- erikpukinskis 11y agoIt's easy to forget if you run in geekier circles, but in fact not everyone is in love with the Star Wars universe. I think we underestimate how many people thought it was a great movie, but have no real desire to engage the universe deeper than that.
- runevault 11y agoExcept when the movie was announced it literally crashed every online ticketing site known to man, and last I heard first day sales were something like 8x the previous record. Star Wars is biggest in geek circles, but it is a full on cultural phenomenon.
- skrebbel 11y agoIsn't "the star wars franchise" a bit like what the Angry Birds franchise will be in 20 years? I.e. a zombie cow, pretty much dead, but still occasionally gives some milk
- mathgeek 11y agoStar Wars has been a popular franchise for the last 38 years. Its popularity has gone up and down, but there hasn't been a holiday season in all those years where there wasn't some Star Wars toy on the shelves. Four billion dollars in box office revenue, and over three billion more in home video sales. When you're done thinking about just how much money that is, take a look at how that pales in comparison to the merchandise. http://www.statisticbrain.com/star-wars-total-franchise-revenue/ http://www.statisticbrain.com/star-wars-total-franchise-reve...
- startupguy1293 11y agoThat's actually unbelievable when you think about it. One could make the argument that Disney purchased Lucasfilms for a a great price. Disney bought them at a time when Star Wars games and the latest films were sub par. Now Star War games look great + are on multiple new platforms (namely mobile), and the Star Wars films look great.
- shmerl 11y agoActivision still refuses to release VtM: Bloodlines on GOG. That's about all I care in their context. May be Paradox should buy the rights for it from Activision, like they did with CCP and White Wolf in general.
- catwell 11y agoKing is far from being a "one game company". I had the chance to visit their Stockholm offices two weeks ago (they hosted Lua Workshop 2015) and I was rather impressed. They have a whole pipeline in place that results in a few successful games, but for every successful game many more come out of their creation studio, are playtested, evaluated and (for the most part) killed. They have also invested in a new engine, Defold (http://www.defold.com/ http://www.defold.com/), that should let them iterate faster and that they let other developers use. I hope it will thrive under Activision management.
- seivan 11y agoI've played with Defold it's pretty impressive (apart from Lua ;-), has most things a 2d engine and editor needs, but even gives you access to the lower stuff that I wouldn't know what to do with anyway.
- etiene 11y agoI'm am veeeeeery excited to check defold out!!!! It seems awesome, specially because of Lua.
- mavdi 11y agoI sold Lars Markgren a really bad Flash game for £500 back in 2006. It's incredible how far King has come since then.
- hodder 11y ago38% of the float of King Digital is sold short. Looks like it will be a very tough lesson for some short sellers today.
- oli5679 11y agoInteresting that Activision already had the homegrown Hearthstone, a Warcraft themed card-game that's earning $100 millions/ year.