Activision To Acquire ‘Candy Crush’ Creator King Digital For $5.9 Billion

Activision is buying King Digital, which created the popular game Candy Crush Saga. Chief executive Bobby Kotick confirmed the acquisition will cost $5.9 billion. However, the purchase will allow Activision Blizzard to reach a broader audience.

As stated on the company website, “Activision Blizzard is the world’s largest interactive gaming company.” Their more popular games, which are played on personal computers and video game consoles, include Call of Duty, Destiny, Guitar Hero, Skylanders, and World of Warcraft.

Although the company has seen great success with their personal computer and console games, they have limited offerings in the mobile gaming market.

Activision Blizzard games have maintained their popularity among PC and console gamers. However, the can be cost prohibitive.

A majority of the games require an expensive video game console or a computer capable of handling advanced graphics.

The games themselves generally cost between $30 and $60, and upgrades often require an additional purchase. Some games, like World of Warcraft, charge a monthly subscription fee in addition to the original purchase price.

Despite the associated costs, PC and console games remain a popular choice for gaming and have made Activision Blizzard one of the biggest names in the industry.

However, with the increased popularity of smartphones and tablets — mobile gaming currently “account[s] accounted for 19 percent of the total dollars spend on video game software.”

Mobile games have grown in popularity, as they are more convenient and cheaper than traditional gaming options.

In stark contrast to personal computer and video console games, a majority of mobile games are free to purchase and play. However, in-game purchases, which include additional levels, energy boosts, and exclusive content, generate billions in revenue.

In the third quarter of 2015, King Digital reported Candy Crush has 474 million monthly active users. The company also reported a 35 percent increase in monthly active users over the last year.

As reported by Fortune, Activision Blizzard offers two games with a mobile presence: Hearthstone and Skylanders. Although both games, which have generated an estimated $36 billion in 2015, are a great success, the company wants to continue expanding their mobile offerings.

Although Activision has a small hand in the mobile market, with more than 25 million active mobile users, King Digital reported more than 400 million.

In addition, King Digital Entertainment’s mobile games will broaden Activision Blizzard’s customer base.

In a recent interview, Kotick confirmed, “60% of King Digital Entertainment’s players were female.” King Digital Entertainment’s Candy Crush Saga has also been a great success in Asia, which “has given it exposure to high growth markets in… China, Japan, and South Korea.”

Although Candy Crush was an instant hit for King Digital, the company has yet to replicate the popular game’s success. CEO Riccardo Zacconi said the Activision’s acquisition of King Digital will likely be beneficial for both companies.

“We believe that the acquisition will position us very well for the next phase of our company’s evolution. We will combine our expertise in mobile and free-to-play with Activision Blizzard’s world-class brands… to bring the best games in the world to millions of players worldwide.”

Edison Investment Research Analyst Eric Opara agrees. In his opinion, the acquisition will allow Activision to tap into “the fastest growing segment of the video games market.” It will also allow King Digital to expand their portfolio beyond Candy Crush Saga.

Activision’s purchase of King Digital is expected to be completed during the second quarter of 2016. However, the purchase will be dependent on shareholder approval. The acquisition is expected to increase Activision’s mobile gaming revenue by more than 50 percent by 2019.

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