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Activision Buys Candy Crush Developer For $5.9B (inquisitr.com)
ForgedArtificer writes: Activision Blizzard purchased Candy Crush Saga developer King Interactive Entertainment last night for a cool $5.9 billion USD; about 20% above market value. The move likely leaves them owning five of the top grossing franchises in the industry. "Candy Crush is one of the most lucrative games in the world, earning some $1.33 billion in revenue in 2014 alone according to a King financial statement. The studio, which operates Candy Crush and a number of similar games including Bubble Witch and Farm Heroes, grossed $529 million in the second quarter of 2015."
We read that in the paper newspaper a few days ago.
A quick custom Google search tell me that the first time this news came out was 20 hours ago. Still I get your point.
I'm surprised that it appeared so late on /. It's usually one of the first place I would expect to read news like this one.
Elok
I'm neither a gamer nor a mobile gamer (the two are kind of different in my head). I'm just kind of shocked that this game is worth that much. I'd assumed (I've never played it) that it was just another mindless click game like the one about birds. If I am mistaken that doesn't really change much, to me. How the hell is the market that large? Who the hell is paying for these games or is it ads and user information that are the real value?
I would not have thought, ten years ago, that the mobile market would have this much capital involved. Someone just won the lottery which is kind of cool, I'm still surprised, however.
"So long and thanks for all the fish."
because mobile game companies have a stellar record of long term success, just look at Rovio and OMGPop.
Branding is like, > 90% of business. Also a HUGE MASSIVE database of analytics and pre-loyal customers.
Are you thinking Zynga?
And i think the price takes that risk in consideration. Over 2 billion a year in revenue, but bought for 6b~. In the current unicorn bubble, that's on the low side.
Their abuse of copyright and trademark to screw over smaller developers is nothing short of legendary. It will be really nice to see them on a shorter leash. Even putting them under EA ownership would have been better than their CEO running wild; mobile development is a much safer place for indie devs with them bought out.
They didn't buy just the coded product, Activision gets a user base and all their delicious data and in-app purchases. Is that sweet or sour ?
True - But candy crush has a crazy install base. Lots of their other games have sucked but they got into the top 10 of games installed every time because of the ads that are inserted into candy crush. Make a slightly non-shit game and the same will happen. Make a good game and you have made a killing.
So, in about a year, do you think we'll be reading blog posts from Bobby Kotick where he talks about how sad and lonely he is?
#DeleteChrome
The kids might move on, but CandyCrush has adult addicts. Those adult addicts have credit cards and aren't afraid to max them out on in-app purchases.
largest accidental in-app purchase ever.
But that's the thing - $2bn in revenue. In profit, you're talking more arounf $600-700m. Mind you, that's still a lot, and it's apparently still seeing growth, but those mobile games are very very fickle. Who's to say that it'll be there in a few years, let alone at least five if you want to just recoup the investment assuming massive profit growth?
Activision better have a plan for turning that single-franchise acquisition into something longer lasting, but seeing their methodology with Guitar Hero and Call of Duty, I wouldn't get my hopes up.
who finds the constant buyouts and mergers disturbing? It seems like everytime I turn around there's another mega merger. Hell, the only thing that's stopping the Cable companies from merging is the FCC. Where are companies getting all this money to go on buying sprees like this? What happened to internal R&D? Remember Bell Labs? Why bother innovating when you can just buy the survivors? Thing is, R&D is expensive. So instead of great new games we get cheap, highly addictive and manipulative stuff like Candy Crush...
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Activision paid over $1billion more for Candy Crush than Disney paid for the Star Wars franchise.
You are welcome on my lawn.
Given the hours people put in it, it's easy.
Ads and in-app upgrades.
Ads are obvious - with the hours people put in it, you can make a lot of money showing ads to players.
The second way is in-app purchases. Like all addictive games, your plays are limited - you can only make so many moves or play so long before you have to stop. But if you can spend $1 to play unlimited for a day or week, that easily rakes in cash.
Personally, I'm of the view that Activision has just paid rather too much money to acquire a developer whose value has already passed its peak. A lot of these mobile developers tend to get big on the basis of one or two apps that "go viral" but then struggle to follow up on initial successes. The mobile gaming market is so over-crowded that producing the next big-hit is a complete crapshoot. Nobody's come up with a formula that works; the Next Big Thing is as likely to be a so-bad-it's-funny Flappy Bird game from some guy in his bedroom as it is to be a carefully crafted and marketed sequel to the Last Big Thing.
That said, I'm not surprised that Activision is looking to diversify. For a long time, it has been dependant upon two big cash cows; World of Warcraft and Call of Duty. Both of those have passed their peak.
World of Warcraft's subscriber numbers have fallen a long way since their peak in the late-Lich King/early Cataclysm era. It's down at around 5 million subscribers now, down from a peak of over 12 million (and Activision/Blizzard have just announced they're going to stop reporting subscriber numbers). 5 million is still a huge user-base for a subscriber-MMO, but they are on a fast downward trend and likely to lose the "world's biggest subscriber MMO" crown soon.
Call of Duty, meanwhile, has also fallen a long way from its sales peak. The peak was achieved in 2011, with 26.5 million sales of Modern Warfare 3. 2012's Black Ops 2 managed an only-slightly-lower 24.4 million, but things went into serious decline after that. 2013's Ghosts sold 16.5 million copies, which Activision blamed at the time on the game coming out during a transition in console generations (the fact that it was a poor game even by Call of Duty standards probably didn't help either). It never reported final numbers for 2014's Advanced Warfare, but did indicate that after 3 months on sale, numbers were "27% lower than Ghosts at a similar point in time", which would indicate that it probably eventually landed somewhere in the 12-13 million sales range.
Now, don't get me wrong, both World of Warcraft and Call of Duty are still spectacularly successful franchises (breaking over 10 million sales is something most AAA developers can only dream of, let along over 20 million). But they are far and away the most important jewels in Activision's crown and if they are in decline, that gives the company a problem.
On that basis, it's not surprising to see them take a punt on something like King (even though I think this was the wrong punt to take).
If they're doing this so they can pull off an inversion, that make so much more sense. The purchase at all, the size of the deal, etc.