http://www.latimes.com/business/technology/la-fi-tn-activision-blizzard-king-digital-entertainment-20151102-story.html

Someone explains this nonsensical business move. If there is one studio who could steal casual gamers from Candy Crush, it's Activision Blizzard. They have great titles and franchise they can leverage, Call of Duty, Warcraft, Starcraft, etc. Why would acquiring a glorified match-3 game studio King somehow benefits them?

Activision Blizzard have their own developers (this is not IBM wanting to get into the gaming market), have their own infrastructure and talents possibly better than King Entertainment. They could easily steal all that Candy Crush players by making their own. Candy Crush title has already reached its peak and saturated.

This is not making sense at all.

They didn't just buy Candy Crush, they bought the whole of King. I read somewhere that CC is about 38% of Kings revenue...

Why just steal the customers when you can buy them all on a slate?

They also have an organisation with a long and proven track record in optimizing this kind of games, I'm sure that is worth something...

But I agree it would be more fun if they spend that money on new games instead...

What a waste of money , They should use that money on their R&D and creating better games.

its was an easy way to get a jump start on entering the mobile market.

google the financial news about it. its explains it much better.

why develop mobile and F2P capabilities and then compete with King, when you can just buy them out, and then use their capabilities to further dominate the mobile and F2P markets?

as a hard core gamer, i think its a total waste too. and would be until such time as i could play the latest total war title on a $10 tracfone, with all the features of the PC version - which obviously ain't happening for a while.

its was an easy way to get a jump start on entering the mobile market.

google the financial news about it. its explains it much better.

Are you referencing this?

Mobile game market isn't hard to penetrate. If small game studios like Angry Birds, or a lone wolf developer of Flappy Bird, can make a hit with a title that no one has even heard of, a giant studio with plenty of well known titles under its belt like Activision Blizzard should have nothing to worry about. Their titles practically advertise themselves.

I am sure there are a few struggles here and there to get serious with mobile development, but the bulk of the hardwork is the development, porting, and testing, which they can spend some money on, and that money is certainly way less than $5.9B.

This feels more like a political move than business. To say that mobile is the sole reason why AB bought King doesn't quite add up.

its was an easy way to get a jump start on entering the mobile market.

google the financial news about it. its explains it much better.

Are you referencing this?

Mobile game market isn't hard to penetrate. If small game studios like Angry Birds, or a lone wolf developer of Flappy Bird, can make a hit with a title that no one has even heard of, a giant studio with plenty of well known titles under its belt like Activision Blizzard should have nothing to worry about. Their titles practically advertise themselves.

I am sure there are a few struggles here and there to get serious with mobile development, but the bulk of the hardwork is the development, porting, and testing, which they can spend some money on, and that money is certainly way less than $5.9B.

This feels more like a political move than business. To say that mobile is the sole reason why AB bought King doesn't quite add up.

That sounds like survivorship bias to me. Being successful in the mobile space is possible for just about anyone, sure. But it is a highly unreliable prospect. Huge corporations don't tend to like highly unreliable propositions. Purchasing King was a relatively reliable action to take; Activision's initial foundation in the mobile market is thereby large and predictable, and trying to extend that kind of foundation is far more reassuring to the cautious corporate controllers than trying to break into the market from scratch, despite the much larger upfront cost of doing so.

Blizzard seems to have gotten very boring... Maybe its just the rose-colored glasses, but I miss the company that made Warcraft, Warcraft II, Diablo, StarCraft and Warcraft III.

Mobile game market isn't hard to penetrate. If small game studios like Angry Birds, or a lone wolf developer of Flappy Bird, can make a hit with a title that no one has even heard of, a giant studio with plenty of well known titles under its belt like Activision Blizzard should have nothing to worry about. Their titles practically advertise themselves.

Even the best studios can release a dud, and the King audience is probably very different from Blizzard's traditional audience. What does Blizzard have to offer someone whose only video game interest is Candy Crush? Even if Blizzard were interested in going it alone in the mobile market, they would not only have to build the institutional knowledge about that market from scratch (which is a different proposition for a major business with shareholders to soothe and targets to hit), they would also have to compete with King for that same audience. It's a proposition with high upfront costs, uncertain return, and no guarantee of building a sustainable audience. A division developed exclusively in-house could flop, or fold, or fall short of projections, or any number of other things that could hurt the company's reputation, damage stock prices, send talent to competitors, etc. Acquiring King might be a much safer, though expensive, bet.

I am sure there are a few struggles here and there to get serious with mobile development, but the bulk of the hardwork is the development, porting, and testing, which they can spend some money on, and that money is certainly way less than $5.9B.

This feels more like a political move than business. To say that mobile is the sole reason why AB bought King doesn't quite add up.

From the link you posted, the numbers would seem to add up. A $5.9 billion acquisition that is expected to return $36 billion in revenue by year's end (that seems like a typo in the article, though). You could definitely be right about there being other, perhaps stronger, motivations than investment and return. I've heard that companies with a lot of cash on hand often find it attractive to buy other companies rather than invest it other ways-- it bumps up revenue, lets executives say all kinds of impressive things about growth and market penetration and other jargon, and calms investors without having to take a lot of risks.

Activision just bought some 330 million potential new players (granted most of them don't care about console or PC games) but still they are bound to get more users into their main business. And that is also like $6 billion they won't have to pay taxes on this year. While an unknown can get lucky with another Flappy Bird the chances of King putting another another top 10 game is pretty much 100%. And with the how out of control the costs are getting to make AAA games are becoming the ROI on mobile games is way better. Seems like a fairly smart business decision on their part. I know this forum doesn't really care about mobile games but they make a lot of money and that is something that Activision likes.

First law of business - if you think a successful business seems to be doing something stupid, there's almost certainly a good reason that you don't yet understand.

Why would acquiring a glorified match-3 game studio King somehow benefits them?

Going off data from a year ago: King makes $2B a year and has 100M DAU.
They just acquired a behemoth moneymaker and acquired a hundred million new customers.

They could easily steal all that Candy Crush players by making their own.

No... It's very expensive to buy 1 DAU. Especially if you want to buy a hundred million overnight. King have already spent billions themselves on advertising to gain their existing customers. You can't just expend the same amount of money and steal those customers. At best you could steal a small percentage of them, and could try to find new ones that aren't already playing King games, but that would necessarily cost more than what King have already spent, and would take a very long time.

Mobile game market isn't hard to penetrate. If small game studios like Angry Birds, or a lone wolf developer of Flappy Bird, can make a hit with a title that no one has even heard of, a giant studio with plenty of well known titles under its belt like Activision Blizzard should have nothing to worry about. Their titles practically advertise themselves.

There's millions of "angry birds" and "flappy birds" games on mobile that don't make any profits at all. Cherry picking two out of a million is not good odds. And as for advertising themselves, I guess that's true if you pretend that advertising budgets of $100M+ grow on trees The only way to guarantee a hit is to throw a large enough marketing budget at it and buy your way into the charts.