That was part of our discussion around our water coolers too. First is depending on the sources, 100M-200M DAU, and some news reports are saying 1B MAU. A billion people, 1/7 of the world's population, looking at them every month.

That is an ENORMOUS number of eyeballs.

In addition to buying one of the biggest current customer-base products and several smaller ones, they also acquired several very attractive development teams. Teams that know how to make a lot of money. They are also difficult to build, and it often takes trial-and-error with many mediocre teams before building an awesome team. Some will quit and a few will be redundant, but most will stick around for at least a few years.

They also acquired a large portfolio of IP. Even if they are crap the company can milk "Candy Crush moremoney" for a while. Brand loyalty goes a LONG way, even when companies trade hands. Even if there are a few bad products people will keep buying for a time in the hopes that the brand will recover. And thinking positively, if products are excellent they can milk that cash cow for many more years, potentially decades. Repeat for all their other products, trademarks, and names, not just Candy Crush.

While there is a chance it doesn't pay out, and sometimes it doesn't pay out, there is also a chance it will pay out handsomely.

alnite, on 03 Nov 2015 - 10:32 AM, said:

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.

Sure, building user base takes a long time, with some risks involved. It's a lot easier to just buy them outright, merge the accounting together to show a nice fat revenue. Bonuses for all the executives, yay!

AB isn't buying King because "it wants to penetrate the mobile market" that "mobile is [their] weakness" like some people are saying. It just wants the money. Now the question is, why now? Why not 2-3 years ago when Candy Crush is rising? Looking at the financials, KING is showing massive growth spurt in this last two years, with cash flow at $500M last year, its all-time highest.

But has King reached its revenue potential? Can it grow more? Or will it just drop flat on its face as fast as it has risen? Look at Zynga, with all its games that once ruled the casual market. They were King back then.

Brand loyalty goes a LONG way, even when companies trade hands.

I think that is the question here. How much brand loyalty remains in Candy Crush, and any of their "Saga" games? At some point people just don't pay attention to the same thing anymore. Unlike Warcraft/Starcraft, you can build an entire universe around that brand. Candy Crush? Unless AB's writers are putting serious creative thoughts into this, the hype will fade.

There are plenty of reasons for Activision / Blizzard to buy King. Activision's current model is making games and either selling them or letting you subscribe to them. Kings business model is harvesting as much data as possible about its users then tweeking the games to try to force them into making IAP.

Blizzard employ games designers whilst King employ data scientists.

Revenue from casual games is increasing whilst revenue from traditional games is fairly consistent.
The technology stack and skill set required to develop massive multiplayer casual games like Candy Crush is completely different to that used for Blizzards existing MMOs. As is the skill set required to develop, maintain and run it.

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.

By the you are suggesting Activision's main business is PC games but, who's to say that the shareholders at Activision haven't checked the financials and decided casual and mobile is where the future of their company lies.

Also Activision isn't the only traditional games company acquiring mobile casual studios. Nintendo have bought stakes in a couple of mobile studios this year as have Pokemon developers Game Freak.

As a gamer, I am not a huge fan of the Blizzard games... all that I tried seemed so polished to death that I didn't kept playing them for even an hour... too boring, too much focused on e-sports, trying too hard to satisfy a mainstream that does not really exist resulting in very childish stories and characters.

And while I have fond memories of the games Activision published in the 90's (R'nR Racing), I also find the current crop rather bland... the yearly CoD clone was about as exceiting as the yearly FIFA clone for far too long, not even the recent entries that seemed to be quite decent can help much to sway my opinion in that regard.

Long story short: I couldn't care less about Activision-Blizzard. The quality of their games IMO is not far from EA shovelware thanks to their dedermination to satisfy the mainstream nowadays. As much as some of their games where genre defining in their own ways (they were never innovative, but they brought genres to the mainstream), if they choke on their King aquisition, I only feel sad for the people working in their studios.

Now, I am no financial expert, but reading some of the experts comments seemed to have made some things clear:

1) Activision bought King at a masive premium... 27% overvalued. Wow.

2) There seems to be a general consensus that King is beyond its peak... with userbase declining. Seeing that Activision most probably wanted to tap into the userbase, this seems to be a problem.

3) Activision and Blizzard IPs themselves seem to be struggling lately, with WoWs End finally seeming nearing, and CoD seeming unable to retain users (who would have thought?)... seems like Hearthstone is doing better, but that most probably cannot fill the void left by WoWs should it really go down in the next few years.

4) Activision has long been indecisive if moving to mobile was its goal, even dismissive of mobile gaming as a whole (which I can understand, its a point of view I share to some degree). this EXPENSIVE 180 turnaround is not seen as only a good thing by many.

5) This whole transaction was most probably just done to please the investors and stock market, which seem to have reacted in a positive way even if analysts where not so positive overall.

I think its the last point that would worry me as an investor (granted, the reason I do care about such things most probably is the reason I am not an investor :))... a company that throws 6b$ out of the window just to gain stronger valuation at the markets is most probably gonna loose money. They will have to deliver something pretty awesome pretty fast or the market will loose confidence again, which could mean the combined market value actually sinks BELOW the original value of both companies. The market is fickle, and wants results fast.

The Facebook effect, where something was completly overvalued and was worth nothing in a short while might happen to Activision too.

Now, just as with facebook, the whole thing could be NOT about the stock markets, making the money lost there irrelevant. Activision still has strong brands that could be used for mobile shovelware (or maybe, just maybe, good mobile games just once in a while) and could aquire a massive fanbase.

Still, I think one commenter hit the nail on its head: "Activision should have spent 500m$ over the last 8 years to move into mobile, than 6b$ in 2015!"...

Activision just bought some 330 million potential new players (granted most of them don't care about console or PC games)

The chance that there is a large overlap between Candy Crush userbase and WoWs/CoD userbase is as likely as finding complex lifeforms on Mars. These are completly different Games and completly different types of players. There will be no synergy.

If Activision has any plan, its most probably expanding its reach to new playergroups its traditional games couldn't reach, not to bring new users to its existing games.... that wouldn't work.

edit: Italian dub