Activision Blizzard, one of the biggest developers of traditional video games in the world, announced on Monday, Nov. 2, that it has agreed to buy Candy Crush maker King Digital Entertainment for around $5.9 billion as part of its plan to expand its global reach.
With a value of around $22.50 per share during an initial public offering in 2014, King will reportedly be sold at a discount price of $18 per share. It had enjoyed considerable success when it became public based on the strength of the popular title Candy Crush.
The game maker's hook is to offer titles using the freemium model in which people could play the games for free but they would have to pay real money to access in-game boosts or additional content.
King, however, had to face questions regarding its ability to duplicate the massive success of its Candy Crush title, which resulted in a 7,000 percent jump in the game maker's annual profit.
While Candy Crush remains one of the top mobile games in Apple's app store three years after it was released, King said the game title is starting to slow down.
The company's other games, on the other hand, did not catch on with gamers.
The lackluster performance of King's recent games has significantly affected the game maker's profit, which dropped by as much as 28 percent during its second fiscal quarter compared to that from the same period in 2014, to $119 million.
King's shares fell 30 percent below their offer price during Monday's trading, closing at around $15.54 per share.
Activision's Plans for King's Gaming Titles
Despite the weakening performance of King's game titles, Activision has decided to push through with its acquisition of the game maker, according to officials from both firms.
Activision saw potential in combining King's player network with its own to produce a gaming audience of more than 500 million unique players every month.
The video game giant was also attracted to King's expansive audience, which included users from different parts of the world, even from emerging markets not considered to be traditional spenders of expensive PCs and game consoles.
Activision's goal is to develop new ways to revive the Candy Crush franchise, much like what the game maker has done for its own video game titles such as Call of Duty.
Activision's CEO Robert Kotick said that the purchase of King was made at a premium to where the company has been trading. However, he said that he believed in the potential of this latest acquisition in the long run.
"They have a great franchise focus, as well as the ability to create and invent new franchises," Kotick said.
Riccardo Zacconi, chief executive of King, said that deal with Activision provides them with access to the gaming giant's portfolio of gaming titles.
Activision's purchase of King is considered to be a departure from its cautious approach regarding investments in mobile games.
Photo: Nguyen Hung Vu | Flickr
