News

Activision To Cross-Promote To 500 Million Users Following King Purchase

by Mike Futter on Nov 03, 2015 at 02:14 AM

Activision provided more detail this morning on its plans to acquire Candy Crush maker King. The deal, worth $5.9 billion, gives Activision entrance to an enormous established mobile user base.

"We think now is the right time to enter mobile gaming in a meaningful way," said Activision CEO Bobby Kotick. "Widespread mobile access around the world has opened up significant demand for engaging, fun content that players can enjoy anytime, anywhere." According to chief operating officer Thomas Tippl, the move gives Activision a monthly active user base of 500 million players, inclusive of 196 countries where King operates. As a result of the announcement, credit rating firm Moody's upgraded Activision's status.

The company also intends to cross-promote across franchises. While no details were offered, Activision might look to Puzzle & Dragons for ways to integrate seemingly disparate franchises for time-limited promotions. GungHo has teamed up with DC Comics, Square Enix (Final Fantasy), Rovio (Angry Birds), and SuperCell (Clash of Clans) for time-limited cross-promotions. 

According to data firm Newzoo, the acquisition (scheduled to compete in Spring 2016) puts Activision in the number two spot for revenue among public game companies. This is despite King's dip in revenue and usership in the quarter ended June 30, 2015.

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While King monthly and daily active users have started to drop off, the company has experienced huge growth over the past two years. The move will swing Activision revenue significantly toward digital, with two-thirds of revenue projected to be from full-game, add-on, and in-game transactions. 

Throughout the call, Activision positioned the King acquisition as complementary growth. King will report its earnings for the third quarter of its fiscal year on November 4.

 

Our Take
While it's easy to look at $5.9 billion as an exorbitant amount to spend on King, the alternative may very well have been more expensive. Building a new usership from the ground up, as well as new properties and the expertise to create a business, would require time and expense that may have rivaled this investment.

"As much as we could invest on our own, we couldn't as quickly or probably in that quality get to the place that Riccardo and his team have gotten to," Kotick said. "It's a perfect complement to what we already do so well in the categories that we operate in." Activision isn't purchasing Candy Crush. Instead, this is a move to acquire a huge network of established users and build from there.