The King is dead, long live the King: Candy Crush developer sold for $5.9 billion

The King is dead, long live the King: Candy Crush developer sold for $5.9 billion
In a transaction fraught with risk, Activision agreed to purchase all of the outstanding shares of mobile game developer King Digital for $5.9 billion, or $18 a share. King, known for its mega-hit Candy Crush Saga, went public at $22.50 a share last year. But the company has been struggling as revenue related to Candy Crush Saga has been on the decline. The app costs nothing to download and install, but those who want to be successful playing the addictive game will need to make in-app purchases, which is how King makes money.

For example, King had $1.4 billion in revenue for all of 2014. But during its latest reported quarter ended in June, the company said that it brought in $206 million. Net profit declined 28% year-over-year. The company is supposed to announce its third quarter results after the close of the market tomorrow. King has tried to duplicate the success of Candy Crush Saga with a follow-up called Candy Crush Soda. While the latter has become popular, its success isn't making up for the declining profits being made by the original title.

Activision barely registers in the mobile game world, with most of its titles made for the console market. Its most famous game is Call of Duty, which happens to be the most popular console game franchise in the world. Its lack of mobile success alone would make this a challenging acquisition for Activision. But there's more for them to worry about. Once a mobile game starts losing players, it is nearly impossible to reverse the trend.

Consider the lesson learned by Zynga, which overpaid for Draw Something developer OMGPOP in 2012. No sooner did the ink dry on that deal, than Draw Something players started to get bored by the game, and turned away in droves. A sequel flopped. At the end of the day, Zynga found itself in financial distress, a position that it has yet to recover from.

source: AppleInsider

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11 Comments

1. amanjain1

Posts: 56; Member since: Apr 28, 2015

No problem till the developers are making money...bring more awesome games

2. Rafishant

Posts: 392; Member since: Oct 13, 2015

OMG. Is it real that this gaming company has a higher value than BlackBerry Ltd?. Almost $6 billions? BlackBerry latest market cap is less than $5 billion with all its services, patents, hardware, bbm, cash reserve. Or Motorola Mobility that Google sold for $2.9 billion to Lenovo. Really a very high value acquisition.

10. downphoenix

Posts: 3165; Member since: Jun 19, 2010

They are not even worth a tenth of what they paid for them. Activision just made a really bad judgment call, thinking that the Saga games will bounce back (spoiler alert: they wont).

11. SonyOwner unregistered

Lol. Maybe blackberry's mobile division. But not the whole blackberry. Your smartphone security were made by blackberry.

3. kabiluddin

Posts: 273; Member since: Feb 28, 2015

People/companies are paying way too much for these type of companies. Tech bubble will soon burst.

4. Spedez

Posts: 542; Member since: Aug 29, 2014

King is going down just like Rovio. Bad purchase for Activision.

5. Neros

Posts: 1016; Member since: Dec 19, 2014

Overvalued for sure. The angry birds and candy crush hype are pretty much dead and the revenue will continue to plunge as we speak.

6. lylee73

Posts: 84; Member since: Mar 18, 2015

Good. No more candies.

7. zeeBomb

Posts: 2318; Member since: Aug 14, 2014

King the next Rovio?

8. shuaibhere

Posts: 1986; Member since: Jul 07, 2012

Yeah...Patent troll is dead..

9. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Bad timing on Activision's part, King is on the downtrend. But I'm glad they bought them, they deserve to be knocked down a peg or two.

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