Activision Blizzard Inc. just spent $5.9 billion on King Digital Entertainment, known for the hit mobile game and Universal Windows 10 app Candy Crush Saga. Activision, maker of such hit console and PC games as Call of Duty, World of Warcraft, and StarCraft, is taking its first step into the mobile games market with its purchase of King Digittal Entertainment, its first mobile game company purchase.
Activision’s CEO, Bobby Kotnick, has already boosted Activision’s stock 72% this year. According to Kotnick, “Now is the right time to enter mobile gaming.” Hopefully for Activision, this is the right time and the right deal because $5.9 billion seems like a lot to splurge on two mobile games. King Digital Entertainment hasn’t been able to create a followup to their massively successful Candy Crush Saga and Candy Crush Soda Saga mobile games.
According to Activision, mobile gaming will account for a whopping $36 billion in total games sales in 2015 and a projected growth of more than 50% by 2019. And so, Activision’s valuation of King Digital is fair, but it’s hard to say if King Digital will be able to create another huge hit for Activision as their King Digital stock has slipped 13% in the last quarter.