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Activision Blizzard purchases King.com (Candy Crush Saga) for $5.9 billion
- Thread starter GSR
- Start date
I can't imagine a case in a full acquisition where Activision would go, "Alright, just go ahead and purge those years of data on consumer behavior, we don't need that!"
LegalEagleMike
Member
They could have made another dozen Destiny games!
Smushroomed
Banned
i agree with you, and its a part of the reason of why i hate reading posts in neogaf
This is a business decision, not a video game decision. These people forming bad opinions with nothing positive to say clog up the forum.
It's like people on a business forum talking about how bad video game design decisions are
stuminus3
Member
This post is an embarrassment. FYI your little boy's club died a death years ago regardless of what those Gamergate imbeciles say.
Well they sold for more than Star Wars; net worth or value over time is nowhere near the same as far as it appears; especially since Disney got a criminally good deal on Lucasfilm and Star Wars. Merchandising alone on SW will pay for the price in a short time.
Again, I'm sure Activision has a plan, but that price for 2015 King.com seems pretty high to me at the moment.
In another "they don't know what they are doing!!!" moment, Moody's today upgraded Activision to investment grade, making them I believe the only dedicated publisher to have an investment grade credit rating from either agency. S&P, at BB+/Watch Positive, will likely follow.
Delusibeta
Banned
So, in order to pay this off, King needs to generate $1.6mill of profit every day for the next ten years. Frankly, it makes Microsoft's acquisition of Mojang look sound.
That assumes the company has a value of 0. The company itself still has some value at the end of 10 years. It could be much lower, though not necessarily.
Mobius and pet octopus
Member
According to this http://bgr.com/2014/02/18/how-much-money-does-candy-crush-make/ they made an average of 5.4mil gross every day. Plus companies are valued based on more than just its income. For example, you include properties owned as part of the value.
newtypepilot
Member
there are a LOT of whales who play Candy Crush. Once they start paying, they get sucked in and never come back out. It's like cocaine...
Atomic Airplanes
Member
My feeble mind can't even comprehend that amount of money, let a lone for a mobile game with a development budget probably around $10,000
6 Billion just for people's information?
This is why mobile is the biggest thing around? Just because these devs managed to figure out how to exploit the human mind?
Skiptastic
Member
Well the market loved the move. Stock was up almost 7% today. I know because I have a 200% return on it so far!
grosvenor_92
Member
This came as a surprise to me when I heard about it this morning. Activision just likes to make it rain money I guess
Have you been paying attention to mobile the past four years?
If you think it's just mobile you don't understand games as a product. Also see advertising.
malboroking
Banned
Pot, kettle, black.
Not bad. Not bad at all.
Phat Michael
Banned
Id be more likely to trust neogaf users saying this $5.9B should be used for AAA game development, rather than a hokey outfit like Moodys or S&P.
KyanMehwulfe
Member
haha in king's annual report and their list of largest threats to their market segment, market share and barriers of entry, general threats to future looking statements, etc... Activision Blizzard was the first listed company ;p
Well, this is awkward.
Actually it's worse than this. The $1.6 million per day actually assumes zero cost of capital. In reality those cash flows are going to be discounted at like 10% per year, which means that King and its associated synergies with activist on will have to be more profitable over time to make the deal worth 6.3 billion in 2015 dollars.
Lastly, most software companies don't have much innate value. Kings only real value is in their IPs and associated data which are only valuable if they are making money. If candy crush is run into the ground King is worth nothing. They probably don't have any hard assets to sell in a worst case scenario. How much do you think somebody is willing to pay for the FarmVille name in 2015?
This deal boggles my mind. I'm working at a company now (much different industry) that made a similarly sized bet in an adjacent space. On paper it looked kind of good, but we quickly found out that those two adjacent product categories were very different, are sellin that acquisition for 1/3 what we paid for it and laying off 1500 people. We are a much bigger company than Activision, and it has completely decimated the company.
The only way this deal works is if you think that King has the secret sauce to mobile gaming. Given their recent trends, and rising acquisition costs I just don't think that is true. King has the 'next Zynga' written all over it.
This could literally force Activ to sell its major IPs, or into a merger within a few years. I expect this deal to burn up a lot of value.
Keep in mind the statistics on M&A deals. 70% destroy value. The odds are against you from the get go.
KyanMehwulfe
Member
^agree though, well i think even if their branding or IPs lost all their value, there's still other value there... they have more in intangible assets than ppe... i mean it's half goodwill, but usually tech companies have a lot of proprietary software that is probably going to be very undervalued...
in the sense that, ok, say their proprietary analytics, user metrics platform, etc is valued at $20-30m but to Activision Blizzard, wanting to enter p2w mobi... for software proven by king's consistently growing revenue (and how their new games continue to grow total rev/prof even as candy crush declines), growing users (and the data on those users, period)... i mean, Atvi will obviously pay a pretty large premium for that
and even if King IPs die, those analytics and metrics platforms, market user data and general segment intelligence, targeting, etc, that infrastructure (the data and analytics, the platform, the development team experienced with it).. the developer experience and dev process already existing.... those still have pretty significant value
atvi can come in and just plug in their own ips... plug skylanders into the those mobi or vice versa, try plug the platform into skylanders, hearthstone... do collabs a la lego x minecraft, etc... skylanders x candy crush. there's still a lot of risk of course and i totally get what you mean about tangible assets... just meant that i think their intangible assets are as much or more about their software and infrastructure than just their ips
in the sense that, ok, say their proprietary analytics, user metrics platform, etc is valued at $20-30m but to Activision Blizzard, wanting to enter p2w mobi... for software proven by king's consistently growing revenue (and how their new games continue to grow total rev/prof even as candy crush declines), growing users (and the data on those users, period)... i mean, Atvi will obviously pay a pretty large premium for that
and even if King IPs die, those analytics and metrics platforms, market user data and general segment intelligence, targeting, etc, that infrastructure (the data and analytics, the platform, the development team experienced with it).. the developer experience and dev process already existing.... those still have pretty significant value
atvi can come in and just plug in their own ips... plug skylanders into the those mobi or vice versa, try plug the platform into skylanders, hearthstone... do collabs a la lego x minecraft, etc... skylanders x candy crush. there's still a lot of risk of course and i totally get what you mean about tangible assets... just meant that i think their intangible assets are as much or more about their software and infrastructure than just their ips
No, I don't think so.
Beer Monkey
Member
So like 1/4 the market cap of Nintendo.
jellies_two
Member
Money is free now
You can borrow at stupid low rates with sound credit like activision.
So activision borrows 6 billion at 3% and the cost is 180m a year, which is what King makes in a couple of months.
So they are also buying developers who know how to create addictive little "it's not gambling, honestly" apps. And I expect they will find a way to do it a few more times.
You can borrow at stupid low rates with sound credit like activision.
So activision borrows 6 billion at 3% and the cost is 180m a year, which is what King makes in a couple of months.
So they are also buying developers who know how to create addictive little "it's not gambling, honestly" apps. And I expect they will find a way to do it a few more times.
KyanMehwulfe
Member
they have ample cash stockpile to begin with too. something like almost 3x as much cash, near cash as EA... maybe a bit more leveraged than EA if you go by debt (sans deferred revenue) to current assets but in general their leverage is pretty similar. Activision just has a shit ton of cash, something like $5b and it's been growing about 0.5b every year for the last 5 years (which i think is more than twice their long-term debt servicing per year)
i mean, it's a bit of an equity mismatch to do a all-stock deal anyhow lol but i can sort of see why it's all-cash..
i mean, it's a bit of an equity mismatch to do a all-stock deal anyhow lol but i can sort of see why it's all-cash..
IdreamofHIME
Member
The Star Wars deal was straight up cash for George. The dude can go to an ATM and see a billion right there in black and white.
This purchase won't be, itll be stocks, shares and all other kinds of shit that has no worth on the street.
The Star Wars deal is one of the craziest ever made, the plain fact Disney have billions in cash just sitting around is mind blowing. Richer than a lot of countries...George too now.
KyanMehwulfe
Member
^this is all-cash too
Cave Johnson
Member
I thought he donated all the money from the Star Wars purchase?
Chû Totoro
Member
Star Wars and Marvel are well known and established IPs for many generations of people on earth... King makes a few very successful games that are played by a lot of people but very few are paying. If they loose the volume they loose everything.
I don't like Candy Crush but I understand that some people are playing it. Though less and less people are playing this around me (younger cousins, aunts, casual gaming friends...) and like I said it surely won't be something that can be pushed through many generations and on various products.
imo it's just a dumb purchase but it's not my money so happy honeymoon. I just hope they don't crash during the flight.
Also Disney smarter than Activision confirmed but who would have doubted that.
I don't like Candy Crush but I understand that some people are playing it. Though less and less people are playing this around me (younger cousins, aunts, casual gaming friends...) and like I said it surely won't be something that can be pushed through many generations and on various products.
imo it's just a dumb purchase but it's not my money so happy honeymoon. I just hope they don't crash during the flight.
Also Disney smarter than Activision confirmed but who would have doubted that.
Much of it yes and he sold the franchise and the studios on the relative cheap. He wasnt looking for a pay day.
How much wrong can there be in one post...
What a weird industry.
A cloned game, highly polished and released very much "right place, right time" combined with ruthless monetization results in a valuation of roughly "$1 for every person on earth"...
Damn...
Then again it makes total sense on Activision's part - if anything it was a bargain. Apparently well over 100 million people playing the game, spending well over one billion dollars annually...
A cloned game, highly polished and released very much "right place, right time" combined with ruthless monetization results in a valuation of roughly "$1 for every person on earth"...
Damn...
Then again it makes total sense on Activision's part - if anything it was a bargain. Apparently well over 100 million people playing the game, spending well over one billion dollars annually...
That's what Ubisoft would do. Activision is better than that.
Yeah, this is straight bullshit. The consideration is 100% cash.
http://www.latimes.com/business/technology/la-fi-tn-activision-candy-crush-20151103-htmlstory.html
I do like how you separated stock from shares and "other kinds of bullshit" because you needed like three things for a sequence!
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