Activision-Blizzard acquires King.com for $5.9 Billion
It was the best of times, it was the worst of time - Of course that is the famous opening of A Tale of Two Cities by Charles Dickens. However, that phrase also describes the status of the mobile games market following news of Activision-Blizzard’s (A-B) acquisition of King.com. News of the transaction was a bit of a surprise, but what was more shocking was the price tag. Consider this, the top mobile gaming company (with several top revenue generating titles) was just acquired for $5.9 Billion when only 13 months ago Microsoft purchased Mojang (creators of Minecraft) for $2.5 Billion. By comparison, King.com has had 9 different titles rank on the top 200 U.S. grossing list for iPhone to Mojang’s 1. This is a clear indication that the market over the last year has cooled off, while at the same time it opens the door for companies looking to foray into the mobile gaming arena.
Ultimately, the question as it pertains to this blog is – What impact does this acquisition have on A-B moving forward?
- A-B acquires the top mobile gaming company.
According to our most recent app forecast - iOS Apps Forecast Model 2008 - 2021 (Global/Region/Country): Apps Buoyed By Subscription Revenue – mobile games represents 58%, or nearly $12 Billion, of iOS revenue in 2015. Add to that revenue from Android and other platforms and the total revenue generated from mobile gaming is over $20 Billion for 2015. King.com alone generated more than $1.5 Billion over its last four quarters. In other words, A-B just acquired around 7% of the entire mobile gaming market.
Third quarter results for King.com were posted yesterday and its total revenue was $480 million with a profit of $143 million; it total profit over the last 4 quarters is $567 million. If that current rate continues then A-B will start to see a positive ROI in 10.5 years.
- A-B makes a move to become more mobile focused.
Historically speaking A-B is a console and PC gaming focused brand and while it does have a sizable portfolio of mobile titles, including the hit title Hearthstone, that isn’t enough to consider it mobile focused. In fact, the recent success – Since April its average rank on the top grossing list in the U.S. is 27.1 - of the iPhone version of Hearthstone might be the reason why A-B decided to make this move and round out its gaming portfolio as it becomes the top gaming company.
Being a top 200 app is very important because that is the best source of discovery for apps and those lists (free/paid/grossing) tend to be perpetual, especially at the top. By adding King.com into its portfolio, A-B’s top 200 appearances increase exponentially across all 3 lists. According to AppTRAX (as shown in the table below), the addition of King.com iPhone apps increases A-B’s number of top 200 app appearances by 708% since June; its iPad numbers increase by 858%.
AppTRAX: Top 200 App Appearances Since June 2015
| | iOS - iPhone | iOS - iPad |
| Total Appearances | 32,464 | 46,866 |
| Activision Appearances | 5.1% | 4.5% |
| Blizzard Appearances | 7.3% | 6.0% |
| King.com | 87.6% | 89.5% |
| Increase in Appearances w/ Addition of King.com | 708% | 858% |
The acquisition of the top mobile gaming company at $5.9B or 4X revenue sets a new reference point for the market. Mobile gaming continues to grow strongly and more acquisitions are likely in the coming quarters. However, the price point for King relative to Microsoft’s Mojang purchase suggests a cooling of the irrational exuberance around mobile gaming companies.