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3 November 2015

Tech-buying bonanza latest! Game firm Activision buys Candy Crush-maker King for $5.9bn

Gaming company Activision purchasing the makers behind addictive smartphone game Candy Crush Saga is both a sensible and ludicrous move in today's tech feeding frenzy.

By Emad Ahmed

The not-so-beloved company behind casual gaming colossus Candy Crush Saga, King Digital Entertainment, has been acquired by gaming giant Activision Blizzard for $5.9bn. This is a big achievement for King, given many (including myself) thought (and continue to think) that a company of its size might not exist for too long, given it creates aimless games stuffed with in-app purchases. And considering how many complain about the modern tyrant that is the microtransaction – paid in-app extras offered by software developers.

At first it might be hard to decipher just what Activision has planned for King. After all, it primarily focuses on traditional console and PC-based games, whereas King is all about the brave new world of mobile games. But take a closer look at Activision’s biggest franchises and it becomes obvious how each individual group helps the corporate entity as a whole.

Kevin Spacey in Call of Duty: Advanced Warfare

Take Call of Duty, which has become an annual (if slowly decreasing) blockbuster in the gaming world for the true, hardcore PC and console gamers who want nothing more than a balls to the wall action game. There’s also Skylanders for the kids, a huge success that involves players – or rather, parents – purchasing both the game and then an array of real-life toys. These toys are individual characters that interface with the console itself to allow unique gameplay for each character. Although this concept isn’t original, it has been taking off in the gaming industry. Disney has a range called Infinity, Nintendo is basically staying alive thanks to its set called Amiibos and Lego has just released its own series too.

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But there is nothing nerdier than the gaming stereotype of a young, white single male hooked on the multiplayer, role-playing game World of Warcraft (WoW), which is also an Activision Blizzard property. Despite its release over ten years ago, it continues to ooze out life in the form of expansion packs. What everyone forgets about WoW is that, despite it holding a still-impressive 5.6m active users (down from a peak of roughly 10m), each one pays approximately £10 each month for the privilege.  

However, the only successful foray Activision has made in the mobile gaming world is with the title Hearthstone, another example of a game users can keep playing with no end in sight specifically because there is no “endpoint”, as demonstrated by its options of in-app purchases. Due to the masterstroke by designers of placing the game in the WoW universe, it gives the game a level of credibility and seriousness in mobile gaming not experienced by fellow gaming titans who continue to be left in the dust.

But it shows how Activision has massaged traditional gamers into the world of microtransactions, making their acquisition of King perfectly palatable. It also shows King is still relevant in the mobile gaming space (sorry Zynga!).

Plants Vs Zombies: Garden Warfare

Acquisitions in the gaming world can be smart. EA purchased PopCap four years ago for $650m, and it allowed the new subsidiary to successfully transition its Plants vs Zombies series from a roughly cut diamond that can be slapped onto your phone to a flashy three-dimensional gem for consoles and PCs.  

Last year, Microsoft purchased Mojang, the company behind digital block-building craze Minecraft. It’s almost every week you come across someone doing wacky things with the game. And let’s not forget the potential licences that can be sold for all sorts of merchandise or even spin-off titles. Just last month, respected developer Telltale Games released Minecraft: Story Mode.

Buying out King exposes Activision to millions of new gamers who will have never touched a copy of Call of Duty, or have no children pestering them to buy a new figurine for Skylanders.

Tumblr CEO David Karp Image credit: Noam Galai/Getty Images

It’s the exact reason why Facebook bought Whatsapp for $19bn. It allowed the social media giant to sweep up the thousands of new followers signing up to the service every day, and messaging will always remain both the most basic and important thing you can do using the internet. The same argument can be used with their purchase of Instagram too. It’s also why Amazon didn’t hesitate to splash $970m on Twitch, the popular gaming site, which forced Google to create YouTube Gaming. And it’s definitely why Yahoo, a company desperate to become young, hip and cool again, bought Tumblr for $1.1bn.

All of these acquisitions show we’re in a tech bubble where monetary value is very loosely mixed with potential value and social influence. Companies are going crazy trying to find the next cow they can violently squeeze. Facebook purchased Oculus VR last year, stating that virtual reality will be the new digital front. Microsoft and Sony have been busy with their responses while Google is using a whole different strategy, one primarily made of cardboard. If this craze continues, I can’t wait to put on a headset to slip into a different world effortlessly. The in-app purchases will be better.

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