Activision's $6 Billion Candy Crush Gamble

Pyrian

Hat Man
Legacy
Jul 8, 2011
1,399
8
13
San Diego, CA
Country
US
Gender
Male
Smiley Face said:
Kameburger said:
And if they maintained profits on Candy Crush they wouldn't recoup their expenses in a "Long" time as you put it, they would recoup it in, 3 to 4 years if they are conservative with some of their costs, or any one of their titles hits it out of the park.
Actually, if Candy Crush is pulling in a million dollars a day, it will take over 15 years to recoup their investment...
Gah. Shamus' link is highly misleading. King made over $2 billion in revenue in 2014 on a ~33% margin. (source [http://www.reuters.com/finance/stocks/financialHighlights?symbol=KING.N]) If they stabilize (highly unlikely but you gotta put your baseline somewhere) Activision will recoup its investment in 9 years. Which would be a very good deal - if it goes down like that.

I think that a horrid crash is a very plausible outcome (they're already losing revenue), and I'm sure Activision is hoping to synergize and get some across the board gains instead. But as valuations go, this is much more reasonable than the purchases of Mojang or Oculus. That's speculation. This... All they need to do is not screw up. (They will probably screw up.)
 

The Rogue Wolf

Stealthy Carnivore
Legacy
Nov 25, 2007
16,908
9,600
118
Stalking the Digital Tundra
Gender
✅
Okay, here's my theory: One of Activision's financial guys was on the phone with Bobby Kotick, panicking because the money press that is World of Warcraft is starting to dry up; Bobby, annoyed and trying to get to his five-day weekend, just yelled "Buy a drink and freaking calm down!". But he was on the elevator and losing his signal, so all that got through was "Buy... King...!"

...yeah, I got nothin'.
 

008Zulu_v1legacy

New member
Sep 6, 2009
6,019
0
0
This is a considerable gamble. If it pays off, it will pay off big. If it doesn't, I'm not sure Activision could survive the hit.
 

fenrizz

New member
Feb 7, 2009
2,790
0
0
P-89 Scorpion said:
Bobby Kotick has been CEO of Activision since he was 28 that's nearly 25 years. I think Activision can be said to be run by someone who knows games.
Indeed.
Just look at were Activison was when he aquired his 25% stake (for $400.000!) in 1990, and look at them now.
It stands to reason that Bobby Kotick is a pretty competent CEO.
 

Coruptin

Inaction Master
Jul 9, 2009
258
0
0
It might not pay back in the long run but they get to report additional revenue on their financial reports.
 

Darkness665

New member
Dec 21, 2010
193
0
0
Well put, Shamus. I worked in corporate America and it was an educational experience. Often one company would buy a smaller one, to gain access to that pool of talent only to shutter the whole mess a few years later (5 was the longest). The one fact that was true for most is there was never any noticeable uptick for the business as a whole. Occasionally one would buy one big enough to grant a change in revenue, income and intangibles but it always came with some caveat, usually mentioned as some sort of financial gymnastics in the annual report.

While Bobby the Krazy was theoretically a gamer he has preferred to sue others, unless they are employees - then he prefers stiffing them. It will be interesting to watch. Although I have no urge to rejoin the corporate world there is one thing I miss. The office pool, there must be a significant one that is betting on how long before they shed the company.
 

Darkness665

New member
Dec 21, 2010
193
0
0
albino boo said:
I'm sorry but you are wrong. Its valve want to make steamos and its VR a thing it's going to have to invest far more than it's doing. --- snip ---
Wow, you really went off the rails there. Valve is making SteamOS just what it wants it to be with exactly the amount of investment they are comfortable with. There has been no billions invested thus wall street isn't clamoring for billions in returns and profits. Gabe wanted an alternative to W8, and now W10. He got it. There is no need to get all Tim Cook with the supply chain as they are not trying to pull billions in returns. ActiVision has to get billions in returns, cause they spent billions to get there. Good news, they have billions to work with.
 

9tailedflame

New member
Oct 8, 2015
218
0
0
Ugh, it's so ugly. It's a terrible company buying the rights to a game that's just another one of the same game that's existed forever. The match games have been around so long, and candy crush is at best slightly different.

I hope it all collapses underneath the weight of all that suck.
 

Blackbird71

New member
May 22, 2009
93
0
0
Pyrian said:
Smiley Face said:
Kameburger said:
And if they maintained profits on Candy Crush they wouldn't recoup their expenses in a "Long" time as you put it, they would recoup it in, 3 to 4 years if they are conservative with some of their costs, or any one of their titles hits it out of the park.
Actually, if Candy Crush is pulling in a million dollars a day, it will take over 15 years to recoup their investment...
Gah. Shamus' link is highly misleading. King made over $2 billion in revenue in 2014 on a ~33% margin. (source [http://www.reuters.com/finance/stocks/financialHighlights?symbol=KING.N]) If they stabilize (highly unlikely but you gotta put your baseline somewhere) Activision will recoup its investment in 9 years. Which would be a very good deal - if it goes down like that.

I think that a horrid crash is a very plausible outcome (they're already losing revenue), and I'm sure Activision is hoping to synergize and get some across the board gains instead. But as valuations go, this is much more reasonable than the purchases of Mojang or Oculus. That's speculation. This... All they need to do is not screw up. (They will probably screw up.)
It should be pointed out that "revenue" is not "profit," and that "profit" is what will be needed to recoup the cost of purchase.