Arts & CultureVideo Games

Berg: $5.9B payday for ‘Candy Crush’ may be doomed

When a massive power in the technology business sees an exciting startup with the next big idea, it will strike with a fast, fist full of cash. It’s how Google ended up with YouTube, Microsoft with Minecraft and Facebook with Instagram and Oculus. So on Nov. 2 when Activision-Blizzard (Destiny, Call of Duty, World of Warcraft) announced the purchase of King Digital Entertainment (creator of Candy Crush Saga and other wildly popular mobile games) it seemed like a fairly everyday occurrence.

Until news of the price tag dropped — $5.9 billion dollars.

For perspective, here are some other recent major acquisitions in the entertainment world:

  • Amazon’s purchase of game streaming service Twitch — $970 million
  • Facebook’s acquisition of virtual reality startup Oculus — $2 billion
  • Disney’s acquisition of Lucasfilm and the Star Wars license — $4.05 billion


It’s a sum of money that seems almost impossible. Activision’s purchase of King is either the bargain of the century or a legendary disaster lying in wait.

Activision didn’t arrive at the magic number overnight. King Digital Entertainment (KING on the NYSE) has a market value of roughly $4.72 billion, largely based on their success with Candy Crush. The simple puzzle game is a dominant force in every app store under the digital sun, contributing over a third of the company’s reported $600 million revenue in the first quarter of 2015. It wouldn’t take long for Activison to recoup their investment – just over five years. But in gaming, five years is a long time.

Think back to the mobile scene in 2010 and one name comes to mind — Angry Birds. Swedish developer Rovio’s hit physics puzzler was at the top of every chart and the tip of every tongue. Birds and pigs were on every screen in America overnight. But cut to today, and the picture looks bleaker. In 2014, Rovio reported a 73 percent decline in revenue due to falling popularity of their mainstay franchise. This year, they released Angry Birds 2 to a fraction of their old audience, laying off staff shortly afterwards.

Zynga, creator of FarmVille, has walked this same path. Five years ago, The New York Times predicted they might become ‘The Google of Games.’ Their revenue has fallen 42 percent since May 2012.

So what makes King different? I’m not some brilliant industry analyst, outsmarting the guys in suits who get to handle ten-digit checks. But this sale seems so clearly overvalued on a company following the same trajectory as all the burnouts. One of the biggest entertainment technology conglomerates in the world just tossed down a massive paycheck in exchange for their future. I have to assume there’s some magic sauce behind King that separates it from the rest of the fads. Or perhaps history is doomed to repeat itself until someone finally learns from it.

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Christopher Berg

Christopher Berg