Update – 11/4: Added the transcript of what Robert A. Kotick said about the King Digital Entertainment acquisition during the Activision Blizzard 2015 Q3 Financial Results conference call.
Activision Blizzard announced an agreement to acquire King Digital Entertainment — better known for Candy Crush Saga, Bubble Witch Saga, and Farm Heroes (among many other mobile, PC, iOS, Android and Facebook game titles).
This huge $5.9 Billion acquisition truly makes one wonder what Activision Blizzard has planned to make this acquisition worthwhile. Imagine the possibilities: Blizzard IP/King Digital crossover games? (Remember the PopCap’s Peggle Warcraft Edition?)
Activision Blizzard to Acquire King Digital Entertainment
SANTA MONICA, Calif.–(BUSINESS WIRE)– Activision Blizzard, Inc. (Nasdaq: ATVI) today announced better-than-expected financial results for the third quarter of 2015 and an agreement to acquire King Digital Entertainment for $5.9 billion in equity value ($5.0 billion in enterprise value). The addition of King’s highly-complementary business further positions Activision Blizzard for growth across platforms, audiences, genres, and business models. Please see our separate press release for details.
As a result of this announcement, Activision Blizzard will host a conference call to discuss both the transaction and earnings. The call will be broadcast over the Internet at 5 a.m. Pacific Time (8:00 a.m. Eastern Time) before market opens on Tuesday, November 3, 2015.
About King Digital Entertainment
King is a leading interactive entertainment company for the mobile world, with people all around the world playing one or more of our games.
We have developed more than 200 fun titles, and offer games in over 200 countries and regions. Our franchises include Candy Crush, Farm Heroes, Pet Rescue and Bubble Witch.
We have 340 million average monthly unique users, as of second quarter 2015, across web, social and mobile platforms.
At King, we design games with a broad appeal, which allow people to play for a moment, then move on with their day and pick up their game later. Our games are also synchronised across platforms, allowing players to switch seamlessly between devices and platforms and continue their game wherever they left off, so they can play anywhere, any time and on any device. For us, this is encapsulated in the idea of bitesized entertainment.
We make our games available for free, while players can purchase virtual items priced relative to the entertainment value they provide. We embed social features in our games that enhance the player experience. We also build on a unique and passionate company culture predicated on collaboration, humility and respect. We believe all of these elements in combination have made our games a great part of our players’ daily entertainment.
King has game studios in Stockholm, Bucharest, Malmö, London, Barcelona, Berlin, Singapore and Seattle along with offices in San Francisco, Malta, Seoul, Tokyo, and Shanghai.
Activision Blizzard 2015 Q3 Financial Results Conference Call
Kotick: Over the last 25 years, we have demonstrated a consistent ability to identify opportunities to serve and support our audiences and deliver superior value to our shareholders. We are disciplined, deliberate, and methodical — whether in the development of new franchises, entering new segments and geographies, and perhaps most importantly: identifying transactions with great opportunity for shareholder-value creation.
With respect to the latter, we have had very positive results, and track records over the last 25 years; because we care deeply about how we allocate our capital, and prioritize our opportunities. The way we considered King is consistent with our proven history of evaluating acquisition opportunities.
King operates in a rapidly-growing segment. They have a truly world-class management team, exceptional game development talent, and great commercial instincts. The transaction is accretive, brings new audiences, and the King Corporate DNA is oriented towards great game-making with commercial potential.
When we merged with Blizzard Entertainment, we found the right partner with extraordinary leadership. And when others dismissed the sustainability of Blizzard’s incredible capacity for innovation, we were certain patience would be rewarded. And it has.
We see a lot of the same characteristics today in King. We think now is the right time to enter mobile gaming in a meaningful way. Widespread mobile-access around the world has opened up significant demand for engaging, fun content that players can enjoy anytime, anywhere.
By acquiring King, which has a proven ability to turn its games into iconic franchises, we will be a participant in the fastest-growing segment in gaming — a category that today is estimated to be $36 billion. It is still extremely fragmented, and we believe has great promise for the future. We also believe King’s management team: including Riccardo, Sebastian and Stephane; are some of the most talented executives in the game industry.
We have long admired their talents, and after spending a lot of time over the last 3 years getting to know the King team, we realized how truly special their company is. They have over 1,600 incredibly talented people committed to a community of more than 450 million monthly active users. Acquiring King will solidify Activision Blizzard’s position as the world leader in interactive entertainment, positioning the combined company for growth across platforms, audiences, genres and business models.
Combining Activision Blizzard’s portfolio of some of the very best interactive entertainment franchises on the console and PC with King’s leading mobile titles will create a world-class portfolio of games with strong endearing appeal to a wide range of demographics and audiences along with leadership positions across key platforms. The number one console franchise was Call of Duty, the number one PC franchise was World of Warcraft, and now two of the top five highest-grossing mobile games.
We will have one of the largest entertainment networks in the world with over half a billion monthly active users, immediately opening up meaningful opportunities to grow and cross-promote content to provide enhanced offerings to our collective players while expanding into untapped geographies. The combined company will have diversified capabilities across business models, like subscription, up-front purchase, free-to-play and micro-transaction.
Through our world-class properties and enhanced capabilities across segments and business models, we will be able to diversify our revenue streams, enhancing our position as the most profitable interactive entertainment company in the world. The result is a transaction that will be accretive to estimated 2016 non-GAAP EPS estimates by approximately 30%. I couldn’t be more excited to welcome King into the Activision Blizzard family.
Kotick: From an investment perspective, King will, like Activision and Blizzard, operate as an independent unit. And so they’ll generate their own capital, that capital will be available to them to invest against their business opportunities.
One of the big benefits I think they’ll get is plugging into the great framework that we’ve created for long-term strategic planning, and that includes capital allocation. Remember, King generates a lot of operating profit, in fact, more operating profit than virtually any other gaming company that has ever existed. And so they’ll be able to continue to generate that operating profit and invest that cash flow in new opportunities.
The Activision Blizzard Q3 2015 financial results conference call will be held after the close of the market on Tuesday, November 3, 2015 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time)
Shortly after, on November 6th, Activision Blizzard will host an Investor Day at BlizzCon 2015. This strategic move integrates Activision Blizzard executives and investors under the same roof where Blizzard will hold the biggest BlizzCon in terms of simultaneous games covered through panels including new Diablo III: Reaper of Souls content, World of Warcraft: Legion, Overwatch, StarCraft II: Legacy of the Void, Heroes of the Storm new battlegrounds and heroes; and a new Hearthstone adventure. In addition, Duncan Jones and Legendary will reveal the Warcraft movie trailer.
Activision Blizzard, Inc. (Nasdaq: ATVI) today announced that it will host the Company’s Investor Day on November 6, 2015 at Blizzard Entertainment’s BlizzCon® event, at the Anaheim Convention Center in Anaheim, CA , from 8:30 AM to 10:30 AM PT , followed by the BlizzCon opening ceremony which begins at 11:00 AM PT . Chief Executive Officer Bobby Kotick and members of Activision Blizzard’s senior management team will provide an in-depth review of Activision Blizzard’s business, current and future initiatives and long-term opportunities.
Presentations by senior management and a question-and-answer session will be webcast live beginning at 8:30 AM PT on the events and presentations section of the Company’s investor relations website. A replay of the event will also be available. The schedule of events for BlizzCon is available here.
During the Activision Blizzard Q1 2015 financial report conference call, it was announced that World of Warcraft subscriptions are down to 7.1 million.
Activision Publishing’s Destiny and Blizzard Entertainment’s Hearthstone®: Heroes of Warcraft™ combined now have more than 50 million registered players and nearly $1 billion in non‐GAAP revenues life‐to‐date.
Blizzard Entertainment had the largest Q1 online player community in its history, up a double digit percentage year over year despite no major launches in the quarter. As expected and consistent with our experience following prior expansions, we saw a decline in the World of Warcraft subscriber number. Subscribers ended the quarter at 7.1 million. World of Warcraft’s revenue performance at constant FX has been more stable, driven by continued strong uptake on value added services, and price increases in select regions, which partially offset subscriber declines, particularly in the East. World of Warcraft remains the No. 1 subscription‐based MMORPG in the world.
Blizzard Entertainment’s Heroes of the Storm™, which has had over 11 million beta sign‐ups, entered closed beta in January. The Founder’s Pack, released in the quarter for $39.99, granted immediate access to the beta, along with a selection of heroes, skins and more.
Blizzard Entertainment’s Hearthstone: Heroes of Warcraft had steady engagement and revenues quarter over quarter, despite no new content releases this quarter. This was driven by sustained pickup of the Goblins vs Gnomes™ expansion content, which was released in the previous quarter.
On March 31, 2015, Blizzard Entertainment kicked off closed beta testing for StarCraft® II: Legacy of the Void™, the third installment of the company’s real‐time strategy sequel. Legacy of the Void will be a standalone product that doesn’t require any prior releases, so it will be easier than ever for players to get into the game and experience all of the latest content.
On April 2, 2015, Blizzard Entertainment released Blackrock Mountain, the second Hearthstone: Heroes of Warcraft Adventure. Additionally, on April 14, the game was released on iOS® and Android™ mobile phones. The smartphone release helped propel the franchise to over 30 million registered players and the #1 download spot for mobile games in more than 25 countries.
On April 7, 2015, Blizzard Entertainment launched the WoW Token System, which enables World of Warcraft players to exchange game‐time Tokens, purchased at $20, to other players for in‐game gold. This serves the dual purpose of enabling players to pay for their subscriptions with their gold and providing players with a secure method for purchasing gold in‐game.
- On April 23, 2015, Blizzard Entertainment and NetEase, Inc. announced that Sanctuary’s gates have been thrown open to all Chinese heroes, as open beta testing for Blizzard Entertainmentʹs award‐winning action role‐playing game Diablo® III: Reaper of Souls™ has gone live in China. Approximately 3 million people signed up to play the beta in China, and the game has already sold 1 million units across two offerings: the Premium Package for approximately $32 (RMB198) and the Digital Deluxe Package for approximately $64 (RMB388).
On June 2, 2015, Blizzard Entertainment expects to launch Heroes of the Storm after an open beta testing period commencing May 19. The release follows on the heels of the epic finale of the Heroes of the Dorm™ collegiate eSports tournament, which was aired live during primetime on April 26 on ESPN2, the network’s first‐ever live telecast of a collegiate eSports event. Students from more than 460 schools across the U.S. and Canada competed for hundreds of thousands of dollars in tuition and other prizes.
Blizzard Entertainment expects to begin beta testing for Overwatch™ in fall 2015.
Blizzard Entertainment announced that its ninth BlizzCon® will be returning to the Anaheim Convention Center on Friday, November 6 and Saturday, November 7. Tickets went on sale in two batches in April and quickly sold out.
This is a partial transcript of the conference focusing on the Blizzard Entertainment portion. Some of the speakers in this portion are: Dennis M. Durkin (Chief Financial Officer), Mike Morhaime (Blizzard CEO), Bob Kotick (Activision Blizzard CEO), and Thomas Tippl (Chief Operating Officer).
A sickly green mars the formerly star-crossed skies of Draenor. A planet that once housed an indescribable primordial beauty now finds itself besieged to an extent never before witnessed. Savage, free beasts that used to roam this alien planet’s expansive lands find themselves twisted into malformed shadows of their former visage. Indigenous trees that could previously sweep you up in their widespread presence now burn as fuel for the Fel. On top of all this, the throne of command and power formerly possessed by Draenor’s original usurpers, the Iron Horde, has become uprooted, deformed, and guided by new management.
This mental image of oncoming destruction is something we hopefully have to look forward to sooner rather than later. Welcome to 6.2, the upcoming content patch for World of Warcraft and an update that holds more weight than just being another patch to tally up with all the rest. Gul’dan has wrought control of the once mighty Iron Horde, morphing them into the Fel monstrosities he had always envisioned as their fate. In seizing control of Draenor’s formerly largest threat, Gul’dan has ushered onto the would-be Outlands, a fate far worse than anything the Iron Horde could’ve ever accomplished. By Gul’dan’s hand, the Burning Legion in full force has finally arrived on Draenor. Their way of entry and base of operations lays across the former seat of power for the Iron Horde: Tanaan Jungle. With 6.2, the end may be nigh for Draenor not just in a story sense, but a content perspective as well.
Yep, I just went outright and said it.
Since Blizzard announced its intentions to allow players to purchase game-time with in-game money, there’s been a plethora of discussion revolving around one thought: how will this new WoW Token affect World of Warcraft?
The initial reaction has been rather for the change, albeit with some resistance from other commentators. Most opposing commentators have been stating that Blizzard selling gold can only end in a “Pay-to-Win” scenario. A “Pay-to-Win” scenario is exactly how it sounds: you pay with real money to succeed in the game. This practice has been adopted by quite a few online games, including Rift, Diablo 3 (specifically and only when the Real Money Auction House existed), and H1Z1. These games have (or in Diablo 3’s case, had) given players the means of progressing without doing any actual work. When the player reaches the maximum level or endgame content, they could simply go to any of these shops and purchase the best gear and items for their character.
It’s a frightening thought, and it’s a fear that seems to permeate World of Warcraft’s outlook by some presently.
Well, I say you’re all wrong.
First off, can someone explain to me how this is “Pay-to Win” in the slightest? I see no gear being sold. I see no items that offer an advantage over other players being sold.
With WoW’s in-game currency revolving almost entirely around Gold, a vast amount of players save gold, upon gold, upon more gold. In my time playing, I still know a guy who has collected close to 9 million across all of his characters and no matter how he approaches the game, he can’t spend it all.
To have such a surplus, wouldn’t it make sense to have some sort of system to alleviate this and positively change their approach to the game? All that effort after all those years, all that gold compiled.. and it doesn’t pay off at all really.
Sure, you can buy the best cosmetics and mounts in game, but what else is plausible? You can buy pieces of gear that will simply become replaced when you raid, and that’s about it. This surplus situation boils down to having nothing to spend it on, all while still having to pay a monthly subscription fee.
Basically, you’re rich in the game, but you’re not rich in real life. And while real life continues to happen and you pay monthly fee after monthly fee, the totals add up and you’re sitting there with millions of gold and nothing to spend it on.
Let’s look at this change from another perspective: meet Joe, the Average WoW player.
Joe’s loved WoW since he was 12. He’s adored every moment in the game, meeting each with laughs, or screams, or even rage. All of this though, for all the good and bad, it combines into his own wonderful experience with the game.
Despite all this, Joe’s facing problems. No, I don’t mean a boss not dropping the specific piece of loot you want, or some in-game guild drama; I mean real life problems.
This average WoW player loves the game. Sure, he’s not the best at it; he’s mediocre in every sense of the word. But, truly, he loves WoW. Meanwhile and outside of Azeroth’s virtual existence, Joe is having financial issues. He wants to keep playing the game he loves, the game that may have even inspired him to do wondrous things in the world, but he can’t continue as long as his financial means are poor.
Joe comes to one final conclusion: either give up WoW and don’t face financial collapse, or keep playing and cut back further on your financial standing (which, obviously, is the worse decision in my opinion).
“Why the WoW Token is the best thing to happen to WoW in years.”
That’s where the WoW Token alleviates this. The effort players pour into WoW every day, every other day, once a week… pays off in-game AND real life.
Everyone, and I mean everyone is in some ways Joe. You want to play the game, you want to enjoy yourself, you want to socialize with your friends and guild and conquer every challenge that entices you.. but you can’t, purely due to a tacked on fee.
I say this because the game acts as an outlet for more of its playerbase than I believe anyone will admit. When I personally used to seriously raid, the nights we’d progress and eventually down a boss were exhilarating. It made me feel like I accomplished something while everything else in life was moving rather slow. The game acted as a stress reliever and something that I, and many others I would bet, prided myself on.
The game itself is hard to put down, specifically when it’s used as an outlet for one’s frustrations. I know from first hand experience, and I’ve come to know others over my years who have felt the same.
Outside of this reasoning though, I am so for this change because of its moral implications. Blizzard has stated constantly over the years its disdain for Gold Farmers to the point they’ve even sued a Gold Farming company. Over the years we’ve also learnt more about the actual machinations within Gold Farming industries; their entire culture and workplace is toxic and horrible. Many of the Gold Farmers we know today are in fact prisoners to the game others, like myself, enjoy.
With Blizzard more-so overlooking the way Game Time and Gold itself is distributed, it helps to eliminate an entire industry based around borderline slavery and slimy practices. I fail to see how that’s bad. Furthermore, with Blizzard allowing the in-game economy to decide for the worth of a WoW Token, it allows a plethora of players who I personally know to play the game freely without questioning their choice to fund their World of Warcraft subscription over living essentials.
This is a change I welcome with open arms, and I hope those still carrying pitchforks will lower them a tad bit after gaining such perspective.
The game isn’t going Pay-to-Win; it’s adopting a practice that has been becoming much more common as the years have passed.
The game is still the same; it’s not suddenly forcing you to buy a Token. You can freely pay for your subscription month to month per usual.
If anything, the game just had some new life breathed into it. All the players who haven’t touched WoW in years due to its subscription fee will have means to access it without that pay wall we all experience month to month.
And because of this change, I already have a few long time friends who wouldn’t touch the game because they couldn’t pay for it coming back.
So, if you’re still sitting there trying to come up with every X, Y, and Z reason to counter the WoW Token’s existence, I sit here and ask you this:
Is the Token the real problem, or is it you?