The big news today was supposed to be the Activision Blizzard investor call for the third quarter of 2015 at 1:30pm Pacific time. There we would get the usual earnings information, some insight into the combined companies goals, and the World of Warcraft subscription numbers.
And then yesterday after hours Activision announced that they had purchased Candy Crush Saga maker King for 5.9 billion dollars which, as Keen points out, essentially makes it more valuable than the Star Wars franchise or, if you prefer, more than twice as valuable as Minecraft, which Notch sold to Microsoft a year back for $2.5 billion.
They also published the basic quarterly financial report for the company. In the latter was the World of Warcraft subscription number.
World of Warcraft® subscriptions remained relatively stable, ending the quarter at 5.5 million subscribersC. Players are excited about the upcoming expansion, Legion™, which will feature a new class, customizable Artifact weapons, class order halls, and much more. World of Warcraft remains the No. 1 subscription‐based MMORPG in the world.
So there we go, the WoW subscriber base is holding for now on Taanan Jungle, time walking, and the promise of WoW Legion at some point, down just 100,000 subscribers from the 5.6 million number reported three months back.
There wasn’t much else of real interest about Blizzard in the report, so I still wonder what the big keynote announcement at BlizzCon will be. Getting to see the Warcraft movie trailer is nice and all, but with the movie seven months away, that really isn’t a sustainable interest right now.
I guess we will find out on Friday. At least the opening ceremony will be streamed for free, as I am not buying the $40 virtual ticket this year. There isn’t enough “there” there, so far as I can tell.
So the big new remains the King buyout, which Activision bills as:
The Most Profitable, Successful Standalone Interactive Entertainment Company in the World. During the last twelve months Activision Blizzard had non-GAAP revenues of $4.7 billion and King had adjusted revenues of $2.1 billion, and for the same period, adjusted EBITDA of $1.6 billion and $0.9 billion, respectively. The combined company will have further diversified and recurring revenues, cash flow generation, and long-term growth opportunities to propel future value creation for shareholders. Activision Blizzard believes the Acquisition will be accretive to 2016 estimated non-GAAP revenues and earnings per share by approximately 30% and significantly accretive to 2016 estimated free cash flow per share. Activision Blizzard expects the combined company to maintain a disciplined capital allocation policy and strong balance sheet.
Part of me sees this as the big King cash out, as SynCaine put it. King, having peaked on pretty much one game, which they stole from somebody else (a key part of the King business model), decided to sell out while they still have value in the market.
Basically, the Zynga story done right… for specific definitions of “right” I suppose. Zynga thought FarmVille (another stolen idea) meant they were smart rather than lucky. King appears to have figured out that they were lucky rather than smart and decided to get out while still on top. That is the cynical, cold world, core gamer gut response view. It is certainly where my brain went immediately.
On the other side, King did bring in over $2 billion in revenues over the last twelve months, which basically means it earned about twice as much as World of Warcraft made over the same period of time… all with crappy, over-monetized, rip-offs of other games.
Well, not “crappy” actually.
Hate the business model and the complete lack or originality as much as you like, but King does put a pretty coat of polish on its games. They are shiny and bright and happy and, at least in the case of Candy Crush Saga, work well and are updated regularly. They add new levels all the time, the game having gone from 480 (if I recall right) to 1,250 in a recent update, along with other additions to the game. And it still runs very well on my aging iPad 2.
Yes, I still play, though I have never spent a cent…
Polished up versions of other people’s ideas that have low system requirements? Where have I heard that idea before?
Could the King business unit, within Activision Blizzard, and thus having access to a range of IPs and other assets, end up being the engine to for Activision to get a serious presence in mobile?
Over at Ars Technica they have an article up about how each company’s market presence looked individually and then together as a single unit. And King is still bringing money in despite not having been able to repeat their Candy Crush Saga success with another game.
I don’t know where this merger will end up. Activision isn’t quite as good at buying and the destroying companies as EA, but they have still screwed a number of people over as the years have passed. I suppose we will see.
So what is left for the investor call? Some PowerPoint slides? I’ll put the Blizzard one up once I find it, if only because that has been a regular part of these posts in the past.
Here is the Blizzard slide from the call, and some weak tea at that, as the big news was something else altogether.
Blizzard Q3 2015 results slide