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Activision buys King for $5.9bn in major mobile move

Activision buys King for $5.9bn in major mobile move

Activision Blizzard is to acquire King Digital Entertainment in a deal valued at $5.9bn. Under the terms of a definitive agreement recently announced, Activision subsidiary ABS partners will acquire all the outstanding shares of King for $18 each.

 

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The deal makes Activision Blizzard the world’s top interactive entertainment company across mobile, console and PC platforms. Its portfolio already includes two of the top five highest-grossing mobile games in the US, the world’s top selling console game franchise and the world’s most successful personal computing franchise. Its titles include franchises such as Candy Crush, Call of Duty, World of Warcraft, Diablo, Guitar Hero, Skylanders and Destiny, along with over 1,000 game titles in its library. King has revenues of $2.1 billion after building one of the largest player networks on mobile and Facebook, with 474 million monthly active users in the third quarter 2015.

The combination of the two will create a global entertainment networks of half a billion combined monthly active users in 196 countries in a demographics that includes casual and core gamers, female and male players, and developed and emerging markets. The acquisition gives Activision Blizzard a strong presence in mobile gaming, which is expected to generate over $36 billion of revenue by the end of 2015 and grow cumulatively by over 50% from 2015 to 2019.

Post acquisition, Activision Blizzard will become the most profitable interactive entertainment company in the world, claimed its CEO Bobby Kotick. “With a combined global network of more than half a billion monthly active users, our potential to reach audiences around the world on the device of their choosing enables us to deliver great games to even bigger audiences than ever before,” said Kotick.

Last year 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.

Games market watcher Fabien Nicolas, VP of Marketing Communications & Community at App Annie, said the acquisition shows how mobile has become the vital growth ingredient for games publishers. “Activision has taken a more reserved approach to mobile, releasing only a handful of titles, while global competitors EA and Tencent have embraced this new sector,” said Nicolas. “This acquisition clearly demonstrates a new commitment to mobile for Activision and a need to diversify to a more global female audience.”

EU roaming charges officially scrapped

EU roaming charges officially scrapped

As the EU confirmed its complete ban on roaming charges which takes effect in June 2017 its ‘clear rules on the right to internet access’ have come under fire. It has been criticised for confusing the public and ignoring wider issues of net neutrality. Some critics even insist the ban is unenforceable.

In a vote in the EU Parliament, the law to ban roaming fees for calling, sending text messages and using the mobile internet abroad in the EU (and in EEA countries) was given final approval. The debate was attended by was attended by only 50 MEPs out of the European Parliament’s total of 751 and proposed amendments to other aspect of the Telecoms Single Package were rejected.

By not accepting any amendments to the Council’s position in first reading, MEPs adopted the new law. From 30 April 2016 roaming surcharges (added to the price paid at home) must not exceed €0.05 per minute for outgoing voice calls, €0.02 for text messages (SMS) or €0.05 per megabyte of mobile internet use.

However, to protect the industry against abuses such as permanent roaming (where people buy a phone in one of Europe’s developing economies with lower tariffs) mobile operators could in certain circumstances be allowed to charge a small fee, lower than current caps, according to a “fair use” policy.

According to German Pirate Party MEP Julia Reda, this gives telcos room to wiggle out of the regulations. With the ruling subject to a review of pricing and consumption patterns, the 15 June 2017 deadline is unlikely to be met and roaming surcharges will only be suspended up to a ‘fair use’ limit beyond which they still apply, said Reda.

“Bill shock from holidaying in the EU affects more than 9 million UK mobile users a year according to our research.” said Ernest Doku, telecoms expert at uSwitch.com.

“But the major concern is if and how mobile operators will recover their costs because we all know there’s no such thing as a free lunch. If this regulation change isn’t properly managed, higher mobile phone bills for all may just prove to be the sting in the tail, with infrequent travellers drawing the short straw.”

Meanwhile the issue of true net neutrality, a less publicised component of the bill, was sidelined in order to push through the crowd pleasing roaming charge ban, said Reda “Unfortunately Ansip [Andrus Ansip, the vice-commissioner responsible for the EU Digital Market] claims amendments would delay package by years,” Reda tweeted, “Actually it’s only 6 weeks until the 3rd reading.”