King Digital Entertainment PLC Soars on Acquisition by Activision Blizzard

We know this because Newzoo released a list yesterday of the top 25 game companies with the highest revenue in the first half of 2015.

Activision has been slow to embrace mobile, a deliberate move to ensure that consumer enthusiasm in the space was not a short-term spike, like gaming proved to be in 2010. The deal will mark a great opportunity for the two companies to enter into a new market.

Mizuho Securities analysts Neil Doshi and San Phan were a bit surprised by the deal and are cautious on it. They note that Activision has stayed away from social gaming until now, instead focusing on PC, online, and console games. However, the can be cost prohibitive.

Activision's games on the other hand are played on pricy video game consoles or computers. Its games are priced in the US$30-US$60 range. At the end of the quarter, World of Warcraft (WOW) had subscriber base of 5.5 million, lower than the 5.6 million in the second quarter.

The numbers now say that Activision Blizzard is bigger than Microsoft and Sony.

The acquisition isn't without risk, for while mobile games have proved popular with everyone from toddlers to senior citizens, they are also tough to make money off of, as companies such as King and its rival Zynga Inc. have found. How many times did you play it?

The game is already plagued with bugs and complaints, where accidental purchases are made with the unconfirmed click of a button and draining user's wallets, and this new development could cause many more bugs.

Shares of King Digital Entertainment Plc., which went public in March 2014, jumped almost 15 percent, or $2.31, to $17.85 a couple hours before markets opened Tuesday and after the deal was announced. Mobile games and mobile-centric developers and publishers usually have a short lifespan within the gaming industry.

As for King Digital, the company has experienced a slight wind-fall in its recent performance.

The deal is a sweet one for Zacconi and his team, who have faced pressure from investors in the past year to prove the company is more than just a one-hit wonder. "China, Japan, and South Korea". King Digital Entertainment hasn't been able to create a followup to their massively successful Candy Crush Saga and Candy Crush Soda Saga mobile games. We believe that the Acquisition will position us very well for the next phase of our company's evolution and will bring clear benefits to our players and employees.

Edison Investment Research Analyst Eric Opara agrees.

Oil and gas companies, one of the most battered parts of the market, saw another wave of investor interest.

Candy Crush Saga is an addictive phenomenon, draining people's wallets to become the fourth-highest grossing game in the Apple Store and a prime example of the potential of mobile gaming.