Reference no: EM133172301
Activision's Crush on Mobile Gaming
On November 2 2015, Activision-Blizzard announced it would purchase mobile gaming giant, King Entertainment for $5.9billion. The all cash deal was expected to close in March 2016. Activision-Blizzard was formed in 2008 as a merger of Activision and the interactive entertainment division of Vivendi(Blizzard). Activision-Blizzard was best known for its Call of Duty, World of Warcraft, Skylanders, Starcraft, and Destiny games franchises. In 2014, the company reported revenues of about $4.4 billion and was the number 3 video game(software) company in the world behind Tencent, and Microsoft.
King Entertainment PLC was founded in 2003 as a social games company. The company, headquartered in Ireland, was primarily known for its best-selling mobile game, Candy Crush Saga. The company's revenues came in at about $2.6B in 2014, with Candy Crush Saga generating nearly 50% of revenues despite about 98% of Candy Crush players being non-players on the "free to play" service. King was the largest mobile gaming company in 2014 with an estimated 10% global market share.
At the time of acquisition announcement, mobile gaming companies largely had been unable to repeat their successes as a "formula" for developing a popular mobile game had proven to elusive. Meaning, most mobile games were "one hit wonders." Wacky games like Flappy-Bird and Plants vs. Zombies appeared to have chances to succeed as good as apps associated with established game franchises. Despite its success in PC and online gaming, Activision-Blizzard had little success in cracking the mobile gaming market. Activision's revenues from mobile games and accessories had fallen from $629 million in 2012 to $418 million in 2015. Given the large number of failures and crowded mobile marketplace, investors worried that Activision-Blizzard would be making a nearly $6 billion mistake in purchasing King Entertainment. Moreover, the business models of Activision-Blizzard and King Entertainment were fundamentally different-and some observers noted, perhaps fundamentally incompatible.
Questions:
1. Main challenge/problem facing the company
2. Analysis of current corporate-level strategy being followed - is it the best one? Why or why not?
a. Is it vertical integration if yes than why?
b. What is their corporate diversification and sustained competitive advantage.
3. Recommendations for adjustments to corporate-level strategy.
a. Their organizational structure and implementing corporate diversification.
b. Implementation of Strategic alliance and sustained competitive advantage.
c. What is their Mergers and Acquisitions and Sustained Competitive Advantage.
4. Analysis of impact of recommended change on company.