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Activision Blizzard’s King Digital Acquisition: A Growth Strategy

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Significant opportunity in the mobile gaming space

Activision (ATVI) is expected to benefit a great deal after its acquisition of King Digital (KING). The mobile gaming market globally is expected to be $36 billion by the end of 2015 compared to $29 billion for the PC (personal computer) segment and $21 billion for the console segment. The mobile gaming sector is expected to continue double-digit annual growth, driven by more consumers in different geographies. Top franchises in this space are generating results similar to established console franchises, with leading franchises showing a track record of continued success.

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Worldwide gaming software sales expected to increase to $112 billion by 2019

As you can see in the above chart, worldwide gaming software sales have increased from $56 billion in 2012 to $86 billion (expected) in 2015, and they’re expected to increase to $112 billion by the end of 2019. Mobile gaming sales are expected to reach $55 billion by the end of 2019 from $12 billion in 2012. Console and PC gaming sales are expected to increase at a slower rate from $44 billion in 2012 to $50 billion by the end of 2015 and $57 billion by the end of 2019.

Expansion of leading franchises

The combined entity will likely look to expand and add mobile franchises with a strong appeal to diverse audiences and demographics. It would also be well positioned for long-term growth through a combined track record of franchise success and growth by providing gamers with high-quality user experiences.

Activision comprises 0.49% of the PowerShares QQQ Trust (QQQ) and 0.39% of the iShares S&P GSTI (TM) Technology ETF (IGM). Electronic Arts (EA), another company in the home entertainment space, also comprises 0.36% of QQQ.

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