A few years ago, hearing about a billion-dollar acquisition was extremely tare. Now, it seems literally everything is being valued in billions, and even those that don’t have monetization prospects are given undue interest by investors.
A testament to this is King, which is the company behind Candy Crush. Activision has announced that it is buying King for $5.4 billion, and all this is because of Candy Crush, which is an extremely popular smartphone game.
Activision is expanding its portfolio, which includes everything from eSport-worthy games like Call of Duty, all the way to casual games like Candy Crush.
The primary pull for this game, at least for the investors, is that it rakes in lots of money from In App Purchases. But the thing is, the amount Candy Crush brings in is not worth $5.4 billion.
To be clear, Activision brought a single smartphone game for $5.4 billion. It is a bit ironic, really. A game that is meant to be free to play is being valued at $5.4 billion. In fact, Microsoft payed much less than this amount when it acquired Minecraft, which is the most popular PC game. Even Twitch was valued less than Candy Crush. Imagine this: One of the most popular websites in the world is worth less than a simple smartphone game. Oculus, a revolutionary company making inroads into Virtual Reality was valued less than a game that is essentially a slightly modified version of Bejeweled.
There’s no question that there is an investment bubble, and when it bursts, a whole lot of money is going to go down the drain.
What do you think? Is it absurd that a simple game is valued more than groundbreaking products?