The combined company will have a customer base of 500 million users worldwide, making it a formidable marketing force in the world of digital games. The combination also allows the company to serve customers on multiple platforms (game consoles, computers, tablets and mobiles).
King's freemium marketing strategy (meaning fees for special features or powers) drove the company through a period of aggressive growth, including significant expansion into Asian markets. Its megahit game Candy Crush was released in 2012 and is still responsible for much of the firm's profitability.
However, mobile games are becoming an increasingly competitive space. Nintendo is finally going to release its first mobile game in 2016, called Mii Friends. As with competing games, Mii Friends will be freemium-priced. Meanwhile, Zynga (known for its once-ubiquitous FarmVille game and Words with Friends) is looking for its next megahit game and facing product launch delays.
King and Activision combined should have more marketing power in mobile games, where much of the growth in game-playing takes place. In-app payments for special powers or widgets are growing, and the firms see a lot of revenue potential from users eager to advance to higher levels and new challenges. Although freemium pricing has its critics, the strategy does allow users flexibility and choices about what they want to spend and when--if they choose to spend on mobile games at all.
