I initially published this post on my personal blog Quarterview.com. Check it out to learn more about mobile game development, game analysis, and industry opinion.
Huge pent-up demand exists for Blizzard IP based mobile games (e.g., Warcraft, Starcraft, and Diablo). We see strong market evidence of this demand in the countless number and success of infringing mobile games that operate without formal licensing with Activision Blizzard.
Especially for fantasy gamers, the ultimate IP in mobile gaming is from Blizzard's Warcraft universe. Overall, this IP is likely second or third only to Nintendo and Shueisha/Shogakukan (who own most of the Japanese anime IP) as underutilized IP assets for mobile games.
Activision Blizzard could easily become the largest mobile gaming company in the world by applying Blizzards old strategy of perfecting proven game models with high polish and launching new mobile games leveraging the company's elite roster of IP.
Hearthstone is a great initial success but what does it need to do to get to the next level?
To get to the next level Activision Blizzard should:
Although internal organic growth of new mobile teams is possible, why take the risk?
So who should Activision acquire?
To me there are only a few viable candidates and the best of these may be Glu Mobile and Ember Entertainment.
The one other company to consider is Com2Us the developers of the game Summoners War which may quite possibly be the best designed mobile game ever created. However, Glu/Ember from a high level outsider's view seems to be a closer fit culturally and with ready to go product fit for IP.
Why Glu and Ember?
Glu + Ember + Activision Blizzard IP:
Let's imagine a scenario where we take the game engines of Glu + Ember and apply Activision/Blizzard IP:
Right off the bat we could have 3-4 easy wins that could all be developed on existing engines. Hence, unlike Hearthstone which took 6 years to release, these wins could conceivably all launch in less than 1 year.
A comparison of the companies market capitalization:
These acquisitions likely wouldn't be easy: there are certainly some changes and areas of weakness to shore up to make this vision a reality. Glu has some particular weaknesses as does Ember.
However, I see great potential for these acquisitions to lead to the creation of the world's biggest mobile gaming company. Activision could with < $1B in acquisitions cost potentially generate 3-5 Top 10 grossing hits over time. Hence, an acquisition that may be able to create as much as $5B-$10B+ in future market capitalization.
The combination I describe could result in essentially the world's greatest mobile gaming company to date.
Activision Blizzard... what are you waiting for?