Social Game Company Valuations ’Out of Whack,’ Activision Says
Activision Blizzard Inc. (ATVI), the world’s largest video-games maker, said today that valuations of makers of games for social platforms such as Facebook Inc. are very high, limiting Activision’s appetite for purchases.
“Valuations of some of the companies in that space are out of whack, so that’s an issue when it comes to acquisitions” Activision Publishing Chief Executive Officer Eric Hirshberg said today in an interview at the Gamescom video-games fair in Cologne, Germany, when asked if the company will make purchases to get into social gaming.
Zynga Inc., which has 232 million active monthly users for titles including “Farmville,” is valued at $13.8 billion on SharesPost Inc. Rovio Entertainment Oy, whose “Angry Birds” game has been downloaded more than 300 million times to computers and mobile phones, may be valued at “several billion dollars,” executive Peter Vesterbacka said, according to Finnish business daily newspaper Kauppalehti this week.
Electronic Arts Inc. (ERTS), the world’s second largest video- games maker, has made a number of acquisitions to boost revenue from social and mobile games. Activision will bring more games onto more platforms, including mobile devices and social networks, Hirshberg said.
By 2013, revenue from games that can be played online or on a mobile device will jump 50 percent to $32.6 billion, overtaking those of console games for the first time, according to PricewaterhouseCoopers LLP.
“We haven’t made any formal announcements,” for games that will be released on Facebook, Hirschberg said. “But don’t mistake careful, methodical planning for inaction. Any new place where people are playing games, at scale, is something that we’re interested in.”
Activision Social Network
Meanwhile, Activision is introducing a social network for players of the “Call of Duty” shooter game this fall with “Call of Duty Elite,” as connecting with friends and players across the world is becoming increasingly important to users.
The franchise has about 30 million players, and they are playing “a mindboggling number of hours, online, in a connected way, with people all across the world, yet there’s currently no way to unlock that very active social network, to interact,” Hirshberg said.
“If you look at other forms of entertainment, there’s lots of ways to connect,” such as sports statistics sites where people create fantasy leagues, Hirshberg said. The “vast majority” of the service will be free. Pricing for premium membership will be announced in September, he said.
With “Call of Duty Elite,” players will be able to control who they play with, they can join groups of people that share their interests, that share their skill level, and Activision will arrange community-wide tournaments. In addition, the players will have access to so-called webisodes, small films based on the games and aired online.
Activision is joining forces with actors and movie makers. “We’re working with people like Will Arnett, who is a big ‘Call of Duty’ gamer, Jason Bateman, another gamer, and executive producers Ridley and Tony Scott, creating new webisodic entertainment that will be exclusively available to the community,” Hirshberg said.
Yesterday, Jens Uwe Intat, head of EA’s European operations, said the company is seeking to slash Activision’s market share in shooter games from 90 percent in 2010 to as low as 60 percent this year.
“It’s a battle between our ‘Battlefield’ and Activision’s ‘Call of Duty’-‘Modern Warfare 3,’” Intat said. “We are certainly aiming for 30 percent to 40 perfect market share this year.”
Hirshberg declined to comment on Intat’s remarks.
To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at email@example.com