• by Gavin O'Malley , Staff Writer @mp_gavin, November 3, 2015

Bubble! Like the jerk of a knee, that’s how plenty of people are responding to word that Activision Blizzard is dropping $5.9 billion on King Digital -- the maker of mobile gaming sensation Candy Crush Saga.

“This is just one of a number of valuations that are increasingly unrealistically high,” according to Mike Wade, professor at the IMD Business School in Switzerland and director of the IMD/Cisco Center for Digital Business Transformation.

Activision already owns World of Warcraft and Call of Duty, but its customers are mostly men. “Candy Crush has a very large female following, so Activision must be trying to diversify its customer base,” Wade reasons.

Jarring as the price tag is, however, the deal makes more sense when you consider shifts in how consumers are spending their time.

More than two-thirds (68%) of U.S. adults now own a smartphone -- nearly double the 35% of U.S. adults who owned a smartphone just four years ago, according to a recent report from Pew. What’s more, 86% of U.S. consumers aged 18 to 29 have a smartphone, it found. (The research firm did not survey consumers under the age of 18.)

Meanwhile, just 40% of U.S. adults own a gaming console -- like the ones you need to play World of Warcraft and Call of Duty -- and that share has not changed in five years.

Given those figures, it’s easier to understand what Activision sees in King Digital.  

In the third quarter, Activision said only 13% of its current net revenue came from mobile and other sources. Sure to boost that share, this new deal will give Activision more than 500 million monthly active users across almost 200 countries, The Financial Times reports.

In fact, if everything goes according to plan, King will help Activision increase its adjusted earnings by about 30%, next year.

Sure, for the deal to meet long-term expectations, King will have to follow Candy Crush with similarly smashing hits -- but that’s the burden of any entertainment company.