By buying Candy Crush Saga maker King in a $5.9 billion cash and stock deal , gaming mega-publisher Activision Blizzard is placing two related bets. The first bet is that mobile games will continue to grow in importance to the overall game industry and that Activision needs a larger foothold in that industry if it wants to continue to grow. That's a relatively safe bet, all things considered.

The second bet is that King represents a sound investment in the mobile market and that it's well-positioned to be a robust, diversified, and consistent leader in the segment. This bet could turn out to be much riskier.

Get mobile or die trying

After making only token efforts in the mobile gaming space for years, the King acquisition is Activision's acknowledgement that smartphone and tablet gaming is getting too big to be safely ignored by the industry's biggest players. "We believe now is the right time to engage with mobile gaming in a meaningful way," Activision CEO Bobby Kotick said in an earnings call this morning.

If anything, Kotick's statement is a year or two too late. While console and PC games (the "traditional" gaming sector) still bring in the bulk of the money in the global gaming market, growth rates in mobile gaming revenue have made it clear that probably won't last too much longer. From 2012 to 2015, traditional gaming inflated slowly from $44 billion to $50 billion in worldwide revenue, according to Activision's own analysis. In that same time, mobile gaming exploded from $12 billion to $36 billion. Activision sees those trends continuing at least until 2019, when the two market segments will be of roughly equal size: $57 billion in worldwide revenue for consoles and PCs, and $55 billion for mobile games.

You can already see this coming parity on the horizon when you look at the total reach of mobile and traditional gaming companies. King currently claims 474 million monthly active users (players that play at least once a month) for its titles. Activision says that after the merger, the newly formed company will have a total of 547 million monthly users (this does not account for overlap, so a player who uses both King and Activision games is double counted).

Doing the math, it seems Activision only has 14 percent of King's market, as measured by total number of monthly players. Sure, a large number of King's players—perhaps close to 98 percent—will literally never bring in a cent of revenue for the company after downloading a free-to-play game. Still, King's extremely large reach is the kind that any company worth its salt would be interested in trying to convert into more profits.

King's mobile reach is also increasingly global compared to Activision's traditional market. In its earnings call, the company acknowledged it only had "some capabilities" in emerging markets like Brazil, Russia, India, and China. These markets have billions of potential players that don't have much in the way of ingrained culture centered on hooking up expensive consoles or high-end PCs to a large screen for living room gaming.

What these countries do have is smartphones. They also have an increasing amount of leisure time and disposable incomes to spend on easy-to-access, easy-to-understand, quick hit entertainment like that provided by King. While "traditional" gaming may continue to be the main driver in Europe and North America for some time, mobile gaming has the potential to reach the billions of people worldwide that have barely been in the market for electronic games in the past.

In short, the King acquisition represents instant diversification for a company that's looking to put its eggs in a few less traditional baskets. Right now, Activision brings in 47 percent of its revenues from console gaming and just 12 percent from mobile gaming. By combining with King, both sides of that console/mobile split come in at an equal 33 percent overnight (PC and online gaming and distribution remain largely unchanged as the remainder). That's a much healthier split in a world where, as Activision COO Thomas Tippl said during the call, "mobile franchises are now reaching results similar to established console franchises."

The once (and future?) King

Even if mobile gaming is going to be a crucial part of Activision's newly diverse gaming monolith, there's still the question of whether King is the right company to use to gain a foothold in that market. The current balance sheet certainly suggests it could be. King already brings in $900 million in annual EBTIDA earnings, not all that shy of the $1.6 billion that Activision brings in itself. At an earnings multiplier of about 6.7, $5.9 billion seems like a fair price for a company that generates so much profit.

The question, of course, is whether King can keep that kind of performance up. Candy Crush Saga, the core of King's small gaming portfolio, may seem like a faddish match-three puzzle game that is unlikely to sustain an audience for very long. Yet the game still manages to place consistently in the top five earners across the iOS and Android App Stores as it nears its third birthday on mobile platforms (and its fourth if you include Facebook). It's a franchise that seems at least somewhat expandable, too; Candy Crush Soda was launched last year and has joined its predecessor in the top five earners for nine straight months now.

Part of the series' longevity is King's treatment of Candy Crush as a service more than a static game. Candy Crush as it exists today bears only surface resemblance to the game that launched so many years ago. Through constant updates, King has added hundreds of new levels (there are now nearly 2,000), new types of puzzles, new purchasable items, and plenty of strategic gameplay variety that keeps players engaged and coming back for more.

The slow drip of new content has led an average of 92 million people to continue playing 1.4 billion games of Candy Crush daily. It's that kind of continued attention from players that makes a game that costs nothing to download into a money factory that generates years' worth of micropayments from the most dedicated fans.

Outside of Candy Crush, though, King's portfolio looks a lot weaker. While titles like Bubble Witch Saga and Pet Rescue Saga do all right in the App Store rankings, none of King's dozen or so non-Candy Crush games have caught on anywhere close to the way Candy Crush has, despite heavy promotion including a lot of international TV advertising.

It's possible thaton its own can be a longterm platform for profits, in the mold of regularly updated franchises like Activision's own. But many casual game makers have struggled after being unable to follow up an initial hit with further success.

It's not hard to remember when Facebook game maker Zynga was on top of the world with hundreds of millions of monthly users for games like Farmville, Cityville, and Zynga Poker. But the company wasn't able to create a sustainable business as interest in its brand of busywork games waned, and it quickly became a has-been in the gaming world. Rovio, similarly, rode the success of Angry Birds to huge growth, but the company has seen a few waves of job cuts in the last year as that cash cow dries up (with no sign of a real replacement on the horizon).

King hasn't given up on trying to expand past its Candy Crush core; the company stressed during Activision's earnings call that 2016 will see the launch of its first "non-casual" game. Still, when it came time to talk about "near-term opportunities" on the call, Activision was able to list well-known and heavily hyped games like Guitar Hero Live, Heroes of the Storm, and Overwatch. King could only gesture vaguely to "plans to launch a mid-core title and three games from existing franchises by end of 2016."

Seemingly addressing concerns about King's lack of depth, Kotick reached back to the 2007 merger between Activision and Blizzard. "When others dismissed Blizzard's incredible capacity for innovation [at the time], we insisted patience would be rewarded. And it has," Kotick said.

But at the time of that merger, Blizzard had a successful track record of decades in the game business and a portfolio that reached much deeper than a single casual game. World of Warcraft was and is Blizzard's crown jewel, but the company was rounded out by franchises like Starcraft and Diablo in its catalog. Even with 1,600 employees working across 12 studios to find the next successful franchise, there's much less guarantee that King will be more than a one-trick pony.

The version of King that Activision is buying today—the one with $900 million in annual earnings and two of the hottest games in the hottest segment of the market—seems like a steal at $5.9 billion. The open question is whether the King of tomorrow will look as compelling, or whether it will follow in the rise-and-fall footsteps of so many other faddish casual game companies.