Candy Crushed? Here's A Chart To Make You Think Twice About King's Looming IPO

Mar 12 2014, 8:32pm CDT | by

Candy Crushed? Here's A Chart To Make You Think Twice About King's Looming IPO
Photo Credit: Forbes Business

Candy Crush is a maddeningly addictive game on which people are willing to spend a buck or more to lengthen their vividly-colored screen time. But potential investors to King.com’s forthcoming IPO should note it’s also a game that brought in roughly three quarters of King.com’s revenue in the fourth quarter, and that there may be a cost to relying so heavily on a digital golden goose, no matter how hooked its users or how much King values itself to be — a remarkable $7.6 billion .

The chart above shows that Candy Crush has recently been sliding in the ranks of downloaded apps on both Apple’s App Store (above) and Google Play (below). Having been firmly in the top 10 for much of July and all of August 2013, the game eventually dropped into the teens and even 20th position in December 2013, according to app analytics company App Annie.

That slide mirrors a fall in revenue for Candy Crush’s maker, King Digital Entertainment, and shows just how closely correlated the company’s finances are to one game. In the last three months of 2013, King’s sales slipped to $632 million from $648 million in the previous quarter, while net profit also fell to $269 million from $290 million.

King did not wish to comment for this story, but the company has been open about the investment risks in its SEC filing today, noting that “a small number of games currently generate a substantial majority of our revenue,” (though “one game” might have been more accurate). The company said that in the future it expects Candy Crush to represent a smaller percentage of gross bookings from mobile as it expands into other games:

“If the gross bookings of our top games, including Candy Crush Saga are lower than anticipated and we are unable to broaden our portfolio of games or increase gross bookings from those games, we will not be able to maintain or grow our revenue and our financial results could be adversely affected.”

King has been producing casual games for a decade and been profitable since 2005, so potential investors are of course also betting on the company’s clever strategies for sniffing out and promoting the next blockbuster hit that will dominate app rankings.

But history tells us even the most effective strategies which stretch the boundaries of exploitative game mechanics can’t guarantee future blockbusters that replicate what Candy Crush has achieved till now. Just ask Zynga, maker of the blockbuster social game Farmville, whose shares have fallen 40% since its December 2011 IPO. Zynga’s shares debuted at $11 but have been hovering around the $3-5 mark for almost two years.

Rovio, the maker of blockbuster mobile game Angry Birds, has chosen not to go public, though when I visited the company’s Espoo, Finland-based offices in June 2011, management then were tentatively excited about a future IPO. Rovio back then had just seen its annual revenue jump by 300% and it was dominating the top ten charts globally. Since then however, Angry Birds has fallen into the mid-30s in rankings according to App Annie.

“We don’t want to estimate ourselves in bubblelicious figures,” Rovio’s vice president Ville Heijari eloquently said then, adding that Rovio didn’t want to “rush” towards an IPO. That may have been wise in hindsight. Rovio has yet to release a game with the same impact of Angry Birds, though it’s had relative success in milking the game’s brand and characters with merchandising deals.

It’s worth noting that King may manage to counterbalance Candy Crush’s eventual disappearance from our screens with other, addictive games. Its other colorful offering, Farm Heroes, seems to have the most potential. According to the company’s filing it had racked up 20 million daily active users in February, up rapidly from 8 million in December 2013.

But it’s still no Candy Crush, which had 93 million users in December 2013.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Indian American scientist develops path to brighter LCD displays
Washington, Nov 24 (IANS) Researchers led by an Indian-American have developed a polarising filter that can result in mobile device displays that last much longer on a single battery charge and cameras that can shoot in dim light.
 
 
Xi Jinping-Peng Liyuan love story goes viral on internet
Beijing, Nov 24 (IANS/EFE) A music video that tells the story of the deep love between Chinese President Xi Jinping and his wife Peng Liyuan has gone viral on the internet with more than 22 million views in a week, the People's Daily reported Monday.
 
 
Italian doctor contracts Ebola in Sierra Leone
Rome, Nov 24 (IANS) A doctor working for a voluntary organisation in Sierra Leone has become the first Italian to contract Ebola, media reported Monday.
 
 
Complete fossil of small dinosaur found
Seoul, Nov 24 (IANS/EFE) South Korean paleontologists have found a complete fossil of a small dinosaur in rare condition, the first such discovery of its kind in the country, according to the National Research Institute of Cultural Heritage in Seoul.
 
 
 

Latest from the Network

Hamilton admits hardly sleeping the night before
Abu Dhabi, Nov 24 (IANS/CMC) Newly crowned Formula 1 World champion Lewis Hamilton has revealed he hardly slept the night before the season-ending Abu Dhabi Grand Prix which he eventually won to clinch his second...
Read more on Sport Balla
 
Real Madrid to play in Australian tournament
Melbourne, Nov 24 (IANS) Real Madrid, which boasts the most expensive squad in world football, have been announced as one of three teams to compete in the International Champions Cup in Melbourne in July. The...
Read more on Sport Balla
 
Cruzeiro win Brazil Serie A title
Belo Horizonte (Brazil), Nov 24 (IANS) Cruzeiro have clinched their second consecutive Brazilian Serie A title with a 2-1 victory over Goias. Everton Ribeiro struck the winner at the Mineirao stadium Sunday after...
Read more on Sport Balla
 
Honours shared in Milan derby
Rome, Nov 24 (IANS) Inter Milan have played out a 1-1 draw against crosstown rivals AC Milan in a sellout Serie A game. Jeremy Menez gave AC Milan a lead at halftime but Joel Obi equalised for Inter shortly after the...
Read more on Sport Balla
 
IOC chief condemns Afghan bombing
Lausanne, Nov 24 (IANS) International Olympic Committee President Thomas Bach condemned the suicide bombing at a volleyball tournament in Afghanistan. The lone bomber detonated explosives Sunday during a local...
Read more on Sport Balla
 
Marseille tops French league
Paris, Nov 24 (IANS) Marseille have climbed to the top of the French league after rallying to beat Bordeaux 3-1. With the victory, they now enjoy a one-point lead over Paris Saint-Germain. Bordeaux striker Thomas...
Read more on Sport Balla
 
New crew aboard Russian spaceship reach ISS
Washington, Nov 24 (IANS) Three new crew members from the US, Russia and Italy arrived Monday at the International Space Station (ISS) on board a Russian spaceship. Terry Virts of NASA, Soyuz Commander Anton...
Read more on Business Balla
 
Sears plans for big Black Friday 2014
Sears is looking foward to cashing in big time for the upcoming Black Friday 2014 shopping holiday on Novermber 28th. Members of Sears have seen their Black Friday specials start one week early and the company has...
Read more on Black Friday Countdown
 
Apple gears up for Black Friday
Black Friday is fast approaching and one company that plans on seeing a sales increase is Apple. Apple has announced that they will have discounted prices for the upcoming buying holiday and one product they plan on...
Read more on Black Friday Countdown
 
Thousands protest in Chile in favour of new constitution
Santiago, Nov 24 (IANS/EFE) Several thousand people took to the streets of Santiago and other Chilean cities to demand a Constitutional Assembly as a means to provide the country with a new constitution, as was...
Read more on Politics Balla