Anorak

Anorak | Candy Crush Saga maker files for IPO: but are they a one hit wonder?

Candy Crush Saga maker files for IPO: but are they a one hit wonder?

by | 27th, September 2013

candy crush

THE makers of Candy Crush Saga have filed for their IPO over on Nasdaq in the US. That they’re an English company floating over there is interesting but of rather more importance is whether they’re really just a one hit wonder?

The basic news is here:

It is understood that King will float on the Nasdaq exchange in what is likely to be the biggest IPO by a UK technology company for years.

King, which used to be referred to as Britain’s answer to Zynga before the latter company’s fall from grace, has lodged its pre-IPO “S-1” paperwork with the Securities and Exchange Commission, taking advantage of the same loophole for rapidly-growing businesses that allowed Twitter to keep its IPO confidential.

Few financial details are available, but it was turning over around £300m at the start of this year and has grown rapidly since then. Its games were played an average of 300m times a month in 2011 but that figure now tops 30bn, helped by the success of Candy Crush Saga, which is the most popular game played on Facebook.

It’s not a surprise that they’re floating, we knew they were considering this back in June when they announced that they had hired bankers to explore the possibility:

King.com, maker of the “Candy Crush Saga” games, has hired JPMorgan Chase & Co., Credit Suisse Group AG and Bank of America Corp. to prepare for an initial public offering, two people familiar with the matter said.

The software developer, whose official name is Midasplayer.com Ltd., hasn’t decided on the size or timing of a share sale, said the people, who asked not to be identified because the plans are private. The Wall Street Journal reported on June 18 that the banks had been hired.

The thing is though that while the company has been around forever in internet terms and it does have a decent product base (some 130 different games) the recent performance of Midasplayer has really been driven by just the one game, Candy Crush Saga:

Over the past two weeks, I had heard from several sources in the industry that King — the maker of mega-hit Candy Crush Saga — had changed its internal thinking around an IPO. The astounding success of Candy Crush blew through all of the company’s 2013 financial targets in a single month, the company’s CEO Riccardo Zacconi told me back in March at the Game Developers Conference back in San Francisco. Candy Crush has done so well on virtual currency transactions that they’ve even stopped doing advertising.

Making vast gobs of money from just one product is fine of course. But in something as prone to the whims of fashion as online gaming the problem is that you never know how long something is going to remain in fashion. For we have before us the example of Zynga, the last company to be top of the Facebook games charts. As people stopped playing its big hit, Farmville, the company gradually imploded and it’s worth a fraction of what it was when it had its IPO.

Is this going to happen here? Who the hell knows is the correct answer to that. Someone’s going to make a lot of money here but it’s entirely unknown whether it will be the people selling their shares at the top, while Candy Crush Saga is still a hit, or the people who buy them from them as the company goes on to develop many more such hits.



Posted: 27th, September 2013 | In: Money, Technology Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink