Looks like it’s tech IPO season folks. The latest company set to go public is King Digital Entertainment, maker of the highly addictive Candy Crush Saga.
The company has officially filed paperwork with the US Securities Exchange Commission as it gets ready to enter the stock market.
In the filing, the company reveals that it managed to pull in a profit of US$567.6-million on US$1.89-billion in revenue. The vast majority of that, around 70%, came from one game: Candy Crush Saga.
The game, which is renowned for its incredibly addictive nature, doesn’t make money from downloads but from users who buy power ups to improve their game-play.
Intuitively it might not seem like the greatest business model, but bear in mind that Candy Crush Saga has 93-million active users and one-billion daily active game plays. Even if a relatively small number of people actually buy anything (around 70% of people who’ve reached the game’s final level have never paid for a single thing in the game), its numbers are self-evidently big enough for the game to make a killing.
As Business Insider points out however, that kind of popularity won’t last forever. If King’s IPO wants to avoid the same fate as Zynga then it’ll have to seriously up its game.
In fact, it might have to do more than that. After all, Zynga had a string of successful games and still went into free fall. None of King’s games come anywhere close to being as successful as Candy Crush Saga.
That said, gaming companies have staked their fortune on one product and thrived. Rovio’s successes with the Angry Birds franchise is probably the best example. In order to keep up profits however, it’s had to move into a few other revenue streams, including energy drinks and plush toys.