King Digital announced on March 12 that shares will be priced between US$21 and US$24; it expects to sell 22.2 million shares in its IPO
Creator of the highly popular Candy Crush Saga, King Digital Entertainment, has announced plans to file for an IPO, which could be worth up to US$7.6 billion on the New York Stock Exchange.
On the back of 93 million active users of Candy Crush, in which an estimated 11 per cent pay for additional game time, King Digital Entertainment made US$568 million in profits and US$1.8 billion sales in 2013. It announced on Wednesday (March 12) that shares will be priced between US$21 and US$24, and that it expects to sell 22.2 million shares in its IPO.
Its success is largely due to its micro-transaction model, which allows consumers to download games for free but makes them pay for additional benefits. It’s availability on smartphones and tablets also helps users to access the game on the go. King Digital Entertainment must have a sound strategy to convince investors and reduce the skepticism attached to casual-social game businesses going public.
In comparison, its main rival Zynga reported losses of US$68,000 in it’s third quarter of 2013. Zynga had also filed for an IPO in 2011 when Farmville was highly popular, but has lost much of its glamour since then.
On the flip side
According to The Financial Times, there are signs that growth for the gaming company is slowing down. King Digital Entertainment saw its daily active users rise from 93 million to 97 million between December and February, but only four per cent of its players make purchases in any given month now.
Zynga discovered that consumers are an unpredictable bunch; Facebook games aren’t as popular as they were a couple years ago. Just last month, King Digital Entertainment had said it was shutting down five of its online titles to focus on the major money-making successes like Candy Crush and forthcoming titles. But who knows how long Candy Crush will continue to be popular?