Even if it isn’t downloaded to your phone (anymore) you have without a question heard or known someone with an addiction to Candy Crush. What you may not know is that the apps massive success has led to creating company, King Digital Entertainment PLC, to plan a $500 million IPO. This may seem like a huge number for a company whose main product involves mindlessly matching colored pieces of candy, especially when the app is free to download. However some of the numbers behind Candy Crush illustrate why the company has such high potential.
Candy Crush has been downloaded on 500 million mobile devices and 408 million of those downloads play every single month, with 124 million playing daily. Financially, the app has also been a success using in app purchases to combat the free download. In the US, the game is estimated to be generating around $850,00 per day. And, while there was a decline in 4th quarter earnings, the company still managed profits of $269 million that quarter alone.
Despite these successful statistics, there are still a number of issues King Digital Entertainment is facing. Many are comparing the company to Zynga, creator of Farmville. Farmville, another app that swept across the internet addicting millions, was the bread and butter of game creator Zynga, and one of the drivers of their IPO. Zynga, who set their IPO price at $10 a share, has seen steady declines in their stock price, currently trading at $5.07. Many potential investors are worried that Candy Crush will be another one hit wonder of the online gaming world. However, there are some positives for King Digital Entertainment. The mobile-game industry revenue is expected to increase 30% over the coming year, and King Digital also boasts successful games other than just Candy Crush (their Papa Pear Saga was one of the top ten most downloaded apps globally in December).
Does King Digital Entertainment have the potential to continue their success? Is their IPO too highly priced? Is there real lasting profit potential in the mobile-game industry?
** Update: On Wednesday, March 12th, makers of Candy Crush announced they hoped to raise $523.8 million leading to a valuation of almost $7.6 billion.