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September 27, 2017

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'Candy Crush Saga' maker King Digital plans IPO

NEW YORK--The company behind "Candy Crush Saga" is going public, hoping the popularity of its addictive online game will translate to sweet returns for itself and its investors.

King Digital Entertainment PLC, which also makes lesser-known games such as "Bubble Witch Saga" and "Pet Rescue Saga," did not disclose how many shares it expects to offer in the IPO or a projected price range for the stock. In papers filed Tuesday with the Securities and Exchange Commission, the company said it hopes to raise as much as US$500 million in the offering. The amount could change in the coming weeks as the company and the IPO's underwriting banks gauge investor demand.

"Candy Crush" was the most downloaded free app on iPhones and iPads in 2013, beating Facebook, Google Maps and YouTube. The game's success helped King replace Zynga Inc. — maker of "FarmVille" and "Mafia Wars" — as the No. 1 producer of games played on Facebook.

So is King the next Zynga?

Zynga, too, once ruled the realm of online games. And in 2011, the company went public riding the popularity of an addictive game, "FarmVille." Founded in 2002, King only decided to go public once "Candy Crush" had achieved the pinnacle of popularity. But several analysts say any comparisons between King and Zynga are unfair — to both companies.

"They have been around longer and are much larger," said John Fitzgibbon, the founder of "Why go public? Because they can."

King is five years older than San Francisco's Zynga, and thanks largely to in-app purchases people make while playing "Candy Crush," the company generated 2013 revenue of US$1.88 billion, more than 10 times its 2012 revenue of US$164.4 million. Zynga's 2013 revenue, meanwhile, was US$873.3 million, down from US$1.28 billion in 2012.

Another major difference: King is profitable, while Zynga is not. King had 665 employees at the end of 2013. Zynga, meanwhile, is cutting jobs but still has about 2,100 employees, down from a peak of 3,300 in 2012, at the tail end of the "FarmVille" craze.

"They are two different kinds of game companies, with 'Candy' being a bit more mobile centric," said Gartner analyst Brian Blau. They also take different approaches to game development, he added. Zynga analyzes how its games are played to try to make the games better, more addictive and more lucrative once they are already out, while King tests its titles "for a very, very long time" before releasing them to the public, Blau said.

"Candy Crush," which involves matching rows of bright-hued virtual candies to make them disappear, is successful by any measure. There were 93 million users playing the game every day in December, according to King's regulatory filing. If King isn't a household name, "Candy Crush" certainly is. The game's fans can be spotted on subways, waiting in line at the Post Office or in the theater before the start of a movie. "Candy Crush" is free to play, but users spend money on extra items to boost gameplay. That's the model for Zynga's Facebook games, too.

King said in its filing that the IPO will include shares offered by the company as well as those offered by existing stockholders. The Dublin-based company, which has offices in Sweden, London, San Francisco and elsewhere, plans to list its stock on the New York Stock Exchange under the ticker symbol "KING."

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