The game development company behind Candy Crush, King, is set to float an initial public offering (IPO) later this month. And King might be worth an eye-watering $7.6 billion!
At some point, most people will buy into a highly addictive game. From the early days of The Sims and as far back as Tetris, people have been sucked into an obsession with a game they can’t put down. These days, it’s all about Candy Crush Saga.
The phenomenally popular Candy Crush Saga has taken King Digital Entertainment Plc, the Dublin-based company that makes it, into the major leagues among the world’s tech firms. It may be far from the level of Facebook or Google but it’s clearly confident about its own future – it is planning to sell off shares this month in an initial public offering (IPO) expected to raise more than $532 million (£320 million).
Some 22.2 million shares will be sold off at a value of between $21 and $24 per share, which points to a valuation of the company at an eye-watering $7.6 billion. That’s more than Hasbro Inc, the company behind classic games such as Monopoly and Scrabble and newer toys such as the Nerf brand. But will investors flock towards it or is the company’s confidence misplaced?
For many analysts, the biggest problem is that King relies heavily on Candy Crush. So heavily, in fact, that it is almost single-handedly responsible for the meteoric rise in the firm’s revenue in the two years since it was launched. In 2011, King took $64 million in revenue, according to BBC News. Candy Crush became available on Facebook in April 2012 and by the end of the year could also be downloaded on Apple and Android devices. A year after the launch of its major game, sales had reached $1.8 billion.
Given that it is behind 180 different games, it is obvious where the company’s biggest potential lies. If Candy Crush was to suddenly lose its grip on its addicted users, King could be headed for trouble.
There are plenty of examples the company will be hoping not to follow – shares in Zynga have fallen by 50 per cent since Farmville began to decline. Similarly, although Angry Birds lives on with merchandise and even an upcoming cinema outing, Rovio hasn’t had a hit on that scale since. If King is to win over and retain the faith of investors, it will need Candy Crush to demonstrate real sticking power to sweeten the deal.
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