Business
12:28 am
Thu March 27, 2014

No Sugar High For Wall Street: Candy Crush Maker's IPO Disappoints

Originally published on Mon March 31, 2014 10:18 am

Candy Crush is played by trying to line up at least three of the same color of candies.

In February, an average of 144 million daily active users got sucked in to the challenge.

Candy Crush is one of more than 180 games made by King Digital Entertainment, and it alone brought in three-quarters of the company's revenue in the last quarter of 2013.

Roger Kay, president of research firm Endpoint Technologies Associates, says to a lot of investors, the game seemed like Farmville, the hit game by Zynga that Zynga can't seem to repeat.

"It's very difficult to replicate the alchemy of a great hit. Even the very same makers of that game can't necessarily come up with another one that's going to be just as popular," Kay says.

He adds that the market may also be getting a little bubbly — there have been high-priced acquisitions like Facebook's purchase of the virtual reality company Oculus VR for $2 billion.

That 2-year-old company has no revenue.

"People are paying a lot for what appears to be not very much," Kay says.

Still, he says, King Digital has been a profitable company since 2005.

It posted more than $700 million before taxes last year.

And it does have a potential hit on the horizon with Farm Heroes Saga, which has seen momentum in popularity since its January launch.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

It is colorful, fun and really addictive. We're talking about the hit mobile game, "Candy Crush Saga." The maker of the games started trading publicly yesterday and got crushed.

King Digital Entertainment's stock sank, which could be a sign that investors are losing faith in the mobile gaming market, as NPR's Laura Sydell reports.

LAURA SYDELL, BYLINE: You play "Candy Crush" by trying to line up at least three of the same color candies. In February, an average of 144 million daily active users got sucked in to challenge. But, "Candy Crush" is one of more than 180 games made by King Digital Entertainment and it alone brought in three quarters of the company's revenue in the last quarter of 2013.

Roger Kay, president of research firm Endpoint Technologies Associates, says to a lot of investors it sound like "Farmville" - the hit game by Zynga that Zynga can't seem to do again.

ROGER KAY: It's very difficult to replicate the alchemy of a great hit. Even the very same makers of that game can't necessarily come up with another one that's going to be just as popular.

SYDELL: Kay says the market may also be getting a little bubbly - there've been high priced acquisitions, like Facebook's purchase of the virtual reality company Oculus VR for two billion. That two-year-old company has no revenue.

KAY: So people are paying a lot for what appears to be not very much.

SYDELL: Still, Kay says King Digital has been a profitable company since 2005. It posted over 700 million before taxes last year, and it does have a potential hit on the horizon with "Farm Heroes Saga," which has seen momentum in popularity since its January launch.

Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.