As the makers of Candy Crush prepare to go public, Derek Thompson marvels at how much money the addictive game has made them:
King Digital Entertainment, the company behind the mega-hit game Candy Crush, has filed its IPO papers with the SEC, offering investors a look inside its massive popularity. And, well, dear God. Last year the company took in $1.88 billion with $568 million in profits—half $1 billion in profits! To put this in perspective, a mobile gaming company specializing in colored sugar baubles made more than a quarter of Amazon’s lifetime earnings in a year.
Yglesias advises against investing, saying the sugar high isn’t likely to last:
These things become monster hits because they’re basically fads (or “memes” that “go viral” as we say in 2014) that benefit from attention spirals that eventually burn out. The very fact that King Digital wants to do this IPO right now should actually tell you something.
It’s not like the company desperately needs to go public to raise capital. And it’s not like the company has become so big that it’s in the Facebook situation of being basically unable to incrementally expand without going public. What you have is a case of founders and early investors trying to cash out while Candy Crush is still popular.
But, with few precedents, it’s hard to predict how the company might fare:
Wary investors could (and should) look to Zynga as an example. The gaming company behind uber-popular Facebook-based games like Farmville went public in 2011, but has been in freefall ever since, due to the company’s inability to launch another game as popular. But the jury’s still out on Zynga, which some say could be just as profitable as initially thought. Yahoo Finance writer Kevin Chupka thinks Zynga is due for a comeback, arguing that the company’s stock dip was due to their lack of mobile offerings. King, on the other hand, operates primarily in the mobile sphere, relying on mobile apps for seventy percent of its revenue.
The Dish 