'Candy Crush' maker, in IPO filing, reigns supreme

Game developer King Digital appears to be the new monarch of the mobile-games industry, crushing rival Zynga with close to $2 billion in revenue last year.

By MSN Money Partner Feb 18, 2014 11:27AM

Candy Crush Saga © GABRIEL BOUYS/AFP/Getty ImagesWall Street Journal on MSN MoneyBy Sven Grundberg and Niclas Rolander, The Wall Street Journal

Anglo-Swedish game developer King Digital Entertainment (KING), the maker of "Candy Crush Saga," lifted the curtain on its financials in a filing for a U.S. listing on Tuesday, showing who's really the monarch of the mobile-games industry -- at least when it comes to revenue.

In its filing with the U.S. Securities and Exchange Commission on Tuesday, the game developer said it saw a more than tenfold revenue increase in 2013, as sales skyrocketed to $1.88 billion from $164 million in 2012.

By comparison, Zynga (ZNGA), maker of "FarmVille" and "Words With Friends," had revenue last year of $873 million, while Finland's Supercell, maker of "Clash of Clans," reported revenue of $892 million.

Admittedly, King, founded in 2002, has been around longer than both Zynga and Supercell. Also, with a total staff of 665 employees, it runs a considerably larger operation than Supercell, with its 138 employees. Zynga, however, still employs some 2,000 people despite heavy downsizing in recent years.

King said its net profit last year was $568 million, up from $7.8 million in 2012, largely on the back of its vastly popular and profitable "Candy Crush Saga" game, which was launched on Facebook (FB) in April 2012 and was ported to Apple's (AAPL) and Google's (GOOG) respective mobile platforms later that year.

Zynga, meanwhile, lost money over the course of last year. Because Supercell isn't publicly traded, many of its financial details remain under wraps, including net income. However, the Finnish company last week said earnings that exclude interest, taxes, depreciation and amortization were $464 million in 2013, up from $101 million in 2012.

Along with Supercell's "Clash of Clans" and "Hay Day," King's "Candy Crush" has been leading the top-grossing charts for iOS and Android for more than a year, and has been one of the most frequently downloaded free apps via the iPhone and Google Play. "Candy Crush" -- a colorful and addictive puzzle game that reaps revenue from in-game power-ups -- is being played by 93 million people every day, and is played more than a billion times every day, King said in its filing.

King said its mobile games have been installed 500 million times in total, from the launch of its first mobile game, "Bubble Witch Saga," which it released for mobiles in the summer of 2012.

As with other stars of the mobile-gaming industry, the big challenge now facing King is following up the success of its current hits. In 2013, it almost quadrupled its R&D spending, pushing to diversify its games portfolio and diminish reliance on the immensely popular "Candy Crush Saga."

But the company admitted that it faces intense competition and low barriers to entry in the digital-gaming industry, where programmers with very limited resources can score massive hits. That was evidenced in the recent craze sparked by Vietnamese developer Dong Nguyen, who has said it took two or three days to develop his chart-topping "Flappy Bird" game.

In the fourth quarter of 2013, "Candy Crush Saga" accounted for 78 percent of King's total gross bookings, and its top three games accounted for 95 percent of total gross bookings in the quarter.

The company plans to diversify its game portfolio and said it expects that "Candy Crush Saga" will represent a smaller percentage of gross bookings going forward.

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