King, the Swedish Creator of Candy Crush Saga, To File For IPO | Hacker News Reader

King, the Swedish Creator of Candy Crush Saga, To File For IPO

arcticstartup.com

45 pointspathy41 comments

Great! Another game company that makes insane amounts of cash with addictive flash-in-the-pan games files for IPO. Fast-forward 3 years, and we have another Zynga on our hands: a company that has no sustainable way of making money. Relying on short-lived hits does not translate well into a public company (in my opinion). I hate companies like that.

Not to mention the scummy nature of how they entice users to pay to play, such as 'insert coin to continue playing' mechanism after you fail a board a few times.

Also offensive is the use of sound in these games to ratchet up excitement like a slot machine.

Not just sounds. It's every NLP trick across all fronts including crying icons and sad faces that only brighten up when you pay.

... all of which is easily defeated by setting date forward, likely meaning that they are making as much money from charging $0.99 for level batches (each of 20 stages to a total of 400+) as they do from selling in-game gimmicks. They just milk this puppy through every hole.

Pretty much every video game from at least the last three decades has "[used] sound...to ratchet up excitement." I would hardly use the word "offensive" to describe this.

Don't forget every movie since the end of silent films.

...wait, no. Also silent films. Because orchestra.

Companies based entirely around building better Skinner boxes is a rather alarming phenomenon.

Or the endless Facebook spam!

King have been around for a fair while.

The appeal while I was under-employed was that you could win small cash prizes, which was pretty compelling. I was able to use these as seed money to earn from various poker sites.

I think that King.com might have a bit more resilience to change than Zynga, and a few more innovative ideas. I am fully prepared to eat my own words though.

EDIT: I am also a bit disturbed by the cynical "turn sad to happy faces for $" tricks they are pulling.

I disagree. They're the new X With Friends. Everyone is playing a *Saga game. Just like everyone WAS playing an X With Friends game.

In a year, Candy Crush will be old and lame and replacements like Pet Saga will never achieve the same success just like Zynga's newer X With Friends titles failed to achieve the same success as the original.

I will be shocked if they can survive post Candy Crush, to be honest. Almost $1M/day is hot stuff, but hopefully they realize how fickle people are with apps.

I know the business school default assumption is that you should basically always reinvest, but every once in a while it makes perfect business sense to just pocket the money, distribute to whoever the shareholders are, and walk away. This is the business equivalent of winning the lottery.

Rovio has been around as long as King, and I'd argue that Angry Birds has generated more revenue, and while a bit played out, probably has a longer shelf life still than Candy Crush.

With the added bonus of the JOBS Act which means they won't have to publicize their income until very late.

Record companies, movie studios and even automotive companies are all hits-based businesses, much like games studios. There's no fundamental reason you can't build a sustainable business around this model.

Interesting fact: King has existed since 2003, but they're only now going public. Given that their only real success so far is Candy Crush Saga, you have to wonder if this will be the next Zynga.

(Also fun fact, Notch worked for King until Minecraft became big enough to pay for full time development.)

You're correct that Notch worked at King[1] for many years, but he had left King long before Minecraft became big enough to pay for development. He left king in early 2009 and started Minecraft in May 2009 while working for Jalbum[2], in June 2009 he started opening up sales of Minecraft and in August 2009 went part-time at Jalbum so that he could focus some time on Minecraft. He left Jalbum completely on June 1st 2010. A fun fact about Jalbum and Notch (although this is steering way off topic): after Minecraft really started to take off Notch recruited a bunch of people from Jalbum, one of the Mojang co-founders was the Jalbum CEO (Carl Manneh) and a couple of Mojang employees were Jalbum employees.

[1] He was an actionscript programmer, he worked on http://www.king.com/games/action-games/luxor/ http://www.king.com/games/action-games/carnival-shootout/ among others

[2] http://jalbum.net

Did King ever make a claim to the Minecraft IP?

I know a few people who put >$10 into this game who previously never bought anything on the app stores. If anything, I'm glad they were able to get more people to link their credit cards to their accounts.

Rovio has been around about as long as King, generated $200M in 2012, and hasn't gone public. They have merchandising deals all over the place, and even some big media tie-ins. They have a story they can build off of, and are licensing the Star Wars brand, no small feat.

Candy Crush has a gameplay based on blocks - there's probably hundreds, if not thousands, of mobile apps with the same gameplay. Pet Rescue? Same thing. At least Zynga had story lines or social interaction in their apps. (And by social I don't mean harassing your friends on Facebook to give you a life in the game)

That said, it's a fun little game. I'll play a quick game while tests are running, Vagrant instance is booting, I'm taking a seat in the executive office, etc. Have they hit on a formula that can deliver shareholder value for years to come? Absolutely not.

I have no sources for the following, but I think they're a one trick pony. And not because they have a single popular game but just one, well, trick - I think they optimize "random" level generation based on monetization performance data. And I think they spend quite a lot of time on that. I wouldn't be surprised to hear that most of man hours go into that. It just snowballed from that.

That's it. I wouldn't buy into that.

The founders should just retire from the fortune they made and let the company die.

That's what this IPO is for, cashing out.

I truly look forward to the burst of this flash-in-the-pan game startup IPO bubble, albeit with slight sorrow for the truly hard-working game devs who are feeding the producers and business staff with their undervalued efforts.

Candy Crush is a pretty good game. Not novel, for sure, but well polished and neat.

That said, a minor success doesn't really mean you're ready for an IPO, I don't think.

A minor success after 10 years of trying, no less.

With this attitude, most developers should toss in the towel at 'Hello World.'

> With this attitude

Most developers including me would probably be better served by a realistic attitude such as displayed above by lowmagnet. Unfortunately, this too takes some 10+ years...

I don't know about well polished... for example the stars are in a different color order when you beat a level than they are in the star-meter during the level.

While I agree that this doesn't seen like a great ipo candidate, how is 850k per day a "minor" success.

That's a rough estimate from a third-party that has little to no data.

Even if they are making 850k per day, they aren't going to be making that same amount of money on the game in 1 year (because something new will have come along), so a 5 billion dollar valuation is probably about five times more than what they're worth, give or take.

This is one of those cases where having a 'confidential' S-1 is weird for me. Prior to opening day they have to have a 'public' S-1 so what is the big deal? Actual numbers on paper leading to a buzz kill ? I don't know. But as an investor I treat it as a negative.

I wonder if it's to avoid people seeing a sharp drop in revenue. If they report now and then revise in a few months a drop of 50% or more, people will back off in a hurry.

Seems like nowadays if you have a single hit you can make A LOT of money but trying to keep it a sustainable business when you depend on hits is very hard. I think they can definitely have a very good business. You just shouldn't look at their current finances as indication for how they will be in the future unless they can keep pumping out hits.

Zynga's market cap is listed as $2.9 million. Presumably this is a typo; it's ~$2.9 billion.

Proof that market cap is just numbers on paper, considering all the lay-offs.

They have ~$1.1B in cash, so their true market cap is closer to $1.8B.

It sounds like you're trying to get to their enterprise value (simplified as market cap + debt - cash), but market cap is market cap (value of outstanding shares). They also own other large assets such as their building in SF.

With revenue of $231M last quarter their market cap looks pretty bad. But that's expected given their trajectory.

Right, I was pointing out that their huge cash pile is a large reason for that high market cap despite their decreasing revenues.

I admit it, I was hooked on candy crush and so were a lot of my friends. But in the last month a huge portion of them just quit playing. I wonder if this is just a weird exception, or if this is a larger trend.

You eventually get stuck on a level, that (a) is no fun to play and (b) feels impossible. This makes you feel like they're holding you hostage for a buck.

So I slowly stop playing.

And soon the app updates and, gee whiz, I somehow complete the level easily, and I roll on another 10-20 levels until the next impossible "hostage" level.

Playing CandyCrushSaga 100% legit makes you cynical.

At a valuation of a billion dollars greater than Blackberry's market cap.

And that's the end of Candy Crush then.

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