'Candy Crush Saga' Makers King Set For £4 Billion IPO

'Candy Crush Saga' Makers Set For £4 Billion IPO

The makers of mobile game Candy Crush Saga, including an investor from the Midlands, could make more than £4 billion when the company floats on the US stock market today.

King.com, the development studio behind the popular game, has been valued at £4.2 billion, and includes a British entrepreneur among its directors.

Melvyn Morris, a former board member at Derby County Football Club, could earn more than £500 million from his shares in the company when it floats on the New York Stock Exchange.

The self-made millionaire left school at 16 and became a management consultant at 20. After working in the United States he returned to the UK where he set up a range of businesses including a flooring company, before founding dating agency uDate. This took off as part of the dotcom boom and was sold for £150 million in 2002.

He used the money he made to help found King, as well as invest in his local football team, Derby County.

His 12.2% stake in King is estimated to make him more than £500 million when the launch takes place. King's IPO (initial public offering) share price is 22.50 dollars, which industry experts say is in the middle of its expected range. The flotation will be the biggest by a UK firm in the technology boom, and follows Facebook and Twitter floating on the stock market over the last year. Twitter is now worth 30 billion dollars (£18 billion).

Candy Crush Saga is free to download but uses the "freemium" model where users pay extra for more moves to improve their score. Having started out on social network Facebook, it moved on to mobile devices in 2012, and is now played more than a billion times a day, according to the company.

Players have to match different coloured sweets in a set number of moves to complete increasingly difficult levels.

Jack Parsons, deputy editor at Bournemouth-based Apps Magazine, admires the structure Candy Crush Saga has built, but says the developer will have to expand its portfolio to maintain interest.

"The 'freemium' model has proven highly controversial among parents, but there is no denying it works - Appdata estimates Candy Crush Saga in-app purchases equal £610,000 per day worldwide. However, a question still hangs over whether it works as a long-term strategy," he said.

"Despite King's successful valuation, there are still concerns about its over-reliance on Candy Crush Saga, despite launching other titles, including Farm Heroes Saga, which is currently being advertised on TV.

"King has estimated the average lifespan of a paying player on a particular game is two to nine months, so time will tell whether King can keep the public's attention or go the way of Zynga, which lost 40% of its value after entering the market in December 2011, but to date reportedly has lost 63% of its monthly and daily active users in 18 months, not to mention 68% of its paying customers."

An industry analyst also believes that while the IPO is impressive, and King is likely to enjoy some market success, there are pressures on the company.

IHS mobile analyst Jack Kent said: "For now, Candy Crush Saga's success has elevated King into the top rank of mobile games publishers - a position it maintained through 2013 and into 2014, but Candy Crush Saga will not remain a permanent cash cow and King must prove it can repeat this success with new titles.

"Building a series of titles that dominate global mobile games revenues is something we have yet to see in the mobile games business. King claims to have developed technology and a structure that will help it find repeat success, and it has a longer track record of developing popular games across platforms than many competitors, but there are no guarantees it can repeat its Candy Crush success."

Close

What's Hot