The sweet story of Candy Crush: How King.com made its millions

By on March 26, 2014

The maker of the smartphone hit Candy Crush could be the most valuable London-based tech IPO ever.

Formative years

The business that would be King began life as online games developer Midasplayer in Stockholm in 2002 – even overnight successes take a fair bit of time to mature. Brit VC Apax invested R621 million in September 2005 and the first iteration of Candy Crush launched on King.com in March 2009.

But it was the shift to Facebook two years later that was the winning move. Although others – Zynga’s Farmville for one – arrived earlier at the social gaming party, Candy Crush, with its short, sweet and mobile-friendly gameplay, has reaped the greater spoils.

An addictive confection in which players match glittering on-screen sweeties by shape or colour, the game has been downloaded 500 million times and has been Facebook’s most popular app since January last year.

It is also the highest grossing app on Google Play and earns more than R6.5 million per day on Apple’s US App Store alone.

Recent history

King made profits of over R7.5 billion on revenues of R20 billion in 2013. With numbers like that, it is no wonder the firm has announced its intention to float on the New York Stock Exchange. Raising R5.3 billion at a sugar-coated valuation of up to R81 billion would make it the most valuable London-based tech IPO ever – if investors can be persuaded by a sweet tooth.

Who’s the boss?

With an Italian CEO, a Swedish creative head and a chairman from England, King is the very epitome of a 21st-century borderless business. They all stand to do pretty well from the IPO. Chief Exec and reformed management consultant Riccardo Zacconi owns 10.4 percent of the equity, but Chairman Melvyn Morris is the biggest individual shareholder, with 12.2 percent.

The founder of dating site uDate and a former director of Derby County FC, Morris left school at 16 to sell flooring but could end up worth more than R8.8 billion.

The secret formula

King’s 180 games are free to download but make money when players buy in-game power-ups to boost scores. Although only four percent of the firm’s estimated 344 million monthly users do so, that’s enough to generate a ripe old income.

But Candy Crush accounts for 78 percent of all revenues, so King’s big challenge is to do it again. It needs repeat successes to prove it’s not just another Zynga-style, one-hit wonder.

Don’t mention

Tax planning. Founded in Stockholm with an executive team based in London and a float planned in New York, perhaps it’s no surprise to learn that King’s official HQ is somewhere else again, in tax-friendly Dublin. So don’t expect HMRC to be cheering if and when King gets its float away.

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