Mobile games are expected to surpass consoles as the biggest segment of the gaming market next year. This should be good news for King (KING), the maker of Candy Crush Saga and a company that has had trouble convincing investors it is here to stay.
King has been dogged by suspicions that it would suffer immensely once people got bored of its hit game. From June to October, the company lost more than half its market value. On Thursday, King reported earnings, and the most recent quarter seems likely to be the last in which Candy Crush will make up the majority of its business. The value of virtual goods sold through King’s non-Candy Crush games totaled $264 million, or 49 percent of the company’s total, up from 41 percent a year earlier. While total revenue is dropping, it is doing so slower than Wall Street expected, and King’s stock is up 5 percent from yesterday afternoon.
EMarketer says that about 70 percent of American smartphone users will play games on their phones next year. Convincing those users to play any one particular game is getting more difficult, and the costs that game companies have to pay for marketing has been steadily increasing. Hence the Candy Crush ads on TV and the Clash of Clans posters on commuter trains.
Still, King is attracting new users. Just under 350 million people play its games each month, up 29 percent from the year before. And King will continue to have advantages over smaller rivals. Aside from having a real advertising budget, the company can also push new games to people as they play its existing games. This is both annoying to many people and relatively effective at getting them to try new games. King says a challenge is getting the new stuff up and moving before the older sort grows stale. The company runs nine separate studios and has released four mobile games this year. None have unseated Candy Crush, but three have made it to the top-15 list of games available in both Apple’s and Google’s app stores.
Going forward, King Chief Executive Riccardo Zacconi says, he wants to publish a new game every three months or so—any longer than that and players’ eyes start to wander. “Leaving a gap of five months between two mobile launches, which was the case between the launch of Farm Heroes Mobile and Bubble Witch 2, was too long to maintain the network,” he says.
