The action of King Digital Entertainment has lost more than 20% at the opening Wednesday on Wall Street. His model raises concerns
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King confirms that the” social gaming “is always a volatile sector. The editor of British-Swedish gaming has been severely buffeted the New York Stock Exchange yesterday, losing more than 23% at the opening, following the release of its quarterly results. In particular disappointed on its sales. The publisher of the hit game Candy Crush, which has an IPO in late March, generated $ 594 million of revenues in the second quarter, when analysts expected 606 million. And the prospects are not necessarily as fun by the end of the year, the gross bookings (advanced payments) are down 5% from the first quarter, giving an idea of what could be the number of Business of the third quarter.
For King, the explanation is simple, but it is not likely to reassure markets: payments generated by Candy Crush are down and this decline is not offset by income from other securities. Highly dependent on this simple but addictive little in which to eliminate candy game, the company has tried to diversify. It launched several new games in the last month, like Bubble Witch Saga 2 or Pyramid Solitaire Saga, a game at cards, a segment in which she created high hopes. The share of these diversifications in total gross bookings increased 33% in the first quarter to 41% in the second quarter. But the pace is not enough to take over Candy Crush.
Fewer players pay
The game, which ensured an explosive growth in King for several quarters – the company from a turnover of $ 64 million in 2011 to 1.88 billion in 2013 – clearly showing signs of slowing. Its launch in the Chinese market had yet boost sales. Main problem for King: players are less willing to pay to speed their progress through the levels. Paying players accounted for just over 5% of all players in the second quarter 2013, a year later, they are no more than 3% to be paid. The player base has expanded so (in all, 138 million people worldwide play daily games of King), but the company will have to work to encourage players to reach for their wallets .. . While avoiding being overwhelmed by competition, particularly of cheaper games, such as 2048 or Kim Kardashian Hollywood.
Profitability intact
This slowdown, however, has no impact on the profitability of the company. King reported net profit up sharply (+31%) to $ 165 million in the second quarter. For the first time, the editor will even distribute a dividend of 150 million to its shareholders. Not sure that’s enough to get the pill … as sweet as it is
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