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Introduction

King is an interactive entertainment company that develops and publishes casual games. Its games include the highly successful Candy Crush Saga. In March 2014, its IPO failed to achieve its target price with investors concerned by the company's reliance on Candy Crush and the disappointing performance of rival Zynga since its IPO in December 2011. This case study analyzes King and these issues.

Features and benefits

* Looks at the history of King Digital Entertainment and how it has grown in to a billion dollar business
* Examines King Digital Entertainment's business model and how this has led to extremely strong growth in recent years
* Analyzes the company's IPO, its outcome and the reasons behind it
* Examines the challenges facing King Digital Entertainment, particularly with regards to smash hit title Candy Crush Saga

Highlights

Originally incorporated as Midasplayer.com Limited in 2002, King was founded to facilitate an IPO and is now the holding company for all assets. King has developed a number of games ranging from multiplayer pool to Candy Crush. This constant development along with the exploitation of various distribution channels has seen revenues and profits soar.
King's adopts a multi-channel approach, although there are signs of an increasing dependence on mobile revenues. The company is reliant on a small number of titles for the majority of its revenue, most notably Candy Crush. The surge in popularity of this game has seen the company grow both revenue and profits as it follows a 'freemium' model.
In September 2013, King announced plans to float on the New York Stock Exchange. Despite much publicity in the run up to the IPO, the shares failed to achieve their target price amid investor concern. Comparisons were drawn with rival Zynga, a company which has performed poorly having failed to build on the success of once popular games.

Your key questions answered

* What is King Digital Entertainment?
* What is King Digital Entertainment's business model?
* What was the outcome of King Digital Entertainment's initial public offering (IPO)?
* What future challenges is King Digital Entertainment facing and how can it mitigate these?

Table Of Contents

King Digital Entertainment plc: Sweet success of Candy Crush but doubts remain
OVERVIEW
Catalyst
Summary
KING DIGITAL ENTERTAINMENT: A BRIEF HISTORY
Midasplayer.com: The early years
Social Networks and smart devices take King to next level
IPO announcement and establishment of King Digital Entertainment plc
KING DIGITAL ENTERTAINMENT: BUSINESS MODEL
King's games can be played on a number of platforms
Reliance on small number of titles, most notably Candy Crush
King's freemium model
King Digital Entertainment: Financial performance
DISAPPOINTING IPO, ECHOES OF ZYNGA
Decision to float all about timing
Underwhelming IPO amid investor concern
Fad factor an inherent issue in online casual gaming
Zynga comparisons plague King
CONCLUSIONS
IPO not so sweet as reliance on Candy Crush raises questions
APPENDIX
Definitions
Sources
Further Reading
Ask the analyst
About MarketLine
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