For the average smartphone or Facebook user, games offer time pass and fun. However there is serious money involved in the business of game making.
The latest entrant to the scene is King Digital Entertainment Plc who plans to raise more than $500 million with their IPO. They plan to do this by selling 22.2 million shares at a price range of $22- $24 per share. That will make the company valued at over $ 7 billion. What makes them confident is their ultra-popular game Candy Crush which went viral after its launch. King Digital Entertainment was founded in Sweden in 2003 with its co-founder and CEO is expected to hold 9.5 percent stake in King after the IPO. Apax Ventures could become the company’s largest stake holder provided the underwriter completely exercises their right to buy the shares. The share will start to trade in New York Stock Exchange from Wednesday under the symbol “KING”.
Photo Credit: Reuters/Carlo Allegri
Pessimists are wondering whether this is the next one-time wonder game like ‘Angry Birds’ and ‘Farm Ville’. However with King there is a difference as King relies on its so-called freemium model where the games are mostly free to download and play with additional content and virtual goodies are available for a price. Most of the players don’t buy anything, but there are a small percentage of players who buy these offerings. The seemingly endless supply of levels and features keep them glued on the game. Analysts bet on the solid financial foundation of the company and the efficiency with which it is run. King plans to focus on its freemium model for future growth also. This is a good turn-around for a company which almost went bankrupt in 2003 with capital infusion at the last minute saving it which eventually turned into a profit making company by 2005.