King’s games have crushed their rivals

King’s games have crushed their rivals

If the company is valued at $ 5bn (£3bn) as hoped, it would mark the biggest flotation the UK technology industry has seen in decades. It would also mark a triumph for Mr

Zacconi and his co-founders, who worked together at a previous technology company called Spray, but were forced to start from scratch when the 1999 dotcom bubble foiled their plans for a Spray IPO.

In many ways, King is an appealing prospect to investors. Its developers, spread between offices in London, San Francisco and Stockholm, were responsible for all of the three most popular games on Facebook; Candy Crush Saga, Pet Rescue Saga and Farm Hero Saga. But more than half of its users come directly to King’s games on their mobiles, reducing its reliance on Facebook as a “middleman”, and positioning the games business to take advantage of the surge in mobile usage.

In spring 2011, its games were played an average of 300m times a month. Now that figure tops 30bn, and – sources close to the company say – it is growing exponentially. “If you go back two years, King was a pretty successful small company. Then it had a spectacular 2012. But 2013 puts 2012 in a different place,” says a source.

Much of its output is free. Nearly two thirds of the people who plough through the 400-odd levels of Candy Crush Saga never pay anything – they simply use the five “lives” they receive free each time they log in, then wait 20 minutes or so until they are entitled to a fresh batch.

King makes its money from the remainder, who pay 69p to extend their game time immediately, or pay more for boosters that help them advance through the levels. Those 69p payments add up – some analysts estimate Candy Crush alone makes $ 3.6m a day.

The idea of real-world cash for virtual-world services sounds temptingly like alchemy to many investors, but it also rings alarm bells. Some would-be shareholders think they have heard it all before. When Zynga went public at the end of 2011, it was the toast of the town, selling pixelated goods to players of Farmville and Cityville.

Then the hits petered out and Zynga’s costs spiralled. The company lost nearly three quarters of its value, tipping in on Friday at just under $ 3bn.

King is adamant that it has a different and highly-efficient development model from Zynga that will keep the pipeline of hits running, at the same time as capping costs. However, it has a fine line to tread. The company’s investors are also wary of new rules published by the Office of Fair Trading, designed to tackle gaming addiction.

Britain’s gaming champion will have a harder time impressing investors if it has to deliberately make its games less tempting. The next few months will be a test of Mr Zacconi’s mettle. He and King’s co-founders were foiled by the first dotcom bubble. They now need to convince Wall Street that they are not fuelling a second.

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