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   Technology StocksZynga, Inc.


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From: Glenn Petersen2/18/2014 12:25:25 PM
   of 363
 
ZNGA is probably getting a sympathy bounce from the Candy Crush registration statement filing. A reminder that the next hit may be just around the corner.

Candy Crush Maker Files for an I.P.O.

By MICHAEL J. DE LA MERCED and MARK SCOTT
DealBook
New York Times
February 18, 2014



Gabriel Bouys/Agence France-Presse — Getty ImagesKing Digital Entertainment said the video-game developer wants to be listed on the New York Stock Exchange.
_______________

Updated, 7:54 a.m. | The company that brought the world the addictive puzzle game Candy Crush Saga is hoping that investors will line up for a piece of its stock as well.

King Digital Entertainment, which has headquarters in Dublin but has offices across Europe and in San Francisco, filed on Tuesday for an initial public offering in the United States. But prospective investors may be wary that players may be tiring of paying to line up shiny virtual pieces of sugar.

While King’s preliminary prospectus gave a preliminary $500 million fund-raising target to determine registration fees, the company is expected to seek a multibillion-dollar valuation. It confidentially filed for an I.P.O. last year.

King is the latest in a growing number of European social gaming companies that have become global champions.

Supercell, the Finnish tech start-up behind the Clash of Clans and Hay Day franchises, raised $1.5 billion last year from the Japanese telecommunications company Softbank, in a deal that valued Supercell at around $3 billion.

Other European gaming companies include Wooga, a Berlin-based start-up that has created a series of social gaming hits like Jelly Splash that continue to top the charts on both Apple’s iTunes and Google Play’s stores.

The rise of the nearly 11-year-old King, built largely on the huge success of Candy Crush, has had many analysts and prospective investors eagerly await an I.P.O. The company said that its profit surged more than 7,000 percent last year, to $567.6 million from $7.8 million. Revenues climbed enormously as well, to nearly $1.9 billion.



Candy Crush, via Associated PressCandy Crush, in which players try to line up three or more matching types of candy, has an average of 93 million users a day.
_______________

In its filing, the game maker disclosed that it has 128 million daily active users, some of whom spend big amounts of money to buy lives or special tools.

Candy Crush, in which players try to line up three or more matching types of candy, contributed the vast majority of that number with an average of 93 million users a day
. It remains the second-highest-grossing app on Apple’s App Store as of Tuesday, behind Clash of Clans.

Other popular games include Pet Rescue Saga and Farm Heroes Saga.

Despite the rapid successes of these European companies, analysts and investors fret that the gaming start-ups remain reliant on a small number of hits.

Share prices have slumped at American rivals like Zynga, which went public in 2011, as investors raise concerns that they will not be able to create new gaming franchises that will keep consumers entertained.

Some investors may be concerned that King could suffer the same fate. The company said that its top three games comprised 95 percent of its total gross bookings.

The company’s gross bookings and revenue declined in the fourth quarter of 2013, in part because of a decline in the Candy Crush business. King emphasized that it expected its blockbuster hit to contribute less to its overall sales over time.

JPMorgan Chase, Credit Suisse and Bank of America Merrill Lynch are leading the underwriting of the I.P.O.

dealbook.nytimes.com

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From: Glenn Petersen3/3/2014 4:34:43 PM
   of 363
 
ZNGA up in a down day.

Zynga Reboots Three Of Its Biggest Franchises on Mobile

by Kim-Mai Cutler ( @kimmaicutler)
TechCrunch
March 3, 2014

Under fresh leadership from new CEO Don Mattrick, Zynga has gone back to the drawing board on some of its biggest money-makers.

Today, the company is unveiling upcoming revamped versions of Zynga Poker and Words With Friends along with a brand-new mobile-first version of its biggest hit FarmVille. It’s a critical time for Zynga, which is trying to revive momentum after losing out on mobile platforms to younger rivals like Finland’s Supercell.

When the company went public in 2011, it commanded nine of the 10 top social games on the Facebook platform. But success on Facebook meant that the company didn’t invest enough in the emerging world of mobile gaming. So companies like Supercell basically built what could have been FarmVille for mobile in games like “Hay Day.”

Now Zynga is fighting back by overhauling its best-known and most lucrative games.

“We have top titles in casino, farming, words, racing, and people [through NaturalMotion's Clumsy Ninja],” said COO Clive Downie. “Then there are another three to five distinct content categories that we’re already thinking about. If you have a #1 title in every one of those categories with a piece of evergreen entertainment, that’s scale from a business standpoint. Those categories are enough to power the top 20 games.”

Downie said that since he was recruited by Mattrick from Japan’s DeNA, they’ve flattened out Zynga’s organization by removing layers of middle management and by making gaming teams more agile. Zynga ended the year with 2,034 employees and annual revenues of $873.3 million, while Candy Crush Saga-maker King had $1.88 billion in revenue with 665 employees. Clash of Clans-maker Supercell had $892 million in revenue with 130 employees.

All of this continues to show how extreme the economics of gaming can be when you have a hit. Even though Zynga is struggling now, it’s entirely possible that it could make a comeback. Just look at the company’s rivals: King languished for several years in the late 2000s, while Zynga blossomed on Facebook. A couple of years later, they had switched places. Similarly, Supercell’s leadership came from Digital Chocolate, a long-troubled social and mobile gaming company from EA founder Trip Hawkins. Zynga’s shares have risen 88 percent in the last six months on hope that Mattrick might be able to turn the company around and on anticipation around King’s expected IPO.

Anyways, Zynga is re-imagining three of its best-known titles. These franchises are key: Zynga Poker, FarmVille 2 and FarmVille generated 21, 17, and 16 percent of the Zynga’s online game revenues last year, according to an SEC filing.



FarmVille is coming to mobile platforms as a standalone game for the first time ever. The company had released a companion mobile app a few years ago that let Facebook players water their crops from their phones, but it wasn’t fully-featured.

But now FarmVille 2: Country Escape will be a fully 3D game that can get to 60 frames-per-second on an iPad air. It has mobile-friendly gestures for watering crops and dragging wheat onto a windmill to make flour.

The game features a seaside farm plus other nearby virtual attractions like a winery, a mine and an airport. There’s a trading stand that serves as the games’ social hub so players can trade with their friends.

“Farming is this evergreen category that speaks to our human DNA to plant and grow crops and raise animals,” said Jonathan Knight, who is a vice president overseeing the game.



Then the company also re-vamped Poker, its top money-maker on mobile platforms for the last several years and the original title that made Zynga a company. The company cut out the red-headed female character and changed the color scheme to feature the kinds of rich reds and golds you might actually see in a real casino.

“It’s hard to imagine reinventing a game that is so old in general,” said Nick Giovanello, the creative director for Zynga Poker. “We looked to the real world and real casinos to see how they design their environments and how that affects player psychology.”

They made the profile photos of players more prominent and made manipulating the chips more of a tactile experience for the touchscreen.



Lastly, they’re overhauling Words With Friends, the game Zynga acquired through the 2010 deal to buy Texas studio Newtoy for $53.3 million.

They’re adding long-requested features like a dictionary and vanity metrics on people’s profiles so they can see their best-scoring words and stats on their average word strength. They’ve also gone back to the original, more simplified model of having a paid version without ads and a free, advertising-supported tier.

“What we’ve found is that ‘simple’ wins on mobile,” said Abhinav Agrawal, who is vice president of Words With Friends. “It’s our core learning from the last few years.”
techcrunch.com

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From: Glenn Petersen3/10/2014 8:15:29 AM
   of 363
 
Has Candy Crush reinvented the wheel. Probably not.

One-Hit Wonders

by James Surowiecki
The New Yorker
March 17, 2014



For more than a year now, tens of millions of Americans have found time each day to devote themselves to an essential task: swiping at their phones and tablets to arrange colorful candy icons in rows. They are playing Candy Crush Saga, a wildly addictive mobile game that has been downloaded more than half a billion times. You can play the game for free, but enough people have been willing to pay for extra lives and various performance-boosting tools to make it staggeringly profitable. Last year, Candy Crush’s maker, an Irish company called King Digital Entertainment, had almost two billion dollars in sales, five hundred and sixty-seven million dollars of which was pure profit. Last month, King filed for an initial public offering, which is expected to value the company at five billion dollars.

The I.P.O. is no surprise, given King’s domination of the booming mobile-game business, but it’s likely to end badly, because King is part of a venerable tradition: the one-hit wonder. Like Coleco, with Cabbage Patch Kids, or Ty, Inc., with Beanie Babies, King’s business is dependent on its one star product; although the company has more than a hundred titles, almost eighty per cent of its revenue comes from Candy Crush. King has done a great job of making money from the game, and of keeping it fresh, but Candy Crush is still a fad, and, like all fads, it will fade. Indeed, as King’s filing makes clear, the number of people who pay for the game has already begun to taper off, as have sales and profits.

In its I.P.O. filing, King claims that a “unique and differentiated model” for developing games will enable it to create new hits, and plenty of analysts believe that King has cracked the code of hooking consumers. But that’s unlikely. The world of pop culture contains many more one-hit wonders than hit factories. After all, luck plays a huge role (is there really a good explanation for the hula-hoop frenzy of the fifties?), and, more fundamentally, serial innovation is just tough: studies suggest that most new products fail. In the gaming industry, success has always been highly unpredictable. Parker Brothers, according to a history of the company, found that there was no secret formula: products that tested well often flopped in the marketplace, while “an in-house flop could become the hit of the industry.” It says something that King, which has been making games for a decade, had profits of just $7.8 million in 2012. The company didn’t make eighty times more in 2013 because it had cracked a code; it just caught lightning in a bottle.

It’s true that a few companies—Disney, say—have been able to consistently ride the Zeitgeist. But King has the misfortune to be in an industry where this is especially difficult, simply because it faces so much competition. “With traditional industries, it’s typically very expensive to get into them, and very expensive to actually make a product,” Michael Cusumano, a professor at the M.I.T. Sloan School of Management, told me. “But, with software, marginal costs are close to zero. That makes it easy for new competitors to enter the business.” Disney flourished not just because of creative genius but also because, historically, animation was incredibly labor-intensive and costly, and few companies could afford the distribution network and marketing operation necessary to get films in front of millions of people. Such high barriers to entry still exist in Hollywood or in traditional video-gaming. Only companies like Marvel or Activision can afford to make The Avengers or Call of Duty. Even then, things are chancy—that’s why studios love sequels—and failure is an ever-present threat. The company Harmonix, which launched Guitar Hero and Rock Band, games that in their day were as huge as Candy Crush, ended up being sold, after a few years, for fifty bucks and a pile of debt.

Development costs in the game-app world are very low. Angry Birds was made for just a hundred and forty thousand dollars, and Candy Crush was created by a team of fewer than ten people. Established companies have some advantage when it comes to marketing power, but hits can come from anywhere. Flappy Bird, a game that was recently downloaded fifty million times in a couple of weeks, was created in a matter of days by a single designer. No wonder that even the industry’s powerhouses have struggled to generate new hits. Zynga has never come close to the success it enjoyed with FarmVille. Angry Birds is still by far Rovio’s most successful product. King has released a couple of successors to Candy Crush, but neither is a breakthrough. What Cusumano says of the software industry in general seems true of mobile gaming in particular: “Typically, companies will have that one big product, and then they’ll sell some sequels to it. But, unless they manage to become the center of an ecosystem, over time they tend to weaken and disappear.”

It’s easy to see why King’s founders want to go public: money. But the money isn’t worth the hassle. As a public company, King will have to show shareholders consistent results and ever-growing profits. Such expectations are, frankly, silly in crazily competitive, hit-driven industries, and trying to meet them is a recipe for frustration. If King stayed private, it could milk its cash cow and build games without having to worry overmuch about hatching a new cultural juggernaut. We expect companies to constantly be in search of the next big thing. But, for one-hit wonders, the smartest strategy might be to just enjoy it while it lasts.

newyorker.com

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From: Glenn Petersen3/12/2014 7:21:24 AM
   of 363
 
The KING pricing could provide a sympathetic bounce for ZNGA:

Candy Crush Saga maker King seeks $7.56 billion valuation from IPO

Wed Mar 12, 2014 6:58am EDT



A woman poses for a photo illustration with an iPhone as she plays Candy Crush in New York February 18, 2014.

Credit: Reuters/Carlo Allegri
____________________

Reuters) - King Digital Entertainment Plc, best known for the hit mobile phone game Candy Crush Saga, said it expects to price its U.S. initial public offering at between $21 and $24 per share, valuing the company's equity at about $7.56 billion.

The Dublin-based company said it will sell 15.5 million shares in the offering, while stockholders, including Apax Ventures, will sell 6.7 million shares, the company said in a filing with the U.S. Securities and Exchange Commission on Wednesday. ( r.reuters.com/bar57v)

The IPO will raise as much as $532.8 million at the top-end of the planned range. It had filed for a $500 million placeholder in February.

Candy Crush Saga, which involves moving candies to make a line of three in the same color, was the most downloaded free app of 2013 and the year's top revenue-grossing app.

It has been downloaded more than 500 million times since its launch in 2012. The basic games are free, but players must pay for add-ons or extra lives.

King offers 180 games in 14 languages through mobile phones, Facebook and its own website, but is heavily reliant on Candy Crush, which brings in about three-quarters of its revenues. The company says its games are played more than 1 billion times a day.

The company, founded in Sweden in 2003, said it has applied to list its shares on the New York Stock Exchange under the symbol "KING".

JP Morgan, Credit Suisse and BofA Merrill Lynch are lead underwriters for the offering.

(Reporting by Aman Shah and Neha Dimri in Bangalore; Editing by Savio D'Souza)

reuters.com

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From: Glenn Petersen3/12/2014 7:46:28 PM
   of 363
 
What’s Candy Crush Really Worth?

Posted by James Surowiecki
The New Yorker
March 12, 2014



On Wednesday, King Digital Entertainment, the mobile-gaming company that makes Candy Crush Saga (which I wrote about in the magazine this week), set the terms for its coming I.P.O. Its projected valuation is as outrageous as expected. King (and its existing shareholders) plan to sell more than twenty-two million shares at a price of twenty-one to twenty-four dollars apiece, which would give the company a projected market cap of around seven billion dollars. That’s two billion more than Zynga’s market cap, and, even more strikingly, just a few billion dollars less than the market caps of the gaming giants Electronic Arts and Activision Blizzard.

The enormous profits that King is raking in from Candy Crush makes the company look reasonably priced on a price-to-earnings (P/E) basis, with a trailing P/E ratio of just 13.3. At Yahoo Finance, Aaron Pressman argues that when you compare King’s valuation to those of other tech high-flyers (which often have P/Es above a hundred), there’s a case to be made that it’s undervalued. The problem, of course, is that this assumes that King’s current profits are sustainable, not just for a couple of years but for the foreseeable future. Price-to-earnings ratios are crude tools at best, and they’re useful only if the “earnings” part can be counted on to be stable or growing. In King’s case, as I argued in my column, there’s just no reason to assume that Candy Crush—which brings in eighty per cent of King’s revenue—is going to keep generating enormous piles of cash for years to come. Nor can it be expected that King will come up with sequels that replicate Candy Crush’s success.

When you buy shares in a public company, you’re buying a share of future profits, and the future of any company that’s reliant on a single faddish product for so much of its revenue is inherently uncertain—too uncertain for investors to confidently accept a seven-billion-dollar valuation. I have no doubt that investors will snap this offering up: the market is willing to value Zynga, which has lost six hundred million dollars over the past three years, at five billion dollars. King looks like a bargain by comparison. But this is a pure gamble.

Pressman alludes to the fact that there are successful video-game franchises. But, almost without exception, those franchises are titles in which companies invest huge sums of money, and many of them (like sports franchises) have a natural upgrade cycle built in: people buy the new Madden like clockwork when football season starts again. King has yet to demonstrate that it’ll be able to do anything similar with Candy Crush.

King’s offering does make clear just why the company is going public—to allow its current shareholders to make a whole lot of money. The company itself is planning to raise about three hundred and twenty-five million dollars. Shareholders are going to sell shares worth another hundred and fifty million, which represents a very nice payday, particularly since many of those shares will be sold by individuals. (The private-equity firm Apex Partners, which owns nearly half the company, is going to dilute its stake by only four per cent.) Going public, as I argued in my piece, still seems like a mistake for a company that has more than enough money in the bank to stay afloat for years to come (and is going to be generating hundreds of millions of dollars annually for the next couple of years), and that operates a business ill-suited to the demands of shareholders, who want consistent and steadily growing profits. But there are few better ways to make a lot of people really rich than a high-priced I.P.O., and, looking at these numbers, it’s not hard to understand why King’s current shareholders are happy to take the money. Whether future shareholders will ever be quite as pleased, though, is another question.

newyorker.com

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From: Glenn Petersen3/20/2014 3:49:28 PM
   of 363
 
At GDC Shindig, Don Mattrick Says Zynga Turnaround Is Halfway There

By Eric Johnson
Re/code
March 20, 2014, 5:05 AM PDT

Two years ago, Zynga’s stock began a now-notorious tumble, losing 86 percent of its value between February and November of 2012. After a leadership shakeup last year and a major acquisition last month, the company is showing some signs of vitality again — part of a turnaround that CEO Don Mattrick says is about halfway to where he wants it to be.

Mattrick was speaking at a Game Developers Conference party hosted by investment bank Covert & Co., his first public appearance since coming to Zynga from Microsoft last July. The company is in a quiet period until its Q1 2014 earnings come out next month, so Mattrick was careful to watch his words, but nonetheless dropped some hints about what’s ahead.

“To me, it feels like 1991 when EA was going public,” Mattrick said of longtime employer Electronic Arts, which acquired his first company Distinctive Software not long before its IPO. “We [EA] grew from 1 to 25 percent market share” by making “purposeful bets” like major sports licensing deals, he added.

For present-day Zynga, however, “purposeful bets” will mean not licensing but, instead, more original IP, in tune with its recent $527 million acquisition of Clumsy Ninja maker NaturalMotion. Indeed, NaturalMotion CEO Torsten Reil and FarmVille VP Jonathan Knight joined Mattrick onstage at the GDC party in taking questions from Benchmark general partner Mitch Lasky.

A few weeks ago, Knight and his counterparts in leading Words With Friends and Zynga Poker unveiled their plans for refreshing some of Zynga’s best-known games on mobile. For Mattrick’s turnaround to work, that platform transition has been key, but he pointedly said his old stomping ground of console gaming was still doing fine.

“People always try to think of the business in discrete terms and pure cannibalization occurring,” Mattrick said. “I think we’re going to see, in the console space, growth occurring. … I’m personally bullish on growth in all segments of the business.”

It’s been easy to temporarily forget about both console and mobile, if only for a second, at this year’s GDC. New virtual reality tech from Sony and Oculus VR has made the experimental technology a go-to icebreaker in seemingly every meeting room and party.

So, Lasky asked, will Zynga release a virtual reality FarmVille game?

“Not in Q2,” Mattrick joked.

recode.net

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From: Glenn Petersen3/25/2014 11:33:48 AM
   of 363
 
Candy Crush gets priced tonight:

Candy Crush comes to Wall Street, should investors get in the game?

By Jeff Macke
March 25, 2014
Breakout

King Digital, the maker of the at one point wildly popular Candy Crush Saga, is set to go public tomorrow - pricing tonight at around $8 billion. The company gets about 75% of its revenue off of the Candy Crush franchise, which was the number one game in the land up through January.

In its prospectus King Digital says that one of the main threats is its own explosive growth. It has hired 512 people over the last two years to try to replicate the success of Candy Crush Saga and come up with another winner; therein lies the rub.

The number one game in the land right now is 2048, a game that I taught the kids how to play and told not to speak to me unless they completed it. It’s that addictive, my friends. It’s the only game you’ll see people playing at work and on the bus while they wait for the NCAA games.

My point is this, the 19 year-old Italian kid who used his OCD to design 2048 and gave it away for free on the internet is really King Digital’s competition. There’s a reason Rovio, the maker of Angry Birds hasn’t gone public yet and that’s because they’re printing cash like a busted ATM or the weirdo that invented Bitcoin.

If a company is really good, really operating, really taking advantage of the $17 billion industry that is apps, they’re not going to go public. When companies like King Digital start going public it’s time to grab your wallet and form a betting pool as to who is going to finish 2048 first (the answer is me).

finance.yahoo.com

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To: Glenn Petersen who wrote (304)3/26/2014 9:06:10 AM
From: Suma
   of 363
 
Are you hoping ZNGA will have the same luck ?

The chances are ?

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To: Suma who wrote (305)3/26/2014 9:32:34 AM
From: Glenn Petersen
   of 363
 
ZNGA will probably get a sympathetic bounce if the KING IPO is viewed as successful. Conversely, it will hurt ZNGA if the IPO is viewed as a failure. While KING is immensely profitable, most of the commentary has focused on the fact that interest in specific online games is transitory, as ZNGA learned a couple of years ago. The days when families would buy a Monopoly game and play with it until the board fell apart are long gone.

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To: Glenn Petersen who wrote (306)3/26/2014 9:56:45 AM
From: Suma
   of 363
 
Well today is not looking good at all. We have fallen from five bucks PLUS to a range that is not forgivable but what is a good guy to do ?

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