King Digital Entertainment plc, the developer of the popular game Candy Crush Saga, booked $632 million in revenues and $149 million in income in Q4 2013. Pretty impressive considering that one product—Candy Crush Saga—accounted for 78% of the company’s gross revenues. Understandably, the company warns:
- A small number of games currently generate a substantial majority of our revenue.
- We must develop new games and enhance our existing games so that our players will continue to play our games and make purchases of virtual items within our games.
- Our free-to-play business model depends on purchases of virtual items within our games, and our business, financial condition and results of operations will be materially and adversely affected if we do not continue to successfully implement this model.
- A relatively small percentage of our player network accounts for a large portion of our revenue and if we are unable to continue to retain players or if they decrease their spending, our revenue could be harmed.
The big question will be whether Candy Crush is a one-hit wonder.
Resources:
King Digital Entertainment PLC contracts.