At Long Last, The Maker Of Candy Crush Has Gone Public

Shares began trading at $20.50 each and fell 11% quickly after the open. The company priced its initial public offering at $22.50.

King.com, the maker of Candy Crush Saga, has finally gone public — and now comes the hard part.

Riding the strength of its match-three game on mobile devices, the company began trading today with shares starting off at $20.50 each, but quickly dropped 11% afer the open. It initially priced its public offering at $22.50 on Tuesday at a valuation of around $7.1 billion.

Candy Crush Saga has turned out to be a genuine worldwide phenomenon, with nearly 100 million people playing it every day. But aside from Candy Crush Saga, the company hasn't quite generated another hit. Its next-best game, the newer-but-somewhat-similar Farm Heroes Saga, has around 20 million people playing it every day.

Those numbers are certainly not bad — but if it wants to sustain the momentum of the business, which brought in $1.9 billion in revenue and a net income of $714 million, it's going to need to generate another huge hit like Candy Crush Saga. It's a question every large gaming company has faced as each new platform has emerged: EA and Activision, for gaming consoles; Zynga, for Facebook; and finally King.com, for mobile devices.

The game does well on mobile devices because of both its simplicity and its attention to detail. While the mechanics are easy to pick up, the game is actually deceptively well designed and is very effective at getting users to pay for power-ups in order to get over difficult levels, according to industry insiders. King.com has around 12 million users who pay for power-ups every month, or about 3% of its overall 408 million monthly active user base.

Still, King.com — unlike Zynga — has been around for more than a decade. During that time, it saw not one, but two titanic shifts in the way people play games. Starting off as a skill game company on the web, it first had to navigate the shift to Facebook — a process that took longer and caught the company somewhat flatfooted in the presence of Zynga, according to many industry watchers.

The transition wasn't pleasant, with some unrest at the company over being unable to catch up and build a presence on Facebook. But unlike Zynga, King.com was able to adequately navigate the shift to mobile devices and create a huge hit that would go on to make billions of dollars for the company. Zynga, meanwhile, is still trying to find a place on mobile devices and hasn't found a hit other than the one it bought for $210 million: Draw Something, a game with just tens of millions of users that crashed shortly after the acquisition.

The initial growth for Farm Heroes Saga bodes somewhat well, but questions still remain, given that King.com can cross-promote its games and is also investing heavily in user acquisition. King.com spent $312 million more in 2013 than it did in 2012 on user acquisition, the company said in its filing.

The trick will be replicating that in to new games that will equally entice users. But already, it seems that the market is not confident in King.com's ability to do so.

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