Candy Crush not so sweet after disappointing earnings

Candy Crush not so sweet after disappointing earnings


Candy Crush Saga

We may be in something of a golden age for iOS gamers, but Candy Crush maker King isn’t reaping the benefits quite as much as it had hoped.

With revenue shrinking, and having been unable to recapture the lightning in a bottle of its breakout hit Candy Crush Saga, the company dropped 21 percent in value yesterday after posting disappointing earnings. The company’s earnings fell 5 percent (or $30 million) from the first quarter this year.

This isn’t the first time King has proven a worry for investors. When the company went public earlier this year, it dropped a whopping 16 percent in its first day of trading.

King is one of the biggest advocates of the freemium business model of games, in which games can be downloaded and played for free, but users are required to pay for in-app purchases.

Interestingly, Apple has been seemingly moving away from promoting this business model as of late, with all the games it singled out as award-worthy at this year’s WWDC being premium games, which don’t require users to make additional payments once they have downloaded the title.

This may owe something to the fact that Apple has been roundly criticized for making it too easy for kids to rack up huge numbers of purchases in freemium games, despite the company actually making numerous positive changes in this regard. In January this year, Apple agreed to pay around $32.5 million to settle an ongoing complaint with the Federal Trade Commission regarding children making in-app purchases.

King has announced that it expects revenue from the current quarter to decrease yet further, to somewhere between $500 million and $525 million: representing an additional drop of 14 percent to 18 percent from the second quarter.

Source: The Wall Street Journal


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