The Candy Crush IPO: Zynga Redux?


King, the makers of Candy Crush, filed to raise $500 million in an IPO yesterday. Of course, noisemakers are comparing this to Zynga’s billion-dollar IPO back in 2011.

ZNGA is dead to investors now. Just for fun, let’s pull up their SEC filings from 2011.

Risk Factors cited in Zynga’s S-1 filing (I’m only copying the top 5):

  1. If we are unable to maintain a good relationship with Facebook, our business will suffer.
  2. We operate in a new and rapidly changing industry, which makes it difficult to evaluate our business and prospects.
  3. We have a new business model and a short operating history, which makes it difficult to evaluate our prospects and future financial results and may increase the risk that we will not be successful.
  4. We rely on a small percentage of our players for nearly all of our revenue.
  5. A small number of games have generated a majority of our revenue, and we must continue to launch and enhance games that attract and retain a significant number of paying players in order to grow our revenue and sustain our competitive position.

Excellent foresight on Zynga’s part. Poor execution of risk management, because all of those risks materialized.


Here’s what King Digital Entertainment, the makers of Candy Crush, cite as risk factors in their SEC filing.

  1. We have experienced significant rapid growth in our operations, and we cannot assure you that we will effectively manage our growth.
  2. A small number of games currently generate a substantial majority of our revenue.
  3. 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.
  4. We face significant competition, there are low barriers to entry in the digital gaming industry, and competition is intense.
  5. If players do not find our casual game formats compelling and engaging, we could lose players and our revenue could decline.

Can King Digital Entertainment continue to churn out growth where Zynga could not? Where PopCap could not? Where Jive could not? Let’s find out!