How this game got me addicted & made others billions!
November 27, 2014
We may not want to admit it but there is something seriously wrong with an adult having it loaded as an App to his mobile phone (and Microsoft Surface!). In fact because I have two mobile phones, an iPad and a Microsoft Surface it is on each device. In fact, so bad is it the real reason it is on every device is because I can go from device to device and still access special features each time. Sad, but true, I don’t read books on planes and hardly watch movies any more – instead when I fly it’s all about the very addictive Candy Crush and Cropsies.
As hard as it is for a grown well to do man about town is to admit it – I am addicted! Now, that really says something because I am not one for games! But, I have found something to fill the void while sitting waiting for planes and, if King (the developer of Candy Crush, Bubble Witch and others) can get me hooked then it’s no wonder that every month there are 352 million unique users – yes, there are 352 million other people just like me and I have no doubt the vast bulk will hide their addiction from you!
What I really wanted to know is where did this evil type fun come from? Who swing a wand and created this massive movement of gamers of all ages? Well, given that we have been focussing on App’s this week I decided to try and get to the bottom of it!
Like a number of successful start-ups the lessons the founders learn have come from elsewhere and often these people have become serial entrepreneurs. So it was that back in 2003 Riccardo Zacconi (current CEO of King), Melvyn Morris (current Chairman) and Toby Rowland got together with Sebastian Knutsson, Thomas Hatwig, Lars Markgren and Patrik Stymne to found King – the parent of those tasty little games with so many treats! Zaccomi, Morris and Rowland had already worked together at uDate.com and earlier in 2003 Morris has sold the business for $150 million. King was originally headquartered in Sweden and, as many start-ups do, faced a crisis not long after when the business just about went bankrupt within the first 12 months – had not have been for a cash injection on Christmas Eve of 2003 then the business may not have got off the ground.
By 2005 the business had raised $43 million by selling larges stakes to venture capital companies Apax and Index Ventures. While the company has been profitable since 2005 there was a significant degree of scpetism that the business even had legs because many believed the market was limited in scope – remember, that back when the business started smart-phones and devices as we know them today were still a few years off.
The challenges of King weren’t over with two of the original founders leaving between 2008 and 2011. Toby Rowland who served as co-CEO left in 2008 and sold his stake back to the business for $3 million in 2011 around the same time as Klaus Hommels. I have to say I am not sure either Hommels or Rowland made the right decision because by the end of the first quarter or 2012 Kind had 30 million active users with that number jumping to 408 million by the end of 2013.
In fact, Katherine Rushton of the Daily Telegraph (UK) wrote “I wasn’t sure how seriously to take him. Although King was nearly a decade old at that point, few outside the technology industry had ever heard of the company and many of those who had, regarded it as a has-been.” After she had met him back in 2012.
Candy Crush was originally released back in March of 2011 on Kings website but the game changed when it was launched into Facebook in April of 2012 – and that is where the massive jump in active users can be attributed because at the time gaming was picking up on Facebook and when you already have an active user base then you can expect that when you move to a new platform a certain percentage will convert over – what you are really looking for, and this is what aspiring entrepreneurs need to keep in mind – is that to enable an App to be successful (such as Candy Crush) you are looking for the contagion point. What is the contagion point? Well, let’s assume for a moment that of the 30 million active users that King already had prior to the launch of Candy Crush on Facebook in April of 2012 that about 5% of them were active Facebook users also which gets us to 1.5 million people. Now, let’s assume that a further 5% of that number will convert to play the game through Facebook – and we come to 75,000 active gamers.
Then what you do is build into the features of the game the sending and receiving of gifts that enable you to more rapidly move from one level to the next and a feature where you can also invite your friends to play. Its at that point when you know contagion selling will take over – because you stop selling the game and your players do it for you. Of course, as you build the user base you turn what appears to be a free game into a monetized one by allowing people to buy special features that can upgrade you or help you with getting past difficult levels.
That’s why King were able to move rapidly from 30 million active users to more than 408 million by the end of 2013. Now, look at the money side – in 2011 sales were roughly about $62 million. By the end of 2013 they were sitting at $1.88 billion and growing.
So, lets go further and than that with the suggestion that there were two critical points of time in the development of King (from the outside looking in). The first was the decision to give users the ability to access the game on Facebook and the second was the arrival of the iPhone and the rise of smart devices. Moreover King got its timing right.
“It was not an easy time. I cut all my costs to zero. The room was small but I had all my properties in there,” he says, his Italian accent still evident. He concedes that, “possibly,” King may never have a hit of the scale of Candy Crush on its hands again but he argues that the company has cracked a formula for developing and testing new games that will help it to establish a portfolio of titles without Zynga-style spiralling costs.
Since then we have seen other titles released such as the Bubble Witch Saga, Farm Heroes and more. King has game studios in Stockholm, Barcelona, Berlin, Bucharest, Malmö and London, along with offices in San Francisco and Malta. In other words it continues to grow with an estimated 600 employees – the biggest challenge ahead is to remain competitive and always retain the thinking of a start-up – because as the market heats up and more people want to get into the lucrative App sector – those who don’t innovate become irrelevant.
The final two lessons to take away are ones all entrepreneurs learn. The first is to stay the course if you fundamentally believe your idea will take off and the 2nd, successful or not – know when it is time to exit.
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